Employment Rights Bill
Lord Sharpe of Epsom ExcerptsWednesday 23rd July 2025
(1 month ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 113-IV(b) Manuscript Amendment for Report (Supplementary to the Fourth Marshalled List) - (23 Jul 2025)
Lord Goddard of Stockport (LD)
The noble Lord, Lord Hunt, will say “Hear, hear” no more because we cannot support Amendment 149A, which is a new amendment that proposes removing Clause 72. I will tell the House why we cannot support it. On Monday I supported the noble Lords, Lord Hunt and Lord Sharpe, when we were very critical of the Government for tabling amendments on Report. People nodded wisely and said that it is not a good thing to do, yet this amendment was tabled today or yesterday. It has had no time for discussion or debate. It has had no time for people to understand its nuances. We know that it takes a big chunk out of the Government’s manifesto pledge Bill, and that does not seem fair to me.
In our view, legislation should be done through constructive amendments. If you do that, you end up with a compromise, whether it is through ping-pong or by persuading the Minister to change their point of view. It is almost like taking the sledgehammer again, and that is not good politics. It is not good for the House, and it is not good for Members. Lots of Members come into these debates, not all the time, and try to get a flavour of what is going on. They might hear that Amendment 149A, which sounds fairly reasonable, has been put forward. It is not fairly reasonable; it takes an enormous chunk out of the Government’s Bill, and that cannot be right for democracy. I have criticised Ministers many times, but we should be mindful that it is in the manifesto and move legislation via amendments rather than trying to remove huge chunks of legislation. On that basis, we will not support Amendment 149A.
Lord Sharpe of Epsom (Con)
My Lords, on balance, it is a great pleasure to follow the noble Lord, Lord Goddard. I will speak to Amendments 148, 149A, 149ZA and 150 standing in my name and that of my noble friend Lord Hunt of Wirral. Before I do that, I thank the noble Lord, Lord Burns, for his common- sense amendment. We think political contributions must always be a matter of choice, not a default. That seems to us a fair and democratic principle, and the Government ought to listen. I was particularly pleased to see that the Attorney-General was in his place to listen to the excellent arguments advanced by my noble friend Lady Cash, which all pertain to international law. I hope he was paying attention. If the noble Lord, Lord Burns, decides to test the opinion of the House, we will support him.
I turn to Amendment 148. On 8 July, the Secretary of State for Health and Social Care, Wes Streeting, remarked rather pointedly that despite the fact that the majority of resident doctors did not vote for strike action, the BMA is now preparing for strike action and it is completely unnecessary. Who can blame him? Strikes are happening under the existing law, and now this Government propose to remove the 50% threshold, the very last democratic safeguard that ensures that strikes have substantial backing. What would that do? It would significantly lower the bar for strike action and allow a smaller minority to cripple vital public services. It is worth bearing in mind that it is public services we are talking about because that is where the bulk of union members are. One has to wonder whether the Government agree with their own Health Secretary. If they do, why are they proposing this? If they do not, will Mr Streeting be invited to correct his error on the record? Do the Government share the disappointment that he expressed on 8 July about the BMA’s strike action or was that simply a performance for the cameras, a convenient public relations stunt, while others quietly dismantle safeguards and seek to make extremists more powerful?
On Amendments 149A and 150A, I am grateful to my noble friend Lord Jackson of Peterborough for his words. Earlier this month, Norman Tebbit, Lord Tebbit, died after a long period of illness. One of his enduring legacies was his role in turning around an unemployment crisis that peaked at 11.5% in 1982. Thanks to the reforms introduced on his watch, the rate fell sharply thereafter. The success was later acknowledged even by the Blair and Brown Governments, who accepted the new consensus, a fair balance between workers’ rights and the flexibility that businesses need. It was the late Lord Tebbit who warned us that we do not intend to see again the scenes of intimidation, mass picketing and political strikes that disfigured our country in the 1970s. That warning remains as relevant today as it was then. Supervision of picketing is an essential safeguard. It ensures that industrial action remains peaceful, lawful and accountable. Removing these provisions, as the Government propose, risks returning us to the chaos and intimidation of the past, as described so ably by my noble friend Lord Evans of Rainow.
Amendment 149ZA is crucial to protect airlines from unfair financial risk caused by conflicting notice periods. This was originally tabled in Committee by the noble Lord, Lord Hutton of Furness. He raised a timely and important issue. As he did not retable the amendment for Report, we did because, frankly, the Committee debate was very late, it was truncated, and the Minister’s response was inadequate.
I refer noble Lords to col. 1342 of Hansard on 10 June for the detailed arguments of the noble Lord, Lord Hutton, but in essence they are that, under current law, airlines must give at least 14 days’ notice of industrial action to avoid costly compensation claims under passenger rights legislation—namely, UK261—unless there are extraordinary circumstances, and a ruling of the European Court of Justice in 2019 made it clear that a strike by an airline’s own staff is not considered an extraordinary circumstance.
The amendment would therefore simply protect airlines from having to pay hundreds of millions in compensation for cancellations caused by strikes. Reducing the notice period to 10 days would expose airlines to up to four extra days of compensation liability and a serious and unavoidable financial burden that would inevitably be passed on to passengers, making family holidays even more expensive for working people. The amendment would ensure that the 14-day notice period remained for industrial action affecting airlines, and it would align industrial relations law with passenger rights and protect vital UK businesses from crippling— I will be charitable and say probably unintended—costs.
In Committee the noble Lord, Lord Katz, argued that this would represent a sectoral carve-out, but that is not a logical argument as the sector is governed by a rule that does not apply to any other. It is therefore entirely consistent with a level playing field. It is the contradiction in legislation that puts airlines at a disadvantage.
Finally, I agree fully with my noble friend Lord Leigh about seeking to maintain the requirement that trade unions should report their political expenditure in their annual returns. I shall support him too, should he wish to call a Division.
Lord Sharpe of Epsom
Member's explanatory statement
This probing amendment would reinstate the 50% threshold requirement for industrial action to be voted on by a trade union and seeks to probe whether the Government perceives a risk to the democratic integrity of trade union ballots for industrial action as a result of the provisions to remove the 50% requirement.
Lord Sharpe of Epsom (Con)
My Lords, time and again we hear about workplace democracy from the Government Benches, and then they introduce this. So yes, I would like to test the opinion of the House.
Lord Sharpe of Epsom
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsMonday 21st July 2025
(1 month ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 113-III(a) Amendments for Report (Supplementary to the Third Marshalled List) - (21 Jul 2025)
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment and others in the name of Lord Sharpe maintain the existing 10% membership threshold for union recognition applications by removing provisions that would have allowed this threshold to be modified through secondary legislation.
Lord Sharpe of Epsom (Con)
My Lords, I rise to speak to Amendments 135 to 143, all in my name and that of my noble friend Lord Hunt of Wirral. When this power first appeared in the Bill, the Minister in the other place, Mr Justin Madders, admitted that the Government had not even decided whether they were intending to use it. First, they said there would be no consultation, then they changed their minds. That is not a serious way to make laws; it is confused and confusing, especially for, as ever, SMEs, which are, as we have discussed many times during the passage of the Bill, in a state of uncertainty about the basic rules governing their own workplace.
If the membership threshold was reduced to 2%, as the Government appear to envisage, in a company that employs 250 employees, it would require only five members in the bargaining unit to request a ballot. That would mean that a union could gain bargaining authority over workplace conditions, pay and leave arrangements for the entire bargaining unit based on the explicit support of a tiny number of employees. This raises questions about whether such an arrangement adequately reflects workforce preferences, particularly for employees who may value direct engagement. That potentially creates a situation in which unions may submit many speculative requests for recognition, with little depth of membership in a proposed bargaining unit. The process comes at a cost to the employer of both managing and arranging access and facilities, and to the Central Arbitration Committee for supervising these potentially speculative ballots.
I really think this speaks for itself; there is not a huge amount to say in addition, although I would note that the noble Lord, Lord Hendy, talked earlier about workplace democracy. Whatever it is, it is not this, so I beg to move.
Lord Lucas (Con)
My Lords, I have Amendment 144 in this group. We discussed the same amendment in Committee. If we do not have a number, it means that, essentially, one employee could trigger union recognition. Surely that is not something we should impose on small businesses.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
I thank all noble Lords for the short but focused debate we have had on this set of amendments, moved and spoken to by the noble Lord, Lord Sharpe of Epsom. I particularly pay tribute to my fellow GMB member, the noble Lord, Lord Goddard of Stockport.
As I set out in Committee, we believe that current thresholds pose too high a hurdle in modern workplaces, which are, as we know, increasingly fragmented. We want therefore to be able to consider whether the 10% membership threshold on application should be reduced in future. The reason why a range of 2% to 10% has been chosen is that, in 2020, the previous Government reduced the threshold that triggers information and consultation arrangements from 10% to 2% in the workplace, so what the Bill proposes aligns with that. But, to be absolutely clear, we want to consult before making any decisions on whether we should bring forward secondary legislation and by how much the threshold should be varied, if at all. We will consult businesses—including, of course, small and medium-sized businesses—as part of that consultation process.
Should we decide to bring forward secondary legislation in the future, that legislation will be subject to full debate in both your Lordships’ House and the other place. We will carry out an impact assessment at that time that will consider impacts on businesses, including, as before, small and medium-sized businesses.
I want to reassure all noble Lords, and the noble Lord, Lord Sharpe, in particular, that, whatever the application percentage in the bargaining unit is or may be, the fact remains that unions would still need to obtain a majority of a bargaining unit in a trade union recognition ballot. That point is fundamental to the misconception that is coming from the Benches opposite about what this part of the Bill does or does not do. To be clear, this is not, to address the point of the noble Lord, Lord Fuller, the “tyranny of the minority”; in fact, it is absolutely contrary to that point. This is ultimately about a trade union having to win a majority.
Experience has shown that this is not easy to achieve. The union will have to make a good case to persuade the majority in the bargaining unit to vote for recognition in a recognition ballot overseen by an independent, qualified person. It is in the trade union’s interest to be confident that it can win a majority in the ballot, otherwise it would still be prevented, as is currently the case, from applying for another statutory recognition ballot in the same bargaining unit for three years. That is why it is highly unlikely that a union will apply for statutory recognition when there is only one worker who is a member of that union. Indeed, if experience tells us anything, it is that it is highly likely that trade unions will continue to focus their efforts on larger workplaces where there is greater bang for the organising buck.
The union recognition process is generally consensual, and that is a good thing. In the nine years from 2017 to 2025, only 375 recognition applications have gone to the CAC. Close to half of the 1,476 recognition applications received since 1999 were withdrawn by unions at various stages of the recognition processes, in many cases because the parties have reached a voluntary agreement for recognition. The confrontation that has been set up by some speakers from the Benches opposite is a chimera; this is not the reality of organised workplaces. Given that, I ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 135.
Lord Sharpe of Epsom (Con)
I am grateful to the Minister for setting out the context in a bit more detail, but I am afraid I am not entirely persuaded. I would like to test the opinion of the House.
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsWednesday 16th July 2025
(1 month, 1 week ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 113-II(a) Amendments for Report (Supplementary to the Second Marshalled List) - (15 Jul 2025)
Lord Sharpe of Epsom
“Right not to be unfairly dismissed: reduction of qualifying period and introduction of initial period of employmentSchedule 3 contains provision—(a) reducing the qualifying period of employment for unfair dismissal and introducing provisions in respect of an initial period of employment, and(b) making further consequential amendments.” Member’s explanatory statement
This amendment provides that the qualifying period for unfair dismissal is reduced as set out in further amendments to Schedule 3. It also provides for an initial period of employment after the qualifying period during which a modified process and different compensation limit would apply, as set out in further regulations.
Lord Sharpe of Epsom (Con)
My Lords, the Government’s intention to protect workers is commendable. We all agree that fairness, dignity and security at work are essential pillars of a just society. However, the approach taken in this Bill, particularly the changes to unfair dismissal rights and the introduction of a statutory probationary period, is confused and counterproductive. What the Government have failed to grasp is that, when businesses are given the flexibility to manage their workforce pragmatically, that is precisely when they are more likely to take on new staff. Hiring is always a risk. By heightening that risk and making it more difficult to manage, this Bill creates disincentives to hire, particularly at the margins of the labour market, where the stakes are highest.
This is fundamentally a question of incentives. Reduce the employer’s ability to assess suitability, cultural fit or even basic reliability, without the spectre of legal sanction, and you will see fewer jobs created. The cost is very real, but nowhere is it properly considered in the Government’s own impact assessment. That acknowledges a likely 15% rise in employment tribunal claims, but makes no attempt to model the knock-on effect on hiring behaviour. The tribunal system, as we know, is already overstretched, with cases often taking more than two years to resolve. A 15% increase without corresponding investment will only deepen the backlog, and employers will know that they are walking into a system that is clogged and uncertain.
Then there is the statutory probationary period, which the Government propose with no real clarity. The Bill fails to explain how this period interacts with the obligation to act reasonably or whether there will be a different standard for dismissals during this window. Will there be a list of fair reasons? Will an employer be able to extend the period if performance takes longer to assess? None of this is addressed. As any employer will tell you, uncertainty in employment law leads not to innovation but to caution and legal advice.
Perhaps the most troubling aspect of the Government’s approach is its likely effect on social mobility. When you raise the legal risks of hiring, it is not the well-connected, polished graduate who loses out but the individual on the edge of the labour market, the person returning to work after illness or parenting, the school leaver with no contacts, the ex-offender with a spent conviction, the refugee trying to prove themselves. The Government’s impact assessment recognises this risk, because it says that making unfair dismissal a day one right
“could damage the employment prospects of people who are trying to re-enter the labour market, especially if they are observed to be riskier to hire”.
Those are not my words but the Government’s.
The same is true for a “cultural fit”, which the Minister dismissed in Committee as an illegitimate reason for dismissal. She said:
“The Government do not believe that an employee not being a cultural fit within an organisation should be a fair dismissal”.—[Official Report, 21/5/25; col. 334.]
However, “cultural fit” is not a euphemism for prejudice; it is about whether someone complements the way in which a team works, the style of communication or the pace and rhythm of a workplace. This is particularly acute for a small business. Hiring mistakes are costly. Even a highly skilled worker takes time to reach full productivity and the cost of advertising, onboarding, training and then managing a dismissal is not trivial. If employers cannot be confident that they will have a window in which to assess a new hire, including on soft factors such as team dynamics, initiative or client manner, they will become more conservative. They will play it safe. Who loses then? Again, it is the person who just needed someone to give them a chance.
My amendment offers a better path. It reduces the qualifying period for unfair dismissal from two years to six months, a meaningful extension of protection for workers. It also creates an initial period of employment following that six months in which a simplified process and lower compensation cap would apply. That strikes a fair balance, giving employers space to assess suitability while ensuring that bad-faith dismissals still carry consequences. Crucially, it also removes the sweeping power given to the Secretary of State in the Government’s clause to modify Section 98(4) of the Employment Rights Act, a power that could drastically shift the fairness test without proper parliamentary oversight.
Employees already have day-one protections against discrimination and automatically unfair dismissal, as they should. However, general unfair dismissal should be subject to a short and defined qualifying period that employers understand and workers can plan around. My amendment delivers that clarity. It also avoids a situation where employers are left wondering whether a dismissal based on fit or reliability will land them in court, even when handled with care.
We have to be clear that jobs are not abstract concepts; they are costs. In the early stages, even the most promising employee is an investment that takes time to repay. Employers need space to make those judgments. This Bill, as it stands, puts a thumb on the scale in favour of caution and against second chances. That is not fair, that is not just and that is not how we grow a dynamic, inclusive labour market. I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I have two amendments in this group, Amendments 50 and 67, which, like the amendments the noble Lord, Lord Sharpe, has just spoken to, which I have also added my name to, relate to day-one unfair dismissal rights. I thank the noble Lords, Lord Leong and Lord Katz, for making time to discuss this issue with me, for which I am very grateful.
The introduction of day-one dismissal rights will have a range of consequences: in particular, additional costs to business, which the impact assessment says will run to hundreds of millions a year and the Government themselves says will fall disproportionately on smaller businesses; and greater numbers of tribunal cases on an already overloaded tribunal system. But the most important impact is on people who are looking for work, especially those with riskier profiles: young people trying to get their first step on the employment ladder; people trying to get off benefits; people with health issues; people changing careers; ex-offenders and so on. The Government rightly want to get all of these into work, but the Bill will make that more difficult, not easier.
The current law, with the two-year qualifying period, allows an employer to take a risk on someone—to give them the benefit of the doubt—without facing the risk of an employment tribunal claim if it does not work out. This Bill ends that. An employee will be able to claim for unfair dismissal from day one, and the only valid grounds for fair dismissal will be capability or qualification to do the job, conduct by the employee or some other undefined substantial reason relating to the employee. These reasons are essentially the same as the current reasons for fair dismissal after the qualifying period in today’s law, and they cannot be changed by the regulations that the Government intend to use to create a new—again undefined—type of probation period. Employers will no longer be able to let someone go during a probation period because it is not working, without risking an unfair dismissal claim.
So what will be the result? Simply, employers will now have to think twice before hiring anybody with a less than perfect employment record. The Bill will make it harder for an employer to take a chance on such people, to give them the benefit of the doubt. To quote the Federation of Small Businesses:
“all it’s going to do is make small employers more reluctant to recruit and fearful of being open to vexatious claims … It’s those furthest from the jobs market who will then suffer, because the less risk small employers can afford to take, the fewer second chances, fresh starts and first jobs they’ll be able to offer”.
If anyone is in any doubt, the Government themselves state the same effect in the impact assessment. I will not repeat what the noble Lord, Lord Sharpe, quoted, but this is what the Government also know and think.
We already have a million young people not in employment, education or training—the so-called NEETs. If we want to solve that, we need employers who want to take them on, who will take a chance and give them that first all-important opportunity. So, why on earth would we want to make it riskier for employers to take that chance?
You would think, therefore, that there must be a good, well-evidenced reason why this Government would decide knowingly to make it more difficult for young people to get their first opportunity to work. I have asked several times during this process for evidence that the existing law is in fact causing any problem. There is no evidence given in the impact assessment, and I have had no real answer to that question. In Committee, the Minister’s answer was:
“We have worked with academics who are looking at this subject. I reassure the noble Lord that we have looked at this and are confident that the benefits in this particular case will outweigh the risks”.—[Official Report, 21/5/25; col. 333.]
That really is not good enough to take action that the Government themselves acknowledge will damage the life chances of the most vulnerable or those just starting out.
Employers do not dismiss people lightly, even during a probationary period; hiring and training are expensive and time-consuming, so employers are strongly incentivised to try to get it right. But it is a fact of life that sometimes, with no fault on any side, things do not work out.
As the Minister knows, the noble Baroness, Lady Finlay of Llandaff, wanted to speak in this debate, but, unfortunately, she cannot be here today. She has asked me to point out the impact this change could have on GPs. Not being able to let someone go if the fit or culture is wrong is extremely serious for a small business—as the noble Lord, Lord Sharpe, described—but in a GP practice it could put lives at risk. GP practices tend to be small teams who must work together well and with great understanding and support. An employee who does not fit with the rest of the team could lead to miscommunication, appointment issues and so on. In healthcare, such errors could compromise patient welfare and could even have fatal consequences. It is essential that people can be easily let go if it is not working out in the early stages of their employment.
Baroness Jones of Whitchurch (Lab)
My Lords, as we have said before, we will continue to consult on this but that is our preferred option at this stage. We think that is a reasonable balance between the current arrangements and some of the proposals we have before us today.
Lord Sharpe of Epsom (Con)
My Lords, I am enormously grateful to the Minister for her response. It was remiss of me earlier not to thank the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Neville-Rolfe for signing various amendments. I am grateful to the noble Lord for his comprehensive and powerful speech, and for reminding us of the comments made by the noble Baroness, Lady Finlay of Llandaff, about GP surgeries.
As the noble Lord, Lord Goddard, pointed out, we have heard from the police, doctors, businesspeople, lawyers, vets and the clergy, and there was no argument in favour of the status quo but there were powerful arguments for common sense. I wonder whether the silence from the Government Benches indicates a degree of unease in what we are debating—a change that will fundamentally alter the balance of risk in hiring, at a time when unemployment has risen in every month that this Government have been in power.
This clause will do nothing to promote fairness in the workplace. It will erode flexibility, choke opportunity and harden the barriers that those on the margins already face. The Minister argued that employers have nothing to fear from tribunals, but the Government’s own impact assessment says that they expect the number of cases to rise by 15%, so I am afraid I do not follow the logic of her argument.
Also, the Government’s own impact assessment admits—I will repeat this, even though the noble Lord, Lord Vaux, did not—that introducing day-one rights to claim unfair dismissal would
“damage the employment prospects of people who are trying to re-enter the labour market, especially if they are observed to be riskier to hire”.
As the noble Lord said, the Government already know that, so why are they doing this?
The noble and learned Lord, Lord Phillips of Worth Matravers, asked a very to the point question, and the noble and right reverend Lord, Lord Sentamu, made an argument based on his experience. Both noble Lords were, in effect, making the point that this is also the compassionate thing to do.
This clause is not ready, safe or wise. We need to avert what my noble friend Lady Neville-Rolfe described as a “looming tragedy”. Therefore, I seek to test the opinion of the House.
Lord Sharpe of Epsom
“1 Section 108 of the Employment Rights Act 1996 (qualifying period of employment) is amended as follows—(a) in subsection (1) omit “two years” and insert “six months”;(b) after subsection (5), insert—“(6) Subsection (1) does not apply if section 4(3)(b) of the Rehabilitation of Offenders Act 1974 (read with any order made under section 4(4) of that Act) applies.”.”Member’s explanatory statement
This amendment reduces the qualifying period for unfair dismissal from two years to six months, leaving in place the existing exceptions to that qualifying period in section 108(3) of the Employment Rights Act and adding a new exception in relation to spent convictions.
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment provides that the initial period of employment begins after the qualifying period for unfair dismissal.
Lord Sharpe of Epsom (Con)
My Lords, I shall speak to Amendments 105, 107 and 159 in my name. On Amendment 105, the Government are well aware that this Bill, in particular Part 1, will have a detrimental effect on seasonal work and seasonal industries, but they have failed to provide any clear definition of what seasonal work is. We therefore think it is essential that the Bill includes a precise definition to protect those vital sectors to ensure that the law reflects their unique and fluctuating nature. We are discussing the lives and livelihoods of thousands who work not in rigid year-round roles but in the beating heart of seasonal industries, such as agriculture, hospitality, tourism and the performing arts. Their work ebbs and flows with seasons, festivals, harvests and holidays, not according to neat quarterly reporting periods. Yet, under the present draft, a 12-week reference period is being proposed as a basis for determining what constitutes an established pattern of work.
Let us pause on that. Twelve weeks—barely three months or, one might observe, the precise duration of just one of the four seasons—is being treated as a sufficient measure for sectors whose very nature is defined by unpredictability and periodic intensity. That is not only an inadequate metric but, in many cases, an actively misleading one. A fruit farm may employ hundreds in May and none by August. A theatre technician might work flat out during festival season and then have no engagements for months, or be working elsewhere. A seaside hotel may be bustling in July but deserted in November. To take a short-term temporary rise in demand and then draw long-term legal assumptions from it about continuity of work is not merely a flawed approach but deeply unfair to both employers and workers.
Businesses cannot predict with such precision. They cannot bind themselves to a rhythm that the market does not keep. If they are forced to do so, they will, understandably, become more cautious. They will hire fewer people, reduce opportunity and retreat from flexibility altogether. Flexibility is not a sin, nor is it bad for an economy. In many cases it is the only practical means by which people—students, carers, parents and artists—can participate in the labour market. We must not make mistake irregularity for instability, nor seasonal work for insecure work.
This amendment does something elegant and essential: it defines seasonal work in clear, practical terms; it captures its recurring yet temporary character, grounded in the real operational rhythms of key sectors; and, crucially, it instructs the Secretary of State to have regard to this definition when drafting regulations. That is not an escape clause; it is a safeguard against blunt policy-making. We are not asking for a loophole; we are asking for recognition that not all labour is uniform and not all employment patterns can or should be squeezed into the same regulatory mould. If we pass this Bill without such a safeguard, we risk chilling seasonal hiring altogether—not protecting workers, just denying them opportunities.
I am grateful to my noble friend Lord Roborough for signing Amendment 107 and I look forward to hearing the answers to the questions that he asked, particularly on the suicide statistics. I hope the Minister is able to address those. Before turning to the matter at hand, I must begin with an unequivocal condemnation of the Government’s recent family farms tax policy. This disastrous measure has placed an unbearable strain on family farms, which are the very foundation of our rural communities and the heart of our national food security. Instead of supporting these hard-working families, the Government have chosen to punish them with policies that threaten their very existence. I urge the Government to commit today to reversing this tax immediately for the sake of our farmers, our countryside and our country.
Having said that, I turn with equal concern to the Employment Rights Bill. Although this Bill’s goal is to enhance worker protections, which is commendable, it tragically fails to take into account the unique realities of farm businesses and seasonal work. As we have heard, farming is unlike any other industry. It is defined by seasonal peaks and troughs, by work that is dictated by the weather and the cycles of nature, and by labour demands that can change from one week to the next. To impose inflexible employment rights designed for stable year-round jobs on these seasonal industries is to misunderstand them fundamentally.
Take, for example, the proposal to extend unfair dismissal rights from day one of employment, which we have just discussed, or the Bill’s restrictions on zero-hours contracts, which would further exacerbate some of these issues. Zero-hours contracts in agriculture are not a tool of exploitation but a necessary mechanism for managing the ebb and flow of seasonal labour. Moreover, the proposal to require compensation for cancelled shifts fails to consider farming’s intrinsic unpredictability. Decisions about work can hinge on weather conditions that change with little notice. To expect farmers to pay for cancelled hours when fields are unworkable is simply unrealistic and unfair.
Even the Bill’s provisions on the right to request flexible working place an undue burden on farmers. Agricultural work is highly seasonal and task driven, as my noble friend Lord Roborough explained. That makes flexible working requests difficult to accommodate in practice. Raising the threshold for employers to refuse these requests will hamper farms’ ability to plan and respond to fluctuating labour needs.
That is why Amendment 107 is not merely desirable but essential. By introducing a clear baseline definition of seasonal work, the Bill can be tailored to reflect the cyclical, temporary and weather-dependent nature of agricultural labour. This amendment recognises the reality of these industries, allowing for the necessary flexibility that the Bill currently denies.
Without this amendment, the Government risk imposing a one-size-fits-all regime that will force many farms to cease hiring, increase costs or even close altogether, yet again devastating rural communities and endangering our food security. I urge people around the House to support this amendment and send a clear message that the law must work with and not against the realities of seasonal work. Yes, we must protect workers, but let us also protect the farms and farmers who feed this nation.
I am grateful to the noble Lord, Lord Londesborough, for supporting Amendment 159. A few years ago, in a remarkable TV interview, a one-time Labour shadow Chancellor could only suggest “Bill somebody” when asked to name a business leader who supported Labour’s policies. Sadly, this Government’s Employment Rights Bill risks the same fate. Ministers cannot name a single small business that supports all the measures contained within it—if any exist at all. This Bill is being rushed through with little regard for the very businesses that form the backbone of our economy. The Government’s own impact assessment hints at a looming disaster but fails to fully capture its devastating effects.
The Federation of Small Businesses warned that this Bill is weighing heavily on the minds of small business owners, already forcing them to put investment and job creation on hold at precisely the moment when they are most needed. The noble Lord, Lord Londesborough, cited the ICAEW, and the Institute of Directors recently revealed that 72% of businesses believe this Bill will harm growth with 49%, so nearly half, saying they intend to hire fewer staff as a direct result.
Yet the Government insist that businesses will simply absorb these costs—a statement that is not only unrealistic but dismissive of the precarious financial position many small enterprises face. Larger firms may weather the storm but small businesses often survive on razor-thin margins, and their survival will come at the cost of lower wages, reduced opportunities, or a reluctance to hire new staff at all. The Office for Budget Responsibility has warned that these sweeping new regulations will likely have
“material, and probably net negative, economic impacts on employment, prices, and productivity”.
That, I fear, is masterly understatement.
Crucially, the Government have missed one vital fact—competition between employers, not simply regulation, best protects workers’ rights. Employers who want the most productive, loyal and committed workers must offer better pay and conditions to attract and then keep them. This natural market dynamic encourages fairness and opportunity far more effectively than heavy-handed mandates. This Bill would distort competition by imposing complex rules and costs that distract businesses from focusing on growth and innovation. Instead, they will divert precious resources into managing compliance and legal risk, and into erecting barriers rather than enabling opportunity. Ironically, this will lead to fewer businesses competing for talent and therefore fewer jobs being created.
The Government claim that these rules will improve job security and working conditions, but the reality is that the increased costs and risks will force many small businesses to rethink their hiring plans altogether. The FSB says so. They will either hold back on creating new jobs or cut existing ones, and some will reduce wages or cut hours to survive. The intended protections risk backfiring, making work less secure and less rewarding. Ultimately, the costs imposed by the Bill amount to a stealth tax that will fall directly on the workers themselves—an opportunity tax. Employers faced with higher compliance costs, the risk of costly tribunals and the restrictions on flexibility will have little choice but to pass these expenses down the chain. This means lower wages, fewer hours and fewer job opportunities, ensuring, paradoxically, that work simply does not pay.
I will say a quick word on my noble friend Lord Leigh’s Amendment 106. This Government like a consultation, but they have been unable to name any business they have consulted in relation to Part 1. My noble friend’s amendment is therefore elegant in its simplicity. It channels the Government’s enthusiasm and corrects their omission. I will support it if he chooses to divide. Finally, I remind the noble Lord, who I think is answering, that the noble Lord, Lord Howard, asked a very good question. Lest he has forgotten it, I would like to re-ask it.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I am grateful to all noble Lords who have spoken in this debate. Amendment 94 from the noble Baroness, Lady Noakes, would exempt specific groups from all or some of the provisions within Part 1. Since the 1980s, UK reforms have stripped back workers’ employment rights and turned the country into an outlier among advanced economies. The UK’s productivity has stalled more sharply than in other economies, with millions trapped in low-paid, insecure and poor-quality jobs. What is the result? Less money in working people’s pockets.
We are now paying the price. Millions of working people cannot afford basic living costs. In one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom; motivation is vanishing. Average salaries have barely increased from where they were 14 years ago. The average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crash, yet executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times the pay of the median UK worker, up from 50 times in the late 1990s. This is not sustainable, not fair and no way to build a healthy, productive economy. The UK must stop treating worker protections as a drag on growth. They are the foundations of it.
More than 2 million people could benefit from guaranteed hours and rights to payment on zero-hours contracts. More than 9 million people would benefit from protections against unfair dismissal from day one. Up to 1.3 million employees will get a new entitlement to statutory sick pay. These new rights, entitlements and protections provide a baseline minimum standard for security and dignity at work. They should not be something the Government of the day can freely take away. Furthermore, exempting any category of person that the Secretary of State deems fit will ultimately create a two-tier system of employment rights based on the politics of the day. While I understand the noble Baroness’s intentions, I reiterate that these provisions were manifesto commitments.
Business confidence is at a nine-year high, according to the Lloyds Business Barometer—
Lord Sharpe of Epsom (Con)
Before the noble Lord sits down, he has put up a heroic defence based on a variety of statistics, but is he aware of the latest survey from the ICAEW—the chartered accountants? It is regarded as very representative, surveying over 1,000 companies of various sizes. The survey shows the fourth quarterly decline in business confidence and that the expectations for employment are at their lowest level since the third quarter of 2020.
Lord Leong (Lab)
We got into government one year ago, after 14 years. Business confidence was very low then, and at the same time unemployment was on the rise. At the end of the day, we are making progress. The figures will take time to change, but I am confident that confidence will grow. Inward investment is coming in, which means more investment in business and growth. Furthermore, the FTSE index reached the 9,000 mark yesterday. What does that say? People have confidence to invest in British companies, so let us not talk down the economy.
Lord Sharpe of Epsom (Con)
My Lords, I cannot let that pass. The noble Lord will know that the FTSE represents mostly foreign earnings. It is not a domestic index.
Baroness Noakes (Con)
My Lords, I thank all noble Lords who have taken part in this debate, which has covered quite a lot of ground. I cannot pretend to be anything but disappointed in the Minister’s response. In fact, the first chunk of his response seemed to be some kind of lesson in the socialist view of life and had nothing to do with any of the amendments. While I respect the Minister’s own business expertise, he does seem to demonstrate that this Government do not understand business and do not understand the key to successful economic management.
I was pleased to hear that my noble friend Lord Leigh of Hurley intends to test the opinion of the House. I hope my noble friends on the Front Bench will seek to do the same when we reach their amendments in their places on the Marshalled List.
I was of course disappointed, but not surprised, that the Minister was not prepared to accept my generous offer of a reserved power to create exemptions to get the Government out of trouble in due course. I hope they do not come to regret their decision. You can take a horse to water, but you cannot make it drink. I have taken the government horse to water, and it has refused to drink. On that basis, I beg leave to withdraw my amendment.
Lord Leigh of Hurley (Con)
I rise to say simply that, in my experience, I have found that employees want to bring with them family members, often parents—particularly women want to bring a parent—and I am not sure that this will allow that anymore.
Lord Sharpe of Epsom (Con)
I thank the noble Baroness, Lady Fox of Buckley, and the noble Lord, Lord Palmer of Childs Hill, for their amendments and their introductions. I speak strongly in favour of these amendments, which address a crucial gap in the rights currently afforded to workers.
At its core, this is about fairness, autonomy and dignity; it is about giving working people real choice and a real voice when it matters the most. As we have heard, under the current law, a worker facing a disciplinary or grievance hearing has the right to be accompanied, but only by a fellow worker or a trade union representative. What of the workers who are not in the union, which, as the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lord Ashcombe pointed out, is most of them? What of those who work in small businesses, where asking a colleague to attend is uncomfortable or perhaps even counterproductive? What of those sectors in which peer support simply is not realistic? We must not confine workers to a narrow and outdated list of whom they are allowed to bring into the room at a time of maximum stress and uncertainty. As the noble Baroness, Lady Fox, so powerfully illustrated with her real-world examples, that causes problems.
This amendment would bring common sense, compassion and modern flexibility into law. This is about worker autonomy, trusting people to decide whom they need in the room with them. If we are truly to modernise employment rights, either amendment should be accepted.
Lord Palmer of Childs Hill (LD)
My Lords, I have signed this amendment in support of the noble Baroness, Lady Penn. I will not add to what many noble Lords have said, but I want to deal with one point.
The noble Lord, Lord Jones, talked about being too prescriptive. We need such prescription to help new fathers. The idea that this is mind-boggling is ridiculous. It would extend paternity leave from two weeks to six weeks, at 90% of pay. We are not talking about a revolution. We are talking about a modest increase to make some connection between fathers and their children in their very early years. It is needed, because the UK has the least generous paternity leave in Europe. It is good for fathers, bonding and mental health. It supports mothers, with a more equal division of care, and it is good for children’s development. It supports business, because employees will be happier, more contented and not stressed with trying to get back to the family home and their young children. This is not revolutionary. This is a modest step forward. I was delighted to be able to sign the amendment of the noble Baroness Penn, which we on these Benches support.
Lord Sharpe of Epsom (Con)
My Lords, I am grateful to my noble friend Lady Penn for bringing forward this amendment, which raises matters of genuine importance to families, working parents and, frankly, society as a whole.
The arguments that my noble friend has made for extending non-transferable paid leave for fathers and second parents is a serious and well-intentioned one. A more balanced system of leave can play a role in promoting gender equality, increasing participation in the labour market and supporting children in their earliest years. As my noble friend explained, it is therefore good for fathers, mothers and children.
I wholeheartedly agree that we should continue to review and refine our parental leave system so that it remains fit for the realities of modern working life. The commitment in proposed new subsection (1) to a comprehensive review is, in itself, a sensible and comprehensive step. I note that this was a manifesto commitment that should have been completed by now, yet the Government are only just starting it. Given the Government’s enthusiasm for consultation, that seems curious to say the least.
We must recognise and acknowledge the broader context in which we find ourselves. The Employment Rights Bill, as it stands, already promises to impose significant new obligations on businesses, at a time when many are still struggling with the increase to employer national insurance contributions, the Government’s constant U-turns, inflation and ongoing global economic uncertainty. Frankly, the Government have asked a great deal of British businesses in the last year—too much, in the view of many—and the effect of these measures has been entirely negative, undermining growth, reducing our competitiveness and rapidly stifling job creation, especially at the margins. If the Government were to think again and accept some of our perfectly reasonable amendments—on the right to request an unfair dismissal, for example—it would be easier to argue in favour of amendments such as this, which could be implemented after careful consultation with business.
While the intentions behind this amendment are commendable and there is certainly room for discussion about the long-term evolution of paternity and shared parental leave, without wider changes from the Government to their most damning plans, this is not the time, nor the Bill, in which to make these commitments. However, I hope the Government will continue to engage seriously with the questions and the comprehensive arguments advanced by my noble friend, and that we will revisit them in a context that allows for a comprehensive economic and perhaps demographic evaluation, along with genuine and meaningful consultation with businesses of all sizes and shapes, and indeed wider society as a whole.
Baroness Jones of Whitchurch (Lab)
My Lords, this has been an important debate on the issue of parental leave and pay. It has been wonderful to hear consensus on how important some of these fundamental issues are to individuals and to our society. I thank the right reverend Prelate the Bishop of Newcastle, the noble Baroness, Lady Penn, and my noble friend Lady Lister for their prior engagement on these important issues. The noble Baroness, Lady Penn, spoke eloquently and with conviction on these matters. I assure her that it is a conviction that I and the Government share.
We need to reform our confusing patchwork of parental leave and pay rights so that they are fit for a modern economy and deliver the wider societal benefits that noble Lords have raised in this debate. The Government are committed to making life better for families and we know that the current system needs improvement. This is why, through this Bill, we are making paternity leave and parental leave day-one rights, meaning that employees will be eligible to give notice of their intent to take leave from the first day of their employment. This brings these entitlements in line with maternity leave and adoption leave, simplifying the system. We are removing restriction preventing paternity leave and pay being taken after shared parental leave and pay to further support working parents in accessing these entitlements. Crucially, the changes in this Bill are not the limit of our ambitions.
Moving specifically to the amendments, Amendment 100 was tabled by the noble Baroness, Lady Penn. While I appreciate what the noble Baroness is attempting in her amendment, I regret that the Government cannot accept it. Let me reassure her that work is already under way to deliver on the spirit of her amendment. Since Committee, the Government have delivered on their manifesto commitment to launch their parental leave review. In doing so, they have listened carefully to concerns raised by noble Lords and stakeholders as to the details and scope of that review.
To answer the questions from a number of noble Lords, the published terms of reference make it clear that all current and upcoming parental leave and pay entitlements will be in scope of the review. The review gives us a chance to consider what we want the system to achieve, while giving due consideration to balancing costs and benefits to families, businesses and the Exchequer. As stated in the published terms of reference, we expect the review to run for 18 months. This will conclude with the Government producing a set of findings and a road map, including next steps for taking the reforms forward to implementation.
In response to my noble friend Lady Lister, we will want to engage and consult with stakeholders throughout that process to inform the conclusions of our work. In response to my noble friend Lord Jones, the call for evidence is already live; it began on 1 July.
I stress that the fact that the review is a manifesto commitment underlines the seriousness with which we are taking it and our obligation to act on its conclusions. However, we cannot predetermine the outcome of the review, nor can we justify the proposed cost increase without a thorough evidence-based assessment. This is why we cannot accept an amendment that would place a duty on the Secretary of State to lay regulations that would almost quadruple the rate and triple the length of paternity pay from current levels.
Amendment 102 seeks to make paternity pay a day-one right for all employees by removing the current continuity of working requirements. I reassure all noble Lords that we understand the importance of fathers and partners having time away from work to support their partner and to be with their developing family. As we have heard, the Secretary of State at the Department of Business and Trade recently met with Dad Shift and others at the launch of the review to hear first hand about their campaign. We are determined to do everything we can to encourage proper shared parenting for the improved well-being of both the parents and the children involved.
While we are removing the qualifying period for paternity leave to make it a day-one right, statutory pay remains conditional on an average earnings test and a requirement to work for the same employer for 26 continuous weeks. This is standard across all statutory parental pay work entitlements, including maternity pay. The only exception is maternity allowance, which is a benefit, not a work entitlement. Maternity allowance is designed to support health and recovery following childbirth for those who do not qualify for maternity pay.
Lord Sharpe of Epsom
“Definition of seasonal work(1) In making regulations under Part 1 of this Act, the Secretary of State must have regard to the specific characteristics and requirements of seasonal work as defined in subsection (2).(2) “Seasonal work” means work that—(a) is performed during a particular period or periods of the year,(b) recurs substantially in the same periods each year,(c) is directly linked to a predictable and temporary increase in demand for labour during those periods,(d) includes work in sectors where such patterns are common, including but not limited to—(i) agriculture and horticulture,(ii) the creative industries, including theatre and live performance,(iii) retail,(iv) hospitality, and(v) tourism and events, and(e) is entered into for a fixed duration not exceeding 26 weeks to meet the temporary demand.”Member’s explanatory statement
This amendment introduces a baseline definition of “seasonal work” to clarify its recurring and time-limited nature for the purposes of the Act.
Lord Sharpe of Epsom
“Exemptions for individuals employed by a farm business(1) Sections 1 to 13, 23, and 26 of this Act do not apply to employment by a farm business.(2) For the purposes of this section— “farm business” means any business, undertaking or activity carried on wholly or mainly for the purposes of agriculture, horticulture or forestry, and includes—(a) the growing of crops, including cereals, fruits, vegetables and flowers;(b) the rearing or fattening of livestock or poultry;(c) dairy farming;(d) the management of woodlands where ancillary to agricultural operations;(e) land used for grazing, mowing or market gardening;(f) any business conducted on land that is occupied under a farm business tenancy within the meaning of section 1 of the Agricultural Tenancies Act 1995 or section 109(3) of the Agriculture Act 1947.”Member’s explanatory statement
This amendment exempts all individuals employed by a farm business from the application of Sections 1 to 13, 23, and 26 of the Act.
Lord Sharpe of Epsom (Con)
My Lords, British farmers have been hammered by this Government. Requiring farmers to give guaranteed hours and day one rights on sick pay and unfair dismissal, as well as to make payments for cancelled shifts, is unworkable, so I would like to test the opinion of the House.
Lord Holmes of Richmond (Con)
My Lords, I will be blessedly brief. I tabled a similar amendment on this issue in Committee to ask the Government, through the Bill, to introduce regulations to designate a body to bring clarity, consistency and fairness and, in effect, to level the playing field in this area of umbrella businesses, on which the Bill is curiously silent. These entities differ dramatically from other sectors of the employment market, the recruiter market and many other sectors of the economy in not having consistency and clarity of approach in how they are treated.
My amendment in Committee suggested the designation of a body to address this issue. At that stage, it was taken by the Government and others around the Committee that I was suggesting the creation of an additional body. Not a bit of it. It was about the designation of an existing body rather than the creation of a new one. With this amendment on Report, I have moved that on and seek to ask the Government to introduce regulations to ensure that existing codes of practice in good standing—ways of operating that all bona fide businesses in this sector of the market already adhere to—apply to all umbrella businesses.
This extraordinarily moderate amendment would bring fairness, clarity, consistency and a levelling of the playing field. I very much hope the Government will accept it. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lord Holmes of Richmond for his Amendment 110. What this amendment does is simple but important. It encourages the Secretary of State to ensure that in bringing forward regulations under the Employment Agencies Act 1973, they draw upon existing recognised certifications and industry standards. These standards, developed and refined by responsible actors within the market, offer a ready-made baseline for compliance which the Government can and should use.
There is consensus that regulation of umbrella companies is overdue, but as we take this opportunity, let us ensure that the regulation is done well and in a way that is pragmatic, proportionate and effective. This amendment helps point us in that direction, so I hope the Minister can offer some reassurance that the spirit of the amendment will be reflected in the Government’s approach to umbrella companies.
Lord Katz (Lab)
My Lords, I am grateful to the noble Lord, Lord Holmes of Richmond, for tabling Amendment 110, which covers the regulation of umbrella companies. The amendment seeks to place an obligation on the Secretary of State to utilise pre-existing industry codes and accreditations as a basis for the regulation of umbrella companies.
We recognise the important role accreditation and trade bodies play in sharing information and best practice with their customers and members. The work of these bodies in the umbrella company industry has had some success in driving up standards. However, this success has been fairly limited, and we would not want to assume that an organisation that is a member of an accreditation or trade body is necessarily compliant with everything. We therefore believe that now is the right time for the Government to step in to protect businesses that already do the right thing and also protect workers.
Many in the umbrella company industry, and those who use umbrella companies, welcome regulation, especially as it will help to level the playing field. This includes public positions taken by the Freelancer & Contractor Services Association, Contractor Calculator, the Recruitment and Employment Confederation and several other bodies’ responses to the consultation run under the previous Government.
We have been clear since Clause 34 was introduced to the Bill that the Conduct of Employment Agencies and Employment Business Regulations 2003 will be amended to apply to umbrella companies. The Government recognise that the regulations in their current form are not appropriate to regulate the activities of umbrella companies. That is because the regulations predominantly focus on entities providing work-finding services or supplying individuals to end clients, which, generally, umbrella companies do not do. Where umbrella companies do provide such services, they would indeed already be covered under the regulations.
The Government have a statutory requirement to consult before any changes are made to these regulations, and as referenced in the recent roadmap publication, the consultation on umbrella companies regulation will be published this autumn. As part of the consultation process, the Government are keen to get views from trade unions, workers and industry bodies in the umbrella company sector. This will enable the Government to better shape policy development. Following consultation, an appropriate and proportionate umbrella company regulatory regime will be introduced in 2027. Once those regulations come into force, they will be enforced by the Fair Work Agency, which will take a risk-led and intelligence-led approach to its compliance regime.
I hope this provides some of the reassurance that the noble Lords, Lord Holmes and Lord Sharpe of Epsom, were seeking, and for that reason I ask the noble Lord, Lord Holmes, to withdraw his Amendment 110.
Companies House: Filing of Annual Accounts by Small Companies
Lord Sharpe of Epsom Excerpts(1 month, 2 weeks ago)
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Lord Leong (Lab)
The noble Baroness has obviously read various newspaper reports. I suggest to her, “Don’t believe everything you read from the papers”. As it stands now, most companies have to file abbreviated accounts, which, as the noble Baroness will know, is just a balance sheet. We are asking under this Act for them to file accounts. As I said earlier, we recognise the concerns raised by various stakeholders and we will set up next steps to address those recent concerns. When this happens, a statutory instrument will be placed and noble Lords can debate it.
Lord Sharpe of Epsom (Con)
My Lords, obviously, we welcome sensible steps to reduce unnecessary burdens on small business, but, given the alleged decision to reverse the reforms to small business account filing, have His Majesty’s Government done the necessary work to ensure that reduced financial transparency does not damage creditor confidence, does not hinder investor due diligence and does not restrict access to finance for small companies?
Lord Leong (Lab)
The noble Lord is absolutely right. It is important that people must be able to rely on the data that is on file with Companies House, whether they are doing business with a particular company or to determine whether the company’s financial statements are accurate. Most companies file their accounts on time and accurately. A small minority of companies do not file their accounts on time or, perhaps, properly. This Act hopefully will go after those small companies. We are not imposing burdens on small businesses. We just want to tackle economic crime.
UK Modern Industrial Strategy
Lord Sharpe of Epsom Excerpts(1 month, 3 weeks ago)
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Lord Sharpe of Epsom (Con)
My Lords, I genuinely admire the intent of the industrial strategy. The sectors that it highlights are sensible. I like the aspiration to focus on all regions and to nurture clusters. All that is very good, but it is a list of aspirations; it is not a strategy. A strategy is a plan of action designed to achieve a long-term or overall aim, and this is not that. All the aspirations in it are good and no one could reasonably argue with them, but the economy and the growth we need will not be delivered by this, or by fine words and noble sentiments.
Growth is not a slogan, it is a result. Indeed, the introduction to the industrial strategy says that
“the Government’s priority mission is to deliver strong, secure, and sustainable economic growth”,
but the Government continue to mistake the former for the latter.
Despite the Chancellor’s triumphant declarations that growth is the number one priority, the harsh reality confronting British businesses tells a starkly different story. The Governor of the Bank of England has delivered a sobering assessment that should give this House pause. He has categorically dismissed the Chancellor’s claims that Britain’s economy has turned a corner, warning instead that growth is slowing precisely because high taxes are biting deep into our economic foundations.
The Governor’s analysis is both precise and damning. What the Chancellor has hailed as evidence of economic recovery is nothing more than a temporary blip driven by fleeting factors that will not be repeated. British businesses, rather than preparing for prosperity, must now brace themselves for an economic slowdown of this Government’s making.
The employment figures alone should shame any Administration who claim to champion working people. Unemployment has risen every single month—all nine months—since the Government took office. This is not coincidence; it is consequence.
Perhaps most telling is the collapse in Britain’s international standing as an investment destination. The number of foreign direct investment projects has plummeted to the lowest level since records began 18 years ago. According to EY, the Government have made the UK a less attractive place to do business than Oman, the Czech Republic and Saudi Arabia. Before the Chancellor’s Budget last year, a PwC survey ranked the United Kingdom as the second most attractive place for investment in the world. That is our record: their record is destroying that competitive advantage in less than a year.
The human cost of these policy failures is becoming increasingly apparent. The British Chambers of Commerce has revealed that almost one-third of small and medium-sized employers have made redundancies or are actively contemplating job cuts as a direct consequence of the Government’s decision to hike employers’ national insurance contributions. Its survey of over 570 member firms found that 13% had already wielded the axe, while 19% were sharpening it for future use.
In times of global uncertainty, businesses look to their own Governments for stability and support. Instead, this Government have chosen to pile domestic chaos upon international volatility. They have created a perfect storm of their own making. They speak eloquently of cutting energy costs while systematically pursuing policies that guarantee the opposite outcome. Their obsession with net zero has created an energy regime that punishes British businesses with costs five times higher than those faced by their American counterparts.
The introduction to the strategy says on page 33:
“There can be no plan for economic stability or sustainable growth that does not include a credible plan for net zero”.
That is obvious nonsense: of course there can. This is a choice, and publishing elegant explanations about how they are going to alleviate the worst effects of their own policies is simply baffling, but it is not strategy.
While pouring billions of pounds into subsidies for renewables, they steadfastly refuse to end the windfall tax on oil and gas companies or to issue new licences for drilling in the North Sea. They have turned their backs on our own North Sea resources, preferring instead to import energy from abroad rather than harness the secure—that word deserves repeating—and reliable supplies beneath our own waters. The result is an energy policy that reads like a masterclass in economic self-harm, and also puts us at a strategic disadvantage in a dangerous world.
It would be remiss of me if I did not acknowledge credit where it is due. The commitment to free trade principles offers a glimmer of hope, and recent trade agreements suggest that the Government have not entirely abandoned the opportunities that Brexit provides. However, if we are truly to harness these benefits, we need comprehensive free trade deals, not the minor economic agreements that currently pass for trade policy.
Their promise to reduce regulatory burdens by 25% reveals another layer of the Government’s duplicity. This sounds precisely like telling businesses what they want to hear, while doing the exact opposite in practice. The Employment Rights Bill alone, which they proudly champion, will impose £5 billion—the Government’s own impact assessment number—in administrative costs on British businesses and introduce a new agency, which is a regulator by any other name. How is that part of a strategy to reduce regulatory burdens?
I suspect that this £5 billionfigure will represent only the tip of the iceberg. What the Government have failed to factor into their calculations is the true cost of empowering trade unions to constantly disrupt business operations, of making it infinitely riskier and more expensive to hire workers, and of creating a labyrinth of legal obligations that will tie employers in knots for years to come. Small businesses, already struggling with the highest tax burden in a generation, will find themselves drowning in compliance costs that will inevitably dwarf the Government’s modest £5 billion estimate.
The impact on young people seeking employment is particularly troubling. At a time when youth unemployment demands urgent attention, the Government are making it more expensive and riskier for employers to take a chance on inexperienced workers. The Employment Rights Bill, whatever its intentions, will price young people out of the job market at the very moment they need opportunity most.
We have also witnessed a hat-trick of U-turns from the Prime Minister, including on welfare reform. We were told that these measures were necessary to get people back into work. I suspect that the Government are not that interested in that after all. What is the point of an industrial strategy if there is no industry left? Will the cost of this U-turn simply mean more taxes, or will the Minister unequivocally rule out further tax rises today?
The Government have shown they do not understand how wealth is created and how economies grow. You cannot tax your way to prosperity, you cannot regulate your way to competitiveness, and you certainly cannot lecture businesses about growth while systematically undermining the conditions that make growth possible. The question before us is simple: will the Government recognise that their approach is failing, or will they continue down a path that leads inevitably to economic decline? The evidence is mounting, the damage is spreading and time is running short.
Baroness Kramer (LD)
My Lords, we on these Benches remember how powerfully business welcomed the industrial strategy produced by Vince Cable during the coalition years, and the shock and dismay with which it greeted the Conservative decision, when that party was in government alone, first to weaken it and eventually to scrap it. Such a strategy is vital to drive business investment, good jobs and prosperity.
It was notable that the Conservatives not only scrapped the industrial strategy but sold off the Green Investment Bank. How different our energy position could have been today, had that not happened. They also readied the British Business Bank for sale; I remember direct conversations with Sajid Javid and his relief that it was to be done away with. It survived only because Covid struck and it was needed to distribute Covid loans.
Those constructive moves were pure ideology: in essence, it was private good, public bad. So I listened with interest to the Conservative Front Bench today and there is a change of tone but—my goodness—this country would have benefited had that change started a few years ago.
We find some common ground in one area. The Conservatives did not exactly name it, but we have talked about it in the past. Raising employers’ NICs, especially SME employers, was the wrong way to start the revival of business and enterprise.
We support core elements of the strategy, but we still have questions. My noble friend Lord Russell, if he has the opportunity to speak on this Statement, will talk much more about energy prices, because we welcome the help of a wider range of energy-intensive industries. But why would we wait another two years to find out who will qualify? What about the burden of electricity prices on service industries such as hospitality?
If the Government want to see a quantum growth in exports, the answer is surely to negotiate to rejoin the EU customs union. By comparison, everything else is small beer. Have the Government noticed today’s FT article charting the decline in productivity—especially in London, which is key to the economy—since Brexit? It played such a significant role, with its impact on business investment and the opportunity to participate in supply chains. This Government are keen on U-turns, so why not make a U-turn that would actually bring money into the country and the Treasury and work to find our way back into the EU customs union?
A business in rural England involved in agribusiness and farming would be asking, “Why does this strategy have so little for me?”, especially in an era of food insecurity, climate change and tariffs. Can the Minister elaborate and provide some reassurance? A business looking for skilled staff would welcome the funding boost for skills but ask, “Why not the fundamental reform of apprenticeships that we need, and where is lifelong learning?” Today’s report of a sharp drop in entry-level jobs surely underscores that need. Can they have a place in the strategy?
A creative reading the importance of data as an asset—in fact, the industrial strategy is quite good on the creative sector, but not on the importance of data as an asset—would ask why the Government have refused to strengthen copyright transparency rules to prevent the US mega-techs scraping intellectual property without recompense. Where is the logic and the justice, particularly when data is identified as critical?
An innovative small business would welcome the Government’s intention to use procurement to drive enterprise, but why do the rules still mean that the Government can then take the intellectual property of that small business and, on the grounds of transparency, give it to its competitors free of charge? This is an issue that my noble friend Lady Bowles raises often, and it still needs an answer.
One issue in particular grates with me. The Government have simply not grasped the need for access to finance for the whole breadth of small businesses, not just priority sectors such as high tech. To build our communities and make sure that good jobs and prospects are available everywhere, we cannot be in a position where small businesses grow from retained earnings only. We need a genuine community banking sector. The high street banks and most alternative finance is not interested in meeting the need. The British Business Bank has a small £150 million pot over the next two years to support community banking, but it is minimal compared, for example, to the $300 billion in community bank financing that is the backbone of small business finance and growth in the United States. Does the Minister understand that this is a missed opportunity?
In many ways, we see this industrial strategy as a positive and strong step forward, but we will not be in a full position to judge it until we see practical support and solutions. Implementation and delivery are key. I hope that, by the time we have such clarity, my noble friend Lord Fox, whose knowledge in this area is so much greater than mine, is back on these Benches. I can tell your Lordships that he will expect answers.
Lord Leong (Lab)
We are not abandoning any industry or sector. This strategy identifies the top-growing sectors, the IS-8 as we call them, which make up 30% of the total business sector in this country but contribute some 60% of the national economy. Obviously, it is the Government’s position to support them. As for retail, hospitality and others, we have other support plans in place; for example, the business rates scheme.
Let us not beat around the bush: the high street is changing and people’s shopping habits have changed but, at the same time, we need to revitalise the high street. Hopefully, when we publish the small business strategy in due course, it will cover how we will revitalise the high street. In other parts of the hospitality sector, be it cafés, restaurants or pubs, it is a very mixed picture. Some pubs are closing down, but not because we have come into government; they were closing down way before then. In the case of the pub in my village—a very small village pub—a year ago it seemed only a matter of time before it closed down. It was sold to a young couple, they changed it and now it is flourishing; you cannot even get a table there. So, pubs need to change.
Lord Sharpe of Epsom (Con)
Wait until the Employment Rights Bill passes—then you will get a table.
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsTuesday 24th June 2025
(2 months ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-XI Eleventh marshalled list for Committee - (20 Jun 2025)
Lord Sharpe of Epsom
“Social mobility impact reportingWithin 12 months of the day on which this Act is passed, the Secretary of State must publish an independent assessment of its impact on social mobility.”
Lord Sharpe of Epsom (Con)
My Lords, in some ways, we are continuing a theme with Amendment 313 in my name. The Government have talked about supporting those on the fringes of the labour market; this is a goal that I hope we all share. We know that different individuals face different work challenges, whether due to educational background, employment history, health circumstances or socioeconomic factors. The question before us is whether this legislation achieves that laudable objective or whether it inadvertently makes it harder for precisely those individuals whom the Government claim they want to help.
I start with the day-one right concerning unfair dismissal, and I pose a fundamental question: why would any employer take on what might be considered a high-risk hire? Why would they take a chance on a young person seeking their first opportunity? Why would they hire a student who did not attend a top-tier university? Why would they consider a person from a lower socioeconomic background, who may lack conventional credentials but definitely possesses untapped potential? When employers face immediate legal liability for dismissal decisions, they naturally become more risk averse in their hiring practices. They gravitate towards candidates with proven track records, established credentials and minimal perceived risk. This is not callousness; it is rational economic behaviour in response to the regulatory environment.
The Government’s refusal to include a meaningful probationary period at this stage compounds the problem significantly. I have little doubt that, fairly soon, the Government will be arguing that they intend to consult and to continue with a light-touch probationary regime, which, it is suggested, could last for up to nine months. That is all well and good, but what does it mean in practice? What does the phrase “light-touch” mean and how will it be defined? Who are they going to be consulting, and on what? What are the Government thinking about this? It needs to be in primary legislation. Make no mistake: this uncertainty is affecting business decision-making now.
It looks as if the Government fundamentally fail to understand that employment relationships involve mutual discovery. In the short term, virtually all jobs represent a cost to business. Employers hire workers not because they are immediately profitable but because they are confident that, over time, these workers will develop skills, reach their peak performance and productivity, and ultimately become a net benefit to the company or employing organisation. This process of development and mutual learning requires flexibility. It requires the ability for both parties to recognise when a match is not working and to part ways without excessive legal complexity. By removing this flexibility from day one, the legislation creates a powerful incentive to hire only the safest and the most predictable candidates—precisely the opposite of supporting those on the fringe of the labour market.
The same perverse logic applies to the day-one right to sick pay. Consider the position of someone who has been absent from the workforce for an extended period. There are businesses that will make a point of hiring such individuals, recognising their potential and being willing to provide them with opportunities. But now the cost calculation has fundamentally changed. An employer considering such a hire must now factor in the immediate liability for sick pay from day one, combined with an inability to part ways if the employment relationship proves unsuccessful. The rational response is fairly obvious: avoid the risk entirely.
This is not theoretical speculation; it is how labour markets function when faced with regulatory constraints. No amount of academic opinion can state otherwise. I urge the Government to review the impact on social mobility, so that they can adapt the legislation to avoid the unintended consequences I have highlighted. Like my noble friend Lord Deben on the last group, I would like to be proved wrong on this. If I am, I invite the Government to gloat to their hearts’ content about that, but I think we need the evidence. I beg to move.
Lord Jackson of Peterborough (Con)
My Lords, I support my noble friend’s excellent amendment, as we reach the end of Committee. Before I get into the substance of that, I will offer some praise. Noble Lords know that, last week, I took issue with the Government Front Bench about the potential lack of response to letters from individual noble Lords who had raised specific points during Committee. The noble Baroness, Lady Jones, who is no longer in her place, took some issue with that, resiled from my analysis and said that it was not the case. However, over the last few days, I have received a plethora of epistles from the Government in my email. As Private Eye may have said in the past, are those two occasions by any chance related? That was my praise; I thank the Government for coming forward with those letters and we will hold them to account when we reach Report. I am grateful for small mercies, nevertheless.
I commend to the Government the excellent report of the Social Mobility Commission, State of the Nation Report 2024: Local to National, Mapping Opportunities for All. I probably say this at every juncture, but my noble friend’s amendment is helpful, because there is a cross-party consensus that we should all be working to help young people in particular into work, innovative employment, and skills and training. As we all know, and as has been found by apolitical third parties such as the charity the Sutton Trust, which focuses on improving social mobility, there are disparities across the country. There are sectoral and geographic disparities, and disparities in people’s backgrounds, race, ethnicity, age et cetera. As far as is practicable, we should be designing legislation that tackles issues around improving life chances, training and skills, and innovation.
More fundamentally, we need to be designing legislation that tackles endemic, entrenched inequalities, and that is what this amendment is about. My noble friend Lord Sharpe of Epsom is absolutely right that this is about opportunity cost. Many employers, given the chance, will try to help young people by giving them a chance to improve their life chances and skills, and by paying for their exams and training, et cetera—via apprenticeships, for instance. But the legislative regime will be such that they are encouraged not to employ that person, because they may have a disability, may be late to the employment market or may not be socialised—they may not understand the protocols of going to work each day, of being on time and of being dressed smartly, which are very basic things that we take for granted. That risk aversity, employers not wanting to employ those people, will have a negative effect as the corollary of this Bill.
Ministers have a chance at least to engage with this amendment and, when we come to Report, I hope to accept it; it would make a real difference to the lives of people who find it tough to enter and stay in the employment market. I encourage Ministers to look at the report to which I referred, and at the work that has been done to support the Bill and its laudable objectives. My noble friend offers this amendment in good faith in order genuinely to improve the Bill. On that basis, I hope that the Minister will look on it favourably and incorporate its ideas into the finished Bill.
Lord Sharpe of Epsom (Con)
I thank the Minister for his answer. I am also grateful to my noble friends Lord Jackson, Lady Lawlor and Lady Cash for their supportive comments and to the noble Baroness, Lady Fox, who raised some very interesting points.
I gently suggest to the noble Lord, Lord Leong, that we are not just talking about it either; we are proposing to do something about it. We want to protect social mobility, which is why we have tabled this amendment. He sounded disappointed that we have to keep returning to this debate—so are we, but we do not feel that we are getting meaningful answers on the subject of the consultation, which we have brought up on numerous occasions. Until we get those meaningful answers, we will continue to return to this debate.
The Government may not deem a comprehensive impact assessment necessary for these provisions, but they have not given a satisfactory response to the serious concerns raised about social mobility and opportunity creation. In our opinion, this represents a failure to engage with the economic realities of how the employment market functions, and the Minister knows this as well as I do.
We must judge policies by their results, not their intentions. Results are not dependent on the nobility of our intentions but on the incentives that policies create in the real world. This Bill creates the wrong kinds of incentives. It incentivises employers to become more risk-averse, not more inclusive. It incentivises the hiring of safe, conventional candidates over those who might bring fresh perspectives but lack traditional credentials. It incentivises the protection of those already in employment at the expense of those seeking to enter it. In the words of the noble Baroness, Lady Fox, it disincentivises taking a punt.
Do not just take my word for it, take those of the Institute of Chartered Accountants in England and Wales. Its most recent survey stated:
“Members say that, at a time when the government needs business to drive growth by taking risks, the Bill, along with these other pressures, will make businesses more risk averse. ‘We worry businesses will start playing it too safe, choosing a “safe pair of hands” over bold, innovative talent that could drive real change’”.
These are not the incentives of a modern, dynamic economy that seeks to maximise opportunity and social mobility. They are the incentives of a system that entrenches existing advantages and fundamentally will make it harder for those without them to break through. We think that is a tragedy. This legislation will be judged a failure because of the standards its proponents have set for it. When employment opportunities for young people decline, social mobility stagnates and those on the fringes of the labour market find doors closing rather than opening, we will see the true measure of these policies, and that will be regrettable. I beg leave to withdraw the amendment.
Lord Clement-Jones (LD)
My Lords, I will see my noble friend Lord Fox tomorrow and I will tell him what he has been missing. I think the noble Lord, Lord Leong, is already making history by using the phrase “very, very soon”—or was it “very, very, very soon”? In my experience, I do not think I have heard that, so it is probably arriving tomorrow morning.
Amendment 318 seeks to introduce specific provisions for dependent contractors. It proposes the insertion of a new section into the Employment Rights Act 1996, by way of a new clause after Clause 150. It is intended to address a significant gap in our current employment law by recognising essential rights and extending them to a growing segment of our workforce. This is a serious and rather surprising omission from the Bill; certainly, it is a gap my party promised to fill in its manifesto last year. I feel an obligation to put this amendment forward today.
The Minister spoke about employment rights in a modern labour market. I do not believe we can secure proper employment rights in a modern labour market without addressing the issue of the dependent contractor. We know that the nature of work has changed and is changing. More and more individuals are engaged to perform work or services personally, relying primarily on a single employer or contractor for their income, yet they fall outside the traditional definitions of employee and fully autonomous independent contractor.
These dependent contractors are often subject to a degree of control over how, when and where they work, leaving them in a precarious position, without adequate employment protections. No doubt this Committee will be familiar with many of those who work in the gig economy—delivery workers, contracted drivers, piece-rate workers, home workers and even consultants who work almost exclusively for a single client. Granted, some Uber drivers and Hermes couriers went to court and managed to establish that they are in fact workers and not independent contractors, but more needs to be done. We need explicit statements about the status of such workers and explicit rights set out in this Bill.
The amendment seeks to rectify the situation by defining dependent contractor status clearly within the Employment Rights Act. Crucially, it proposes to extend several key employment rights to these individuals, treating some of the measures in the Bill as applicable to them. Specifically, this amendment would ensure that dependent contractors are entitled to the rights set out in proposed new subsection (2) of my amendment. This includes payment at or above the national minimum wage for all work performed; the right to payment for cancelled, moved and curtailed shifts, which mirrors the vital protections the Bill introduces for zero-hours workers; statutory sick pay from day one of sickness, aligning with the Bill’s improvements to SSP; day one rights to paternity and parental leave, and the new right to bereavement leave.
The amendment also includes a statutory right to disconnect from work-related communications outside of normal working hours, and protection from detriment for exercising this right, as the Bill establishes for other workers. It also includes protection from unlawful deductions from pay, and against discrimination. It further includes an entitlement to guaranteed hours if regular and predictable hours are worked for a defined period, moving beyond just the right to request and aligning with the new provisions for qualifying zero-hours workers.
It is also important to note that this amendment respects the distinct nature of dependent contractor relationships. It acknowledges that, unless specified otherwise in their contracts or by future regulations, dependent contractors would not automatically be entitled to statutory redundancy pay or general minimum notice periods for termination, so there would continue to be a distinction between employment and dependent contractor status.
Furthermore, the amendment would empower the Secretary of State to issue further regulations to define key terms and the specifics of these rights, ensuring flexibility and the ability to adapt to evolving working practices. It would also mandate the issue of guidance, including an online tool to aid in determining dependent contractor status in disputed cases. By accepting the amendment, we would have the opportunity to bring fairness and greater security to a significant and growing portion of our workforce. We could ensure that individuals who are deeply reliant on a single employer received fundamental employment rights reflecting the modern realities of the work. I very much hope that the Government will support this vital addition to the Bill. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Lord, Lord Clement-Jones, for his amendment. As we consider this legislation, it is timely to reflect on how it would interact with one of the most significant shifts in our labour market in recent decades: the rise of the gig economy. This sector has delivered considerable benefits, including increased flexibility, new income opportunities and innovative business models. It has allowed many individuals to engage with work on terms that suit their circumstances, whether as a primary or supplementary source of income.
However, with any new form of work comes a degree of legal complexity. Our current employment framework was designed largely in a different era—one where work tended to take place in fixed locations, during fixed hours and under traditional contracts. The gig economy challenges many of those assumptions. For businesses, this complexity can lead to inconsistencies in regulation, administrative uncertainty and litigation risk; for individuals, it can mean uncertainty about rights and entitlements, and for policymakers, it raises the broader issues of whether and how the legal definitions of employment need to evolve to reflect modern working practices.
The Bill, while not focused exclusively on the gig economy, touches on matters such as workplace rights, regulation and the role of secondary legislation that will inevitably affect it. We should therefore consider whether the legislation provides sufficient clarity for businesses operating flexible models, whether it supports fair and predictable frameworks for all parties, and how future regulations will ensure that any changes to employment classifications or entitlements are based on clear, evidence-led analysis.
The question before us is not so much whether the gig economy is good or bad—it is part of the modern labour market, and it will obviously continue to grow and remain so. The more pressing question is whether the labour market is equipped to keep up with that evolution, and whether the Bill provides the right foundation for doing so. In that context, thoughtful and measured discussion about emerging work patterns such as dependent contracting, platform work, freelancing —which we discussed the other day—and other hybrid models are not only appropriate but very necessary. I look forward to further discussions with the noble Lord, Lord Clement-Jones, and others, on this subject.
Before I sit down, I thank the noble Lord, Lord Leong, for the great courtesy with which he has always conducted himself in his discussions and deliberations with our side. I enjoyed his valedictory remarks. I felt that he was perhaps slightly irked by the fact that we have had some relatively lengthy debates—perhaps because he did not agree with the premises of some of them. I would say very gently that that is the point of Committee; we are not supposed to agree, we are supposed to probe. As a former Home Office Minister, I have to say that these debates are not long; they are brief. These debates are like Usain Bolt; ours were like Mo Farah.
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 thank the noble Lord, Lord Clement-Jones, for tabling Amendment 318. He raises an important issue. As we have been discussing, the changing nature of work and the gig economy are a real challenge for us, and we recognise the complexity and shortcomings of the UK’s current employment status framework.
I can reassure the noble Lord that the Government have committed to consulting on a simpler framework for employment status, and this remains our intention. We have been clear that, as a result of the complexity, some of the reforms in the plan to make work pay will take longer to undertake and implement. We want to get the potential changes to the framework right, and we will consult on the fundamental aspects of employment law before taking action. I think that in part echoes the comments of the noble Lord, Lord Sharpe, who recognised the complexity and the need to think it through before we get it right. We are determined to follow this through and take action.
I am sympathetic towards the noble Lord’s aims to extend the protection of employment law. The self-employed make a huge contribution to the UK economy. As the noble Lord, Lord Sharpe, said, while many enjoy being their own boss and the flexibility that self-employment brings, others can find themselves highly dependent on one particular client with little choice, which can bring them challenges and problems.
I appreciate that the noble Lord is seeking to address this with his amendment by introducing a new employment status of “dependent contractor” and extending employment protections to those individuals. However, the amendment would further complicate what is already a highly complex area—one where, as I am sure the noble Lord knows, there have been several high-profile Supreme Court judgments in recent years. We want to avoid introducing an additional employment status before we have had the opportunity to reflect and consult further.
In addition, I can assure the noble Lord that the Government are committed to supporting and championing the self-employed. We have already announced a package of measures to help the self-employed thrive in good-quality self-employment, including measures to tackle late payments to small businesses and the self-employed. I urge the noble Lord to listen to our reflections and our determination to look at the whole issues around the gig economy, and to give us a little bit of space to do that. For this reason, I ask him to withdraw Amendment 318.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Baroness, Lady Bennett, for bringing forward this amendment requiring a review of safe homeward transport for workers. I also welcome her back from her brief visit to the Maoist utopia on her last amendment. The safety and well-being of workers, particularly those finishing their shifts late in the evening, is a matter of significant importance. Many sectors operate outside traditional working hours, and the challenges faced by employees in securing safe and affordable transportation home after 11 pm are real and varied.
Understanding these issues is crucial, especially for vulnerable groups, including women and girls, for whom late-night travel can present heightened risks. It is also important to recognise that safe transport arrangements can contribute positively to worker morale and retention and may even play a role in reducing crime or accidents. The review has the potential to shed valuable light on current practices and challenges and provide a basis for informed discussion about how best to support workers who face late-night journeys home. I look forward to the Minister’s response.
Lord Katz (Lab)
My Lords, I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 321. We recognise the concern underpinning the amendment and agree that workers finishing late at night should be able to travel home safely and affordably. We are aware that for some workers, particularly those in hospitality, healthcare and security, late shifts can pose challenges when public transport options are limited. We also acknowledge and welcome that some employers, including firms in the City of London, have taken proactive steps to support their staff with safe transport home.
While we do not believe that it is appropriate to legislate for a review at this time, I hope I can reassure your Lordships’ House that we are committed to supporting workers’ well-being and safety. That commitment is evident throughout the Bill. For example, as we discussed on the second day of Committee in early May—another opportunity for a history lesson, it seems so long ago—the Bill strengthens the right to request flexible working from day one of employment. This flexible working provision empowers workers and employers to agree working patterns that better suit individual circumstances, including, where appropriate and reasonable, avoiding late finishes. We are also taking steps to improve enforcement of existing rights and to ensure that employers meet their obligations to provide safe working conditions.
Although it is not the subject of this legislation, the Government are also committed to reviving, rejuvenating and investing in public transport, not least through the Bus Services (No. 2) Bill, the creation of GBR, improvements to rail services and the huge amounts being invested across the country, particularly in the north, in new transport projects, all of which will provide a greater level of options and service for not just people working late but those who want to enjoy the night-time economy and to use public transport more generally.
While we cannot support this amendment, we share the underlying concern and will continue to work to ensure that all workers are protected and supported. I therefore ask the noble Baroness, Lady Bennett, to withdraw her Amendment 321.
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsMonday 16th June 2025
(2 months, 1 week ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-IX(Corrected)(b) Amendments for Committee (Supplementary to the Corrected Ninth Marshalled List) - (16 Jun 2025)
Lord Sharpe of Epsom
“(2A) Subsection (1) only applies where the protected industrial action is the result of a properly conducted ballot in accordance with sections 226 to 232.”Member's explanatory statement
This amendment ensures that subsection (1) only applies where protected industrial action follows a properly conducted ballot under sections 226–232.
Lord Sharpe of Epsom (Con)
My Lords, the amendments in this group seek to address gaps in our current legislation by establishing clear exemptions from detriment protections when workers engage in unacceptable conduct during industrial disputes, while creating a comprehensive framework that restores balance to industrial relations.
I am willing to be corrected, but we do not believe that these specific protections against certain leverage activities currently exist in legislation, which is precisely why Amendment 252 is necessary. However, this forms part of a broader package addressing systemic failures in our industrial relations framework. In our assessment, leverage may manifest in various forms, but at its core lies a deliberate strategy to publicly intimidate and humiliate employers, compelling them to make concessions in industrial disputes that they would not otherwise consider. We fundamentally reject this approach as unacceptable in civilised industrial relations.
When describing leverage in the context of the Grangemouth dispute, Unite the Union explicitly stated:
“Leverage targets all areas of weakness of an employer … Leverage is the translation of an organising mind-set into the planning and implementation of a campaign strategy, underpinned by the escalation of pressure to create uncertainty”.
Even more concerning, Unite the Union expressed the view that in a leverage campaign
“the employer is routinely treated as a target to be defeated not a friend to be convinced”.
This adversarial approach treats employers as enemies to be vanquished, rather than as partners in resolving legitimate grievances.
Amendment 252 specifically identifies actions that constitute leverage: intimidation at picket lines; protests at company premises or the private homes of senior managers; the harassment of non-striking workers; and deliberate actions designed to undermine business continuity planning. Workers who engage in these intimidatory tactics should face the prospect of dismissal without recourse to employment protection.
However, the problems extend beyond leverage tactics. Amendment 251C responds to the troubling rise of wildcat strikes and unofficial action lacking democratic mandates. The Grangemouth dispute exemplifies this. Leverage tactics were employed in pursuit of objectives that may not have commanded genuine workplace support. If workers are to enjoy enhanced protections, those protections should be reserved for action properly sanctioned through domestic process under Sections 226 to 232 of current legislation.
Amendment 251G seeks to address the growing problem of co-ordinated action by workers outside of established collective bargaining frameworks. We have seen increasing instances of social media-organised workplace action that deliberately circumvents union structures and creates chaos for employers facing industrial action without recognised representatives to negotiate with.
Amendment 251D seeks to address the very real risk that, without proper definition, every minor management decision during a dispute could become grounds for a detriment claim. We have seen in other jurisdictions how broad definitions create litigation cultures, where employers face constant threat of claims for routine operational decisions. This amendment would prevent the trivialisation of genuine grievances while protecting employers from vexatious claims.
Our compensation framework amendments respond to documented failures. Amendment 251K would establish three bands of detriment severity—minor, serious and extreme—addressing the current lack of guidance that leads to wildly inconsistent awards. Amendment 251L would require proof of “actual financial loss”, preventing the speculative claims that proliferate without such requirements. Amendment 251N would restrict compensation to economic losses, preventing the concerning trend towards “injury to feelings” awards that represent a fundamental category error in industrial relations contexts.
Amendments 251E and 251F seek to address the stark reality that industrial action has already compromised public safety. During recent NHS strikes, emergency cover was inadequate, putting patients at risk. The 2019 London Underground strikes left commuters stranded, creating security vulnerabilities. Amendment 251E would provide essential legal clarity for employers who must prioritise continuity of critical operations. Without this protection, fear of litigation prevents necessary operational decisions. Amendment 251F recognises that some industrial action poses direct threats to public health and safety. Such considerations must take precedent over detriment protections.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I thank the noble Baroness for her contribution, and I thank the noble Lord, Lord Sharpe of Epsom, for tabling these amendments. I ask noble Lords to bear with me as I respond to each of them.
I want to be clear about why this clause is required. Clause 73 inserts new Sections 236A to 236D into the Trade Union and Labour Relations (Consolidation) Act 1992. New Section 236A is required because the Supreme Court ruled in April 2024 that Section 146 of the 1992 Act is incompatible with Article 11 of the European Convention of Human Rights.
Amendments 251C, 251F, 251H and 251J are unnecessary as their purpose is already covered in existing legislation. In the case of Amendment 251C, Clause 73 already requires a ballot compliant with Section 226, as specified in Section 219(4) of the 1992 Act, and makes it clear that protection is limited to cases where the action is compliant. Furthermore, in the case of Amendment 251J, secondary action is already prohibited under Section 224 of the 1992 Act, and the new protection of Section 236A will not apply where the industrial action was unlawful secondary action.
With regard to Amendments 251F and 251H, Section 240 of the 1992 Act allows for criminal prosecution of those who intentionally and maliciously endanger life or cause serious injury to a person by going on strike. Furthermore, if an act of an employer is motivated primarily by health and safety concerns, not for the sole or main purpose of preventing or deterring the employee from taking protected industrial action or penalising them, they have a defence from detriment claims, and the tribunals will consider whether the employer’s act or failure to act constitutes detriment.
Amendments 251D and 252 seek to prejudge a full and open consultation on this issue by setting out circumstances in which the detriment protection will not apply. We will prescribe detriments in secondary legislation only once we have conducted a comprehensive consultation seeking views across the public, including those of workers, employers, trade unions and all other stakeholders.
With reference to Amendment 252, that protection from prescribed detriment applies only where the sole or main purpose of subjecting the worker to detriment is to prevent, deter or penalise the worker from taking protected industrial action; for example, if a worker is subjected to detriment solely or mainly because they have harassed or bullied non-striking workers, the protection will not apply. I can be clear that criminal law will continue to apply to pickets.
Amendment 251E would be an unnecessary limitation on the protections from detriment. The prohibitions that new Section 236A places on an employer are clear: the sole or main purpose of the action must be to deter or penalise industrial action, which would not apply in the case of genuine maintenance of critical operations. Amendment 251G would be an unreasonable restriction to apply to detriment protections. Non-union members have the right to participate in official protected industrial action and, where that is the case, must be afforded the same protections from detriment as union members.
Amendments 251L and 251N would place a burden on individuals to prove that they had suffered financial or economic loss as a result of detriment, and would limit the circumstances where they were eligible for compensation. These hurdles and limits would potentially deter them from engaging in industrial action, limiting compliance with the Supreme Court ruling and Article 11.
Amendments 251M and 251P seek to restrict compensation with regard to business deeds. I want to be clear that an employer’s action or failure to act in relation to prescribed detriments will be a legal obligation that cannot be breached proportionately, and there is no legitimate business interest defence for seeking to deter or penalise an employee for taking protected industrial action.
Amendment 251K seeks to establish bands of detriment severity of “minor”, “serious” and “extreme”, and would require the Secretary of State to specify maximum compensation limits for each, which tribunals would have to comply with. New Section 236D is already clear that employment tribunals must have regard to any loss sustained by a claimant that is attributable to the actions of, or failures to take action by, an employer. Therefore, tribunals will award compensation based on what the tribunal considers to be just and equitable and will be able to proportionately determine the amount of compensation, taking into account all the relevant circumstances. I hope I have reassured the noble Lord. I therefore ask him to withdraw Amendment 251C.
Lord Sharpe of Epsom (Con)
I am very grateful to the Minister for his very comprehensive answer, and also to the noble Baroness, Lady Kramer, for her comments. I will have to read Hansard very carefully, because there is quite a lot of detail in the Minister’s answer, but I will say that for months we have listened to Ministers speak at considerable length about the urgent need to address bad actors in our workplaces. On a number of occasions, they have painted fairly vivid pictures of unscrupulous employers who exploit workers, flout employment law and engage in practices that undermine good industrial relations. However, having been presented with clear evidence of equally concerning bad actors within the trade union movement, the Government’s response has been, in effect, to stay silent. I repeated those Unite comments, and I will repeat them again here, that
“the employer is routinely treated as a target to be defeated not a friend to be convinced”.
To use a word that came up in the last group, that is not “constructive” or collaborative; that is very hostile in intent.
Without going into enormous detail, Amendment 251L, for example, would require proof of actual financial loss, which is a basic principle that would prevent speculative claims. I do not see how that would deter anyone with a legitimate claim from engaging in industrial relations, so how would their Article 11 rights be infringed, as I believe the Minister outlined?
We will have to come back to these amendments because, as I say, there was a good deal of detail in there. Once again, the Minister is relying on the mythical consultation; I would like to know when that consultation on these aspects of these amendments will take place. Of course, that also calls into question when he expects all this to be implemented—a subject to which I am quite sure we will return on a number of occasions this evening. But for now, I beg leave to withdraw.
Lord Sharpe of Epsom
“(4) The Secretary of State must conduct a review to assess the impact on emergency services arising from the repeal of the Strikes (Minimum Service Levels) Act 2023.”
Lord Sharpe of Epsom (Con)
My Lords, I support the amendments tabled after Clause 75, which would require the Secretary of State to assess the impact of repealing the Strikes (Minimum Service Levels) Act 2023 in terms of emergency service provision and the broader resilience of our public infrastructure during industrial action. These are pragmatic and proportionate amendments, and I regret that they are even necessary, but the manner in which Clause 75 proposes to repeal this legislation—abruptly and with no review, consultation or supporting evidence—leaves us no choice.
The 2023 Act was narrowly drawn. It applied only to a tightly defined set of sectors—ambulance services, fire and rescue, health, transport, nuclear decommissioning and border security—in which a complete withdrawal of labour poses serious and obvious risks to life, safety, national security or national functioning. It did not ban strikes or criminalise union membership. It allowed a minimum service level to be set, by regulation, after consultation with affected sectors. In other words, it was a public protection measure, a mechanism of last resort, and it mirrored provisions already in countries across Europe and beyond.
The Government now seek to repeal the law, seemingly on the basis that it achieved nothing. They will no doubt point to the fact that industrial action has continued since the Act came into force. Indeed, we know from statistics that 160,000 working days were lost to strike action in the first quarter of 2025 alone. However, that statistic proves nothing about the value, or otherwise, of the Act. It proves only that the right to strike continues to be exercised, as it should be.
The Strikes (Minimum Service Levels) Act was never intended to eliminate strike action, and its success should not be judged by whether workers stopped striking. It should be judged by whether the public was kept safe when strikes did happen, whether ambulances still reached heart attack victims, basic fire cover was maintained and border infrastructure functioned at a minimum level.
That is a relevant test, and the Government have produced no evidence to show that those minimum protections were either unnecessary or ineffective. In fact, if the Act truly achieved nothing, why the rush to repeal it? Governments do not normally spend valuable legislative time repealing laws that they believe have no impact. The truth is that this law has teeth: it provides leverage, and it establishes a legal baseline. The Government want to remove it not because it is useless but because it places limits on how far certain interests can allow disruption to stretch.
Even if one believes the Act was flawed, the responsible course would be to review its effects before repealing it, particularly when the law was so recent and implementation across sectors was still under way. Consultations on minimum staffing levels had not been concluded in all sectors, practical guidelines had only begun to take shape and the real-world application of the law was still emerging, so to repeal it now is to abandon public protection in the name of political symbolism, to uproot a tree before it even had time to settle and declare it a failure for not bearing fruit.
What is most striking, however, is that the Government have provided no evidence that repealing the Act will lead to improved industrial relations, despite making that very claim in the impact assessment for this Bill. It is asserted almost in passing that the removal of the Act will restore trust or reduce tensions in negotiations, but where is the proof of that? Where is the analysis? Where is the independent data or stakeholder feedback to support that optimism?
We are told to take it on faith that repealing a legal framework designed to protect the public will somehow produce a more harmonious climate between unions and employers. But we are not here to govern by faith—we are here to scrutinise and to ask hard questions, and to legislate with due diligence. I put this to the Minister directly: can the Government point to any serious evidence, whether from unions, employers, emergency service leadership or international examples, that repealing this Act will improve negotiation outcomes, reduce disruption or lead to faster resolution of disputes? If not, why are we legislating in the dark?
What is the Government’s alternative? If we strip away the only existing mechanism for maintaining safe service levels during strikes, what replaces it? Nothing in the Bill offers an equivalent safeguard. There is no provision for voluntary cover agreements, no incentives for minimum staffing, no rapid arbitration scheme and no contingency powers for life and limb services. We must assume that the Government are content to simply let key public services fall to zero capacity during industrial disputes. There will be no legal recourse, no duty to plan and no obligation to protect the public. That is not reform.
Meanwhile, the public, who continue to support the right to strike in principle, also expect a functioning state. They expect to be able to call an ambulance and get one; they expect transport to limp along during industrial disputes, not collapse entirely; and they expect public safety to be preserved. The amendments before us are not extreme; they merely require a clear-sighted review of the implications of this repeal, something that any responsible Government would do as a matter of course.
I urge noble Lords to support these amendments. If the Government are confident that repealing the Act would strengthen industrial relations and carry no risk to public welfare, they should have no objection to reviewing that impact and reporting to Parliament. If they are not confident, I submit that the repeal should not proceed at all.
In short, the issue here is not ideology; it is competence. We are about to discard the only statutory mechanism for ensuring minimum service level provision during strikes—a model recognised across Europe and endorsed by ILO principles—without evidence, without a plan and without a single word of accountability to Parliament. As I said earlier, that is not governance; it is recklessness. I beg to move.
Baroness Coffey (Con)
My Lords, I will speak to each of the three amendments in this group, starting with Amendment 254. A significant part of the reason for the minimum services, as my noble friend has just laid out, was to recognise that certain issues were affecting daily life.
It is worth while considering the timing of aspects of this, not long after the end of the Covid lockdowns, and recognising the economic challenges that our country faced. In combination with people’s need to access urgent medical support, bearing in mind that a number of activities had been cancelled many times already, the impact of seeing further strikes—cancelling a basic level of operation for patients—was starting to become potentially very difficult for the country to manage and for patients in getting better.
Other sectors were also discussed, and transport is a good example. I expect that none of the train operating companies used this, partly because many of them found different ways to keep trains running on a basic level—good examples of that would be Greater Anglia or South Western Railway. Greater Anglia will soon become a nationalised rail operator, so I would be very interested to know—I appreciate that the Minister may not have an answer today—what the practice will be in the future as a consequence of this. At the time, the operating company Abellio was able potentially to have gone to this piece of legislation to keep trains running, although it did not have to. Will nationalised rail companies be allowed to continue to keep services running so that users can get to work, or wherever they need to go, even though there are other people on strike? My expectation, candidly, is that no nationalised company will in any way go against any trade union strike. I cannot see a Labour Government Minister using that, so by repealing this legislation the Government will have lost a lever on behalf of many of the users of public services, or services put forward for public use, across the country.
At one point there was a discussion about schools. A similar issue had arisen with children during Covid, through no fault of their own and no fault of the teachers. Schools were kept open, by and large, physically for certain workers but also online. Undoubtedly, there was a challenge for education but also, frankly, the inconvenience to working parents when schools go on strike is particularly harmful and is disruptive to those families and the wider economy. But it was decided not to do that. We reverted back to making sure, in the spirit of the Act’s intentions, that we would keep it to what were deemed to be absolutely key public services. Otherwise, there would have been significant detriment to the wider public.
Amendment 258, tabled by the noble Lord, Lord Fox, and the noble Baroness, Lady Fox of Buckley, on a review into the impact on small businesses, would be very helpful. Huge changes are being put in place after nine years of a piece of legislation that from the economy’s perspective has worked reasonably well. I appreciate that the trade unions may not have liked it—and I recall it being voted against, back when this was being debated in the House a decade ago—but it is vital to the wider economy that we get our companies growing.
It seems to change every time, but I think that overall the number one mission of this Government is growth and the economy. Yet they are starting to do things, through this Bill and other situations, that seem to be driven by ideology rather than pragmatism and practicality. As a consequence, the basics and the consequences of some of this legislation, or the repealing of existing legislation, need to be considered in proper economic depth. I would love this to have happened with an updated impact assessment for us to consider before we conclude the Bill. By the way, I am grateful to the Minister for making sure that the letter the Secretary of State sent me has been placed in the Library so that every Peer can see it, but it worries me that that issue will not be considered further.
Amendment 256 links with the idea of a certification officer. I will come to series of amendments on that soon, so I am not sure how much of a certification officer role will be left. When it applies its thoughts on how it goes about the enforcement of the laws to which it is subject—and which it is also doing on behalf of trade union members—it should consider our role in the world and, in particular, how that contributes to make sure that we have a growing economy. I am sure all Members of your Lordships’ House would agree that we need it to grow.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the Minister for his response, and to my noble friends Lady Coffey, Lady Noakes and Lady Lawlor for their comments. I also thank the noble Baroness, Lady Kramer, for introducing the important amendment tabled by the noble Lord, Lord Fox, which I neglected to speak to but will do in a second, for which I apologise. Regarding the Minister’s assertion that the unions do not cause chaos, perhaps somebody should alert the RMT to that. By its own estimation, it cost the economy £5 billion in 2023. I would call that fairly chaotic.
As we conclude this debate, I express some disappointment at the Government’s response to the modest and reasonable amendments that we have tabled. We have simply asked for evidence. A number of the assertions that the Minister made are based on none whatever. We have asked for an impact assessment—we repeatedly ask for impact assessments on all manner of aspects of this Bill. I will take him up on his offer of that meeting. However, to come back to the implementation plan, it would be a much better-informed meeting if we had an implementation plan and a timeline. We will not drop this until the Minister can provide one. I am sure he will be working “at pace”, in his noble friend’s phraseology.
All we have done is ask for the Government to pause and consider the real-world consequences of repealing a law that was designed to protect public safety during times of industrial action. The Government claim, with some optimism, that removing the Strikes (Minimum Service Levels) Act 2023 will somehow improve industrial relations. However, when they were asked to produce any evidence from employers, unions, the public or independent experts, none was forthcoming. There is no analysis of outcomes, no tracking of safety impacts, no consultation findings and no plan for what replaces the protections that they are so eager to tear down. In short, there is no case, just conviction without content.
We could go on and talk about how this is not theoretical, and I would again point noble Lords to look at Birmingham. If the Government truly believe that the 2023 Act was flawed, they should prove the case with data, with stakeholder consultation and with a sober assessment of what ought to follow in its place, and not simply repeal it blindly, prematurely and with no credible alternative offered. We are not asking for the impossible. Our amendments ask for a review, a report and a basic assessment of impact. They are measured, responsible and in keeping with the House’s role in ensuring good governance.
I have two more points. I should have acknowledged and expressed very strong support for Amendment 258 in the name of the noble Lord, Lord Fox. That rightly seeks a review into the impact of Part 4 of the Bill on small and medium-sized enterprises, and I look forward to picking that subject up with him again when he is back.
I note that my noble friend Lady Coffey asked a very specific question about the nationalised rail industry. I am sure we would all like an answer, so perhaps the noble Lord will write with the Government’s intentions when it comes to governing that particular sector. For now, I beg leave to withdraw my amendment.
Lord Sharpe of Epsom
“Certification Officer: growth dutyWhen discharging its general functions, the Certification Officer must, so far as reasonably possible, act in such a way as to advance the following objectives—(a) the international competitiveness of the economy of the United Kingdom, and(b) its growth in the medium to long term.”Member’s explanatory statement
This new clause would require the Certification Officer to advance the objectives of the international competitiveness of the economy and its growth in the medium to long term.
Lord Sharpe of Epsom (Con)
My Lords, as my noble friend Lady Coffey mentioned a short while ago, we have been told by this Government on numerous occasions that growth is their number one priority. Growth, growth and more growth has become something of a mantra for Ministers, but the harsh reality is that their actions are consistently undermining this stated objective, and their latest economic performance demonstrates the urgent need for the amendment before us today.
The UK economy shrank more than expected in April. The standard measure of economic output, GDP, contracted a sharp 0.3% according to data from the Office for National Statistics. Additional costs on businesses were also levied during that month as employer national insurance contributions took effect, which businesses told the ONS played a part in their performance. The biggest part of the economy, the services sector, contracted by 0.4% and manufacturing dropped by 0.9%. The Government are manifestly failing to reach their stated growth target.
It is not enough for the Government to tell workers, businesses and the British public what they want to hear about growth while simultaneously implementing policies that actively undermine economic competitiveness. The trade union provisions in the Bill represent a perfect example of this contradiction: they expand the protections and rights that will inevitably increase costs, reduce flexibility and diminish our international competitiveness, all while the Government claim to be prioritising growth.
My amendment would require the Certification Officer, when discharging functions under the Bill’s expanded trade union framework, to advance the objectives of international competitiveness and medium to long-term economic growth. It represents a vital safeguard against the economic damage that unconstrained implementation of these provisions could inflict. The Certification Officer oversees trade union administration from registration to financial transparency to complaint procedures. Under the Bill, these functions will expand significantly as new rights and protections are introduced. Without a growth duty, there is no mechanism to ensure that the Certification Officer considers the broader economic implications of how these expanded powers are exercised.
We operate in an intensely competitive global economy. Our European neighbours and international competitors are not standing still while we load additional costs and restrictions on to British businesses. When the Certification Officer makes decisions about trade union regulation, registration and oversight, those decisions must be made with full awareness of their impact on our ability to compete internationally. Countries such as Germany, despite having strong trade union traditions, maintain regulatory frameworks that prioritise economic competitiveness. Singapore, Ireland and other successful economies have demonstrated that worker protection and economic growth are not mutually exclusive, except when regulators are required to balance these objectives explicitly.
This amendment ensures that as we expand trade union rights and protections, we do so in in a way that enhances rather than undermines our economic position. It requires the Certification Officer to ask not just whether a decision serves trade union interests but whether it serves the broader national interest in maintaining a competitive and growing economy.
The concept of growth duties is well established across government precisely because regulators have learned that narrow focus on single objectives can create unintended economic consequences. Financial regulators have competitiveness objectives because financial regulation that ignores competitiveness can drive business overseas. Planning authorities must consider economic impact because planning decisions that ignore economic consequences can destroy local economies. Environmental regulators operate within frameworks that balance protection with economic considerations because environmental regulation that ignores economic reality becomes counterproductive.
The offshore employment trend demonstrates exactly why such balanced approaches are essential. When regulators focus solely on enhancing protections without considering economic consequences, they risk creating conditions where the protections become meaningless because the activity they are meant to regulate simply moves beyond their jurisdiction. It would be extraordinary if trade union regulation, which directly affects workplace costs, flexibility and productivity, were exempt from such considerations. This amendment brings the Certification Officer into line with best practice across government by requiring explicit consideration of economic impact.
The Government may argue that trade union regulation should focus solely on worker protection without economic considerations, but this position is fundamentally flawed for a number of reasons, and recent evidence makes it increasingly untenable. For example, it would create an artificial separation between industrial relations and economic policy that exists nowhere else in government and has proven counterproductive in practice. Every other area of regulation requires consideration of economic impact precisely because regulators have learned that ignoring economic consequences undermines policy objectives. It would also contradict the Government’s stated priority of growth while simultaneously demonstrating the practical impossibility of separating worker protection from economic performance.
When companies such as The Legends Agency can build multi-million-pound businesses by helping UK employers avoid UK employment law, the Government’s approach has clearly failed on its own terms. I beg to move.
Baroness Noakes (Con)
My Lords, I am a great fan of international competitiveness and growth objectives for regulators. When the first one was introduced for financial services regulators in the Financial Services and Markets Act 2023, I thought it was an incredibly important addition to the way regulation of financial services is undertaken. Just last week, your Lordships’ Financial Services Regulation Committee issued its report on how that international competitiveness and growth objective is working, and I commend it to noble Lords.
I support what my noble friend Lord Sharpe of Epsom has said about applying the duty to the Certification Officer, but I invite him to consider whether there is a much more important area where such a duty should be applied in this Bill, which is to when the Secretary of State makes decisions about, for example, the enforcement provisions or making the various regulations that we know are necessary to make Part 1, and indeed other parts of the Bill, operate effectively.
The most important aspect of the Bill is going to be driven by what the Secretary of State does once it is enacted, but there is not an equivalent requirement on the Secretary of State to take into account the needs of international competitiveness and growth. It is essential for the Secretary of State to have that at the front of his mind when making regulations that will have such a big impact on the way that businesses operate in this country. I therefore commend my noble friend’s amendment, but if he is considering bringing something back on Report, he might consider something a little broader.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for tabling Amendment 256. We fully recognise the importance of supporting growth and international competitiveness across our economy, and we will of course continue to pursue policies that will deliver on our economic ambition. However, we do not consider this duty to be appropriate for the certification officer.
The certification officer is not a traditional regulator; they are an independent quasi-judicial officeholder. Their core functions are to oversee regulatory compliance fairly and impartially and to ensure trade unions and employers’ associations adhere to statutory requirements in relation to their finances and governance. This includes investigating complaints, maintaining accurate registers and ensuring that democratic processes are upheld. Imposing a duty to promote growth and competitiveness would cut across this role. It risks introducing competing priorities, blurring legal clarity and ultimately undermining confidence in the CO’s neutrality. We cannot require the certification officer both to conduct their judicial and regulatory functions and to deliver economic outcomes. The certification officer has no role in relation to the international competitiveness of the United Kingdom economy or its growth in the medium to long term.
As noble Lords will know, this Government have been active in requiring a number of regulators to apply a growth duty. Those bodies to which the growth duty currently applies are purely regulators—regulators that set strategies and make decisions that significantly affect the type, scale and location of economic activity in important sectors. The decisions regulators take can set the parameters for economic activity across the economy, and, of course, we recognise that; but the certification officer does not have this responsibility or power. We share the noble Lord’s commitment to economic growth, but it must be pursued in the right way. Furthermore, requiring the certification officer to follow a growth duty would not be practicable, and there is no evidence that imposing such a duty would have any meaningful impact on the UK’s growth or international competitiveness. It would be like asking a court to consider cases based on their impact on economic growth rather than on the evidence of the case.
For those reasons, I must ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 256.
Lord Sharpe of Epsom (Con)
My Lords, I thank the Minister for her answer, but I have to say that I am unpersuaded. The gist of it was that the certification officer does not have either the responsibility or the power, but by definition this amendment would deliver both those things. I completely agree with my noble friend Lady Noakes, and I shall take her suggestions on board and have a careful look at this. I do not believe that this amendment and the suggestions she made are mutually exclusive; in fact, if anything, they are very complementary. I thank my noble friend Lord Fuller for his comments, which, frankly, were just an expression of complete common sense.
I express my disappointment at the Government’s rejecting this amendment. I think it reveals more about the Government’s true priorities, frankly, than all the rhetoric about growth that we have heard. The Government are absolutely right to identify growth as a priority, but they will not find it in this Bill. In fact, there is nothing in the Bill that will bring any growth. I challenge the Minister to identify a single provision in these hundreds of pages that will increase productivity, enhance competitiveness or create jobs. The Government’s own impact assessment suggests the same: it is a document notably silent on growth benefits, while cataloguing increasing costs and regulatory burdens.
If the Minister is genuinely confident that the Bill will support growth, and if she truly believes that the expanded trade union protections and enhanced worker rights will somehow boost economic performance, I am surprised and somewhat mystified that she will not accept this amendment. The argument was that the certification officer is not a traditional regulator, but they still have a regulatory function, so I do not really see what difference that makes, frankly. What could be the objection to requiring the certification officer to consider growth when discharging functions under a Bill the Government claim supports growth? If these provisions truly advance economic competitiveness, a growth duty should be welcomed as a validation of the Government’s approach.
I could go on, but I do not see the point. The Government have rejected a genuine opportunity to demonstrate that their growth rhetoric has substance. The amendment would have required no fundamental changes to their approach, simply consideration of the economic impact when implementing trade union provisions. It would have aligned trade union regulation with best practice across government, while preserving all the work protections the Government claim to champion. The fact that they cannot even accept a modest requirement demonstrates that the commitment to growth is hollow rhetoric. It is designed to disguise an agenda focused more on trade union empowerment, regardless of economic consequences. How very disappointing for our great nation. I beg leave to withdraw the amendment.
Baroness Coffey (Con)
My Lords, I have tabled Amendment 257B simply because I did not see the answer in the Explanatory Notes to the Bill. This is quite a straightforward one for the Minister.
In Section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992, the regulations are normally done by negative resolution—or the annulment, as set out in new subsection (6). However, I want to understand why the Government felt that these particular regulations needed to be done through the affirmative procedure. They are not the only changes—that I am aware of—in the Bill to that section, or others, of the Act. Can the Minister explain why they have been singled out? Given the trend of your Lordships’ House over many years, why do we not move to having affirmative resolutions instead of annulments for these ones in the future? I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendments; they are measured, necessary and principled amendments to Clause 85, which rightly restore a degree of parliamentary scrutiny that had been quietly eroded in the original draft of the Bill. As we stated at Second Reading, there are 173 delegated powers in the Bill, which is unacceptable—not just to those the legislation will impact, but to the House.
In the Minister’s contributions on similar legislation in the past, she expressed her strong reservations about the use of delegated powers. I recall well her interventions, which were made with clarity and conviction, as she tabled amendments recommended by the Delegated Powers and Regulatory Reform Committee. But we now find ourselves considering a clause that does precisely what she once warned against because it carves out certain sensitive and constitutionally significant areas and exposes them only to selective scrutiny.
The original version of Clause 85 created a two-tier system. Some regulations would require affirmative approval from this House, while others—no less consequential—would not. This piecemeal approach to oversight is not only undesirable but unnecessary. Regulations made under Section 293 of the Trade Union and Labour Relations (Consolidation) Act are not merely technical: they pertain to fundamental matters, such as the rights of trade unions, the balance of power between employers and employees, and the protections afforded to those who take lawful industrial action. It is therefore only right and proper that all regulations made under this section should be subject to the affirmative resolution procedure: they should be laid before and approved by both Houses of Parliament.
My noble friend’s amendment achieves this. It does so with economy of language, but with significant constitutional consequence. It removes the artificial distinction introduced by subsection (5), and instead applies a uniform standard of scrutiny to the entirety of Section 293.
Since the Government took office, many of us across these Benches have expressed concern about the growing use of skeleton Bills, Henry VIII clauses and broad enabling powers that allow Ministers to legislate without adequate consultation or scrutiny. This amendment is a quiet but firm step in the other direction back towards balance, principle and the proper functioning of Parliament.
Again, I thank my noble friend for tabling her amendment, and I hope the Government will not merely accept it but embrace it to show their commitment to transparency and to the constitutional propriety of this House.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for his contribution. I remember standing before him during the PRaM Bill and we discussed this very matter. Some of this negative resolution is required because not only does it save parliamentary time but it is technical. Anyway, I thank the noble Baroness, Lady Coffey, for tabling Amendments 257B and 257C, which would make all the powers under Clause 56 subject to the affirmative procedure, as well as existing regulation-making powers that are currently covered by the negative procedure, by virtue of current Section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992.
It is worth noting that most of the access regulations are already subject to the affirmative procedure. Indeed, as the noble Lord, Lord Sharpe, mentioned, only four of the 12 delegated powers are subject to the negative procedure. Given the technical nature of those delegated powers, and to save parliamentary time, the Government are of the position that making them subject to the affirmative procedure would not be appropriate.
Further to this, as mentioned in previous debates, all regulations under Clause 57 will be consulted on via public consultation, the outcome of which will be published for all to see. This is an important process, which will help ensure that our policy development is informed by the practical experience and needs of trade unions, businesses and stakeholders.
The noble Baroness, Lady Coffey, and the noble Lord, Lord Sharpe, will have noted in previous debates in this place that the Delegated Powers and Regulatory Reform Committee said that
“it is heartening that in a Bill with so many delegated powers”—
the noble Lord, Lord Sharpe, mentioned 173—it had
“only found four on which to raise concerns”.
Clause 56 was not one of those. Therefore, I ask that the noble Baroness, Lady Coffey, to withdraw Amendment 257B.
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.
Lord Sharpe of Epsom
“Impact on industrial action (1) The Secretary of State must, within 12 months of the day on which this Act is passed, publish an independent assessment of the impact of this Act on the number of working days lost to strike action.(2) The assessment must include data comparing the number of working days lost to strike action in the 12 months following the passing of this Act with the 12 months prior.(3) The Secretary of State must lay a copy of the assessment before Parliament.”
Lord Sharpe of Epsom (Con)
My Lords, my Amendment 262 concerns an issue of considerable importance, not merely for those involved directly in industrial relations but for the health of our broader economy, the stability of our public services and the legitimacy of this legislation. The amendment would require the Government to commission and publish, within 12 months of Royal Assent, an independent assessment of the impact of this Act on the number of working days lost to strike action, specifically comparing the 12 months following its enactment with the 12 months preceding it. That report would then have to be laid before Parliament. This amendment is modest in scope. It does not seek to obstruct the Bill or alter its provisions. It merely seeks transparency, accountability and, above all, vital evidence-based analysis in due course.
There is a striking—if I may use that word without inflaming the debate—absence of hard data or persuasive analysis in support of the central justification for these changes, namely that repealing certain elements of the Trade Union Act 2016 will result in better industrial relations. Indeed, the Government’s own impact assessment acknowledges that there could be a benefit
“if Trade Union reforms lead to better industrial relations”.
I emphasise “if”. Hope is not a good substitute for policy. Nor should legislation of this consequence be built on assumptions rather than analysis. I will therefore structure my remarks around three core questions which the Government have failed to answer convincingly and which this amendment would help to address.
If we are to repeal elements of the 2016 Act, we must first understand what standard the Government are using to declare that Act a failure, or at the very least to assert that it is no longer fit for purpose. The Trade Union Act 2016 introduced significant changes: minimum turnout thresholds for strike ballots; requirements for information on ballot papers; limits on picketing; and restrictions on facility time in the public sector. It was controversial, certainly, but it was also justified by the Government of the time as necessary to ensure that industrial action had a strong democratic legitimacy, and that the wider public were protected from excessive disruption.
Now we are told that these measures must be rolled back, but we have at no stage been told what objective, or even subjective, measure of success or failure is being applied. Are we to believe that the 2016 Act failed because it did not eliminate all industrial action, because it was unpopular with some stakeholders or because it placed an administrative burden on unions—or, more worryingly, is it being repealed simply as a matter of political preference? To look at some figures, according to the Office for National Statistics, the number of working days lost to strike action was at a historic low throughout the period following the 2016 Act until a sharp rise in 2022-23, partly driven by inflation, the consequential erosion of real-terms pay and broader discontent in the traditional public sector.
Are we being told the legislation was ineffective because strikes still happened in 2022? If so, that ignores the very different macroeconomic context we now face. Or is the claim simply that industrial relations will somehow improve if these legal constraints are lifted? In any of those cases we must ask: compared with what? Compared with the pre-2016 environment? Compared with our European neighbours? Or compared with a model of workplace consensus that may not exist in reality? Without a baseline for comparison, the Government’s argument is essentially unfalsifiable and unjustifiable.
Let us assume for the sake of argument that the Government believe that these changes will lead to more equitable bargaining, greater union engagement and ultimately improved relations between employers and workers. Even if that were true, we must still ask at what cost. If these reforms lead to a rise in industrial action, that will have implications not only for the affected sectors but for the public at large. Trains will be cancelled, schools will be closed, hospital appointments will be postponed, bin collections will be missed and courts will be adjourned. These are not abstract costs, so it is extraordinary to repeal a major piece of industrial relations legislation without offering any quantification of the risks of increased disruption and without explaining how those risks will be mitigated.
The impact assessment leans heavily on the idea that increased union involvement could lead to improved communication and better outcomes, and perhaps it could. But the fact remains that the cost of getting this wrong will be borne not by policymakers but by the public. That is why this amendment is so crucial. It simply asks the Government to return to Parliament within a year and tell us whether this has worked. Has industrial action decreased or increased? Are we seeing the promised harmony or the feared escalation? If it is the latter, we as legislators have a responsibility to know that and to act accordingly.
Perhaps the most fundamental question of all is: what actual, empirical, verifiable evidence do the Government have to support their central claim? We have not been given a retrospective analysis of the Trade Union Act 2016 and its impact. We have not been provided with consultation data that robustly supports repeal. We have not seen sector-by-sector breakdowns of how these measures will improve the industrial landscape. We have not even seen clear articulation of the problem the Bill is trying to solve. Indeed, the rationale appears to be more ideological than evidential. It seems to be based on the belief that loosening legal constraints will somehow foster good will and reduce conflict. All the academic research and literature on industrial relations remind us that legal frameworks matter, that institutions shape behaviour, and that rules, when clear, consistent and fairly applied, help prevent conflict and not exacerbate it.
If the Government are so confident in their position, why not test it? Why not commit to measuring its effect? Why not, a year on, lay before this House and the other place an honest assessment of whether their theory of change has delivered the desired result? If the evidence proves them right, they will be vindicated. If not, Parliament should be empowered to revisit the legislation. There is, after all, considerable flexibility inherent in legislation so riddled with Henry VIII powers. I look forward to the Minister’s reply and I beg to move.
Lord Fuller (Con)
My Lords, I rise to support Amendment 262 in the name of the noble Lord, Lord Sharpe, and others, because I want to talk about a simple economic truth. One of the provisions in the Bill will reduce the thresholds at which industrial action may be called or authorised. The truth is that when you reduce the threshold, the likelihood of industrial action does not grow linearly; it grows exponentially. The amendment is needed because the Bill, sadly, will provide the world with a real-life experiment that will inform political and economic science of that simple truth.
It could be worse than that. My experience comes from local government and my relationship with the National Joint Council. Local government employs 1.8 million local government workers. There are three principal unions: Unite, UNISON and GMB. Within the cohort of local government workers, I have negotiated with the craft workers, the Salisbury workers and the coroners. There is a red book, a green book and a blue book; there is even a gold book covering senior fire officers and police officers. There are 136 different activities that local authorities do and, of course, there are 350 principal councils. I have engaged with all this complexity over about 10 years sitting on the National Joint Council, the device through which the employers engage with the unions. I have sat alongside the noble Baroness, Lady Taylor, on that body for many years, and now we both find ourselves in here.
As part of the gang of four, the top four local government councillors engaged in these important negotiations, I have learned a lot of things. There is less beer, there are fewer sandwiches and there are palatial premises built by one of the unions in Euston. It has not been easy work, but we have had a series of national agreements engaging on a respectful basis. It has been valuable work. The important point is that there have been powerful incentives to avoid industrial action. The bar has not been impossible, but it has been a high bar against which strike action must be called. It has sort of worked, because there has been an equilibrium between the employer and the employees across 1.8 million unionised workers —just under a third of them all—in this country.
That equilibrium has meant that when there is a strike, it is serious. When people down tools, it is in the news. The Birmingham bin strike is a case in point: there is a strike, and it is serious. My anxiety about so many of the provisions in the Bill is that it is going to dissolve the powerful incentives to avoid industrial action and instead, arithmetically and structurally, put in the provisions where it is encouraged. The Bill sets the wrong balance, because we are not talking about simple organisations with single unions and small workforces in local government. We are talking about a very complex landscape. If you reduce the thresholds, people are more likely to strike because a minority, as little as 10%, of workers could call a strike. When 10% hold the 90% over a barrel, that is clearly not in the interests of the public; it is not in the interests of the workers; and I do not believe that in the long term it is in the interests of the unions.
Amendment 262 calls for a robust assessment of the effect of the Bill on days lost to industrial action. Not only is that the right thing to do but we would do a service, because it would demonstrate once and for all that simple efficiency of labour relations: if you reduce the threshold to call industrial action, the number of days lost to strikes will go up geometrically. I regret that we are going to do a service to political and economic science, but if that is the way it is, Amendment 262 is the way to achieve it.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Fuller, and the noble Baroness, Lady Lawlor, for their contributions. I will be brief; I do not want to stand between noble Lords and their dinner break.
I thank the noble Lord, Lord Sharpe of Epsom, for his Amendment 262. We have already debated impact assessments at great length and I will not repeat the same arguments. Any industrial action is regrettable and all parties have a duty to seek a resolution to such disputes. Failure to do so is basically a lack of management and leadership by all. We have also debated the repeal of the 2016 Act in previous debates. I will not mention that either. Furthermore, it is a manifesto commitment.
Despite its good intentions, the amendment would impose a review procedure that in effect repeats what the Government already intend to do. We recognise the importance of ensuring that the impacts of these policies on workers, business and the economy are considered, and that analysis assessing these impacts is published. Our impact assessment also outlines a plan for monitoring and evaluating the impact of the Bill and subsequent secondary legislation.
As noble Lords will see from the impact assessment, our Employment Rights Bill could have a positive direct impact on economic growth, helping to support the Government’s mission for growth and ensuring that we raise living standards across the country and create opportunities for all. The Bill is expected to benefit people in some of the most deprived areas of the country by saving them up to £600 in lost income from the hidden costs of insecure work.
To conclude, I reassure your Lordships that we already have robust plans in place to assess and review the Bill’s impacts, including on industrial action. My commitment in an earlier debate to meet noble Lords to discuss the impact assessment further still stands. I therefore ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 262.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Lord, Lord Leong, for his answer, but I am, of course, disappointed. I must say to him that of course he could not repeat the argument about the impact assessment because it is manifestly inadequate and overreliant on the word “could”, which he just used again.
So it is with a sense of frustration that I close this debate on Amendment 262 because, let us be blunt, the Regulatory Policy Committee has already deemed the Government’s own analysis inadequate. It found that the assessment underpinning this Bill failed to consider important variables, lacked robust modelling of strike-related costs and omitted any real evaluation of how the repeal of the 2016 Act provisions might drive up the number of working days lost to industrial action. That is criticism born not of political bias but of technical expert judgment, but the Government persist in asserting that an independent stocktake of actual strike days would be superfluous.
During the Bill’s passage, no fewer than 160 government amendments were tabled on Report, some of the most consequential of which would fundamentally alter the trade union landscape: changes to ballot thresholds, as my noble friend Lord Fuller explained; adjustments to picketing rules; and alterations to facility time arrangements. Many came late, with scant time for meaningful consultation and no accompanying update to the impact assessment. In effect, we are being asked to sign off on a statute the final shape of which was revealed only in piecemeal fashion and for which no comprehensive evaluation has ever been produced. There is more flesh on the skeleton now, but it still makes for a pretty unsavoury sight.
The consequences of this are already evident. Businesses stand in limbo. They are unsure how to prepare—again, the lack of an implementation plan. HR directors, legal advisers and finance teams are all left guessing which rules will apply. If the Government can point to a single one who is not, could they please say so, because we have spoken to very many and cannot find a single one who is not left guessing? They require clarity, not uncertainty. They need to know, for instance, whether a union ballot will again require a 50% turnout, or whether the conduct of pickets will be governed by new or old prescriptions. In their absence, investment decisions are deferred, retention and, especially, recruitment strategies are on hold and the workforce, unsure of its rights and obligations, faces unnecessary anxiety.
To deny acceptance of this amendment is to deny the very notion that policy should be tested against outcomes and treats legislation as unchallengeable, rather than a living instrument whose impacts must be monitored, and it tells employers, workers and the public alike that we legislate in the dark. So I regret deeply that the Government have chosen to reject the amendment. Doing so signals a reluctance to subject themselves to the discipline of evidence, shirks the responsibility to measure the real-world consequences of their own handiwork, and turns a blind eye to the limbo in which businesses and the public languish. That is not acceptable. If the Government’s reforms truly will deliver better industrial relations, they should welcome the chance to prove it. If Ministers are as confident as they claim to be, let them fast-track the assessment. Let them demonstrate that strike days are falling, that workplaces are more harmonious and that public services are protected. For now, I beg leave to withdraw the amendment.
Corporate Liquidations
Lord Sharpe of Epsom Excerpts(2 months, 2 weeks ago)
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Lord Leong (Lab)
I thank the noble Lord for that question. All I can say is that in my long years of business I have learned one thing. Turnover is vanity; profit is sanity. If companies keep chasing turnover without the support of working capital, they will be on the first and pretty fast step to failure.
Lord Sharpe of Epsom (Con)
My Lords, first, does the Minister accept that the spike in voluntary closures is directly linked to the Government’s decision to hike the entrepreneurs’ exit tax from 10% to 14%—soon to go up to 18%—as well as increases in capital gains tax, which are prompting many owners to race for the exit?
Separately, in answering a question earlier he relied heavily on GDP figures, which will be small comfort to those people who have lost their jobs, but I think I heard him say 7% growth. I do not think that is right—would he care to correct the record?
Lord Leong (Lab)
Apologies; it is 0.7% growth. I thank the noble Lord for that. At the end of the day, what is really important is that we have to support businesses, and the Government are supporting businesses. Capital gains tax is still the lowest in Europe. In the G7, only the US and Japan are lower than us. Frankly, most employers go into business to create businesses. Sometimes they exit business, and some of our tax reliefs are still better than those of many other countries in Europe.
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsTuesday 10th June 2025
(2 months, 2 weeks ago)
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Lord Sharpe of Epsom (Con)
My Lords, I rise to express my deep concern about the inclusion of the clause repealing Section 116B of the Trade Union and Labour Relations (Consolidation) Act 1992, and to urge that it be removed in its entirety from the Bill. The clause does not merely tidy up legislation or modernise outdated provisions, it seeks to dismantle a vital safeguard that upholds the principle that taxpayer funds should not be used to subsidise the activities of private organisations, no matter how long-standing or worthy those organisations may be.
Section 116B was introduced to ensure that where public sector employers agree to deduct trade union subscriptions directly from employees’ pay, a service commonly known as check-off, the administrative cost of doing so is reimbursed by the union. This is a reasonable and proportionate expectation. After all, unions are private membership organisations. It is not the role of the taxpayer to underwrite the cost of maintaining their finances, especially when alternative methods of payment, such as direct debit, are readily available and commonly used by the unions themselves. Repealing this provision would, in effect, shift the cost burden for this private financial arrangement on to public sector employers and, by extension, the taxpayer. These are costs that would be no longer recoverable, whether they involve payroll staff time, IT systems or administrative oversight.
Although each individual deduction might seem minor, across large public bodies—for example, the NHS, schools, local authorities or Whitehall departments —these costs accumulate. The public purse, as noble Lords opposite do not need reminding, is already under immense pressure and it should not be expected to shoulder this additional financial responsibility. There is a very real risk that this repeal, however well-intentioned, would result in taxpayers unknowingly subsidising trade union operations.
Moreover, Section 116B introduced a measure of transparency and accountability into the system. It ensured that unions have to make active choices about how they collect their subscriptions and whether to invest in alternative systems, such as direct debit. It also gave employees greater awareness of and control over how they supported union activity. Removing this provision without putting any comparable mechanisms in place risks eroding that transparency. It suggests a return to a one-size-fits-all approach in which the employer bears the cost and the worker has little visibility over the arrangements.
There is also the issue of equity. Public sector employers are distinct in that they are funded by the state and their accountability is to the taxpayer. In the private sector where check-off arrangements still exist, employers and unions are free to negotiate the terms of such systems, including where the cost should be reimbursed. Why should public employers uniquely be placed in a position where they must provide these services at their own expense without any form of compensation? It is a contradiction that undermines the rationale for removing Section 116B.
The proposed repeal would also remove the flexibility that currently exists in the system. Under Section 116B, the Secretary of State has the power to make regulations specifying exceptions, such as for devolved Administrations or specific categories of public bodies. That allows the provision to be adapted in a way that respects local autonomy; for example, in Wales, where different arrangements have been supported by the devolved Government. By removing the entire provision, this clause strips away that flexibility and imposes a blunt uniformity that does not reflect the complexities of public sector governance across the United Kingdom.
Finally, we must consider the broader message that this repeal sends. It risks creating the impression, fair or not, that trade unions are being afforded preferential treatment and being allowed to impose their operating costs on to the taxpayer without scrutiny. At a time when public trust in institutions is fragile and when every pound of public spending is rightly under the microscope, this is a deeply unhelpful signal to send.
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 thank the noble Lord, Lord Sharpe, for posing arguments against Clause 60 standing part of the Bill.
This clause seeks to repeal Section 15 of the Trade Union Act 2016 by amending the Trade Union and Labour Relations (Consolidation) Act 1992 to remove Section 116B. Section 15 required trade unions to pay public sector employers where they administer payroll deductions for trade union subscriptions, known as check-off. It further required that this service be made available only where workers have the option to pay their union subscriptions by other means.
The Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2024 were introduced as a cost-saving measure, with estimated annual savings of £1.6 million, totalling £12 million over the following 10 years. However, as the impact assessment acknowledged, the regulations would bring a cumulative cost of £17 million to public sector employers and trade unions over that period. This is far higher than the estimated cost savings.
The current system places bureaucratic processes on both trade unions and public sector employers that can be clearly simplified to support productive trade union relations. There should be no costs to employers associated with withdrawing the check-off regulations. Employers will have the choice to continue with or amend any agreed arrangements regarding the deduction of union subscriptions from their employees’ wages, in discussion with their recognised trade unions.
We feel that there is a need to simplify this process, which is what our proposals intend to do. While I thank the noble Lord for this very short debate, I urge him to support this clause, for the reasons I have set out.
Lord Sharpe of Epsom (Con)
I thank the Minister for her explanation, although I am not particularly persuaded.
Lord Goddard of Stockport (LD)
My Lords, these amendments, proposed by the noble Lords, Lord Hendy and Lord Woodley, are I think as people have outlined. I have been on the wrong end of that legislation on a number of events—official strikes, unofficial strikes and secondary picketing. As a shop steward you are responsible for taking those actions for a company; there are consequences and I have suffered consequences from that.
It is not that I agree with the rights being taken away, but I think times have changed and unions have moved on now. The right of anybody to remove their labour, if they are pushed to it, should be a universal right, but it should be used very sparingly and in very special circumstances. It is all very well rushing to legislation and quoting the European Court, but we live in the real world and when things happen to people at work and people are treated badly, sometimes we have not got time to go and contact the KC and get case law. We just do the things that we used to do and take that action straight away. Sometimes that resolves the matter fairly quickly, because a reasonable employer will see the action you have taken as a direct result of another manager doing something that was not in agreement. So I get the thrust of this.
I have had notes typed and I have been writing my own notes, but I think the top and bottom for me is the amendment is seeking to restore a trade union’s flexibility in choosing which members to ballot and removing some procedural requirements and obligations to notify employees in advance of ballots. I think that time has gone as well.
Reinstating rights for prison officers, the group currently subject to significant legal limitations, is one I would like to slightly explore. The intent behind these amendments is to strengthen trade union rights and promote collective bargaining. The concern is potentially around impact, industrial relations and public safety, especially with the actions of prison officers. I say to the noble Lord, Lord Hendy, and to the Government that the way to protect prison officers is not to enshrine the right to strike but to remove the reasons why they would want to strike. That really is about improving the Victorian conditions that we have in 2025 prison systems, where people go into prison and come out worse criminals or nine out of 10 as drug addicts or whatever.
Governments, instead of trying to give extra law for prison officers, should be looking at the root cause. I know there is a prison plan being built and we are trying to get more education into prisons—if you want to speak to the noble Lord, Lord Timpson, he can give you chapter and verse on that, as I have listened to him doing. I hear why it is being done, I understand why it is being done and I know that it is not got a hope in somewhere else of getting through. But I thank the noble Lord for bringing it forward, because sometimes it is good to realise that things that we used to do are perhaps today not even politically correct to do. Human rights and the rights of people who go every day to work, to earn a living and support their family, need airing and need protecting. I know this is a probing amendment, but I thank the noble Lord for bringing it because it is interesting. Now and again it is good to be reminded of how it used to be and how it can be now.
Lord Sharpe of Epsom (Con)
My Lords, I join the general thanks to the noble Lord, Lord Hendy. I thought it was a most interesting introduction and I learned a great deal. I particularly liked the phrase “constitutional benediction”, which I am planning to nick—although not in this context, because I rise to join the Minister and express my clear and firm opposition to the proposed new clause after Clause 64. It seeks to enshrine in statute a so-called positive right to strike even in breach of contract, as opposed—if I follow the noble Lord’s arguments correctly—to the freedom to strike. It strikes me as somewhat semantic in terms of the practical outcome, which I suspect is an argument we will hear again.
Let us be absolutely frank about what the amendment would entail. It would insert into the Trade Union and Labour Relations (Consolidation) Act 1992 a wholly unprecedented and therefore dangerously broad provision that every worker shall have the right to take industrial action, whether or not it is in breach of any contract. It would not be subject to employer agreement or tethered to lawful procedures but would be an absolute statutory right to break contract terms and withdraw labour.
Industrial action, particularly strike action, is obviously a serious matter, and I think everybody would agree on that. It affects not only the employer but the public, the economy and, critically, the most vulnerable in society, who rely on public services. That is why we believe our existing legal framework strikes a careful balance. It protects the right to strike but does so within clear procedures and obligations: balloting requirements, notice periods and protections against unlawful disruption. This amendment would ride roughshod over all that.
What does it mean to have a right to breach your contract, regardless of process or proportionality? Surely, that is not a right; that is just carte blanche. This provision would displace the carefully constructed framework that governs how industrial action can be taken lawfully and responsibly. It would empower disruption without accountability. The purpose of employment law is not to tilt the playing field in one direction or another but to ensure that fairness, order and mutual obligations between employers and workers are respected. The right to withdraw labour must remain conditional on lawful procedures and not granted in the abstract, regardless of impact or legality.
Moreover, the proposed amendment would likely bring the UK into direct conflict with established contract law and create endless legal uncertainty. If workers are told that they have a statutory right to strike, even in breach of a contract, what does that mean for essential services, public safety, or the ability of schools, hospitals and transport systems to function with any consistency?
I do not think we should be mistaken. This amendment is not some minor clarification; it is a fundamental rewrite of the basis of workplace relations. It would undermine the principle that contracts entered into freely carry obligations and it would sweep away the balance between rights and responsibilities. I also have to ask: once a principle of contract breaking is established, how long before that is used as precedent in other contractual disputes?
Nobody denies that workers must be able to organise, speak up, bargain collectively and act where necessary. That is already protected in the legal framework. This amendment would take a sledgehammer to that balance. It would replace legal clarity, we believe, with legal radicalism, and accountability with absolutism. For those reasons, I urge the Government to reject the amendment.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank my noble friend Lord Hendy for tabling Amendment 238, which would establish a broad statutory right to strike. I thank him also for our constructive and amicable meeting a few days ago and for his impressive tour of international conventions this evening. I have to say to him that anything I subsequently say does not mean that I do not take our international obligations seriously. In fact, in this increasingly uncertain world, we have more of an obligation to work collaboratively across countries. I think there is a lot to be gained from countries if we do that, not only on these sorts of issues but obviously on other issues of social justice as well.
I thank the noble Baronesses, Lady Fox and Lady Jones, for adding to this short debate and the noble Lord, Lord Goddard. He raised some of the issues around prisons. I will be addressing those in the next group of amendments, but the point is well made that we certainly have to look after and defend our prison officers and recognise the service that they do for us.
The Government recognise the intention to reinforce protections for industrial action but it is important to emphasise that the right to strike is already protected under UK law, as set out in Sections 219 and 244 of the Trade Union and Labour Relations (Consolidation) Act 1992, provided clear conditions are met. Introducing a specific codified right to strike would cut across the uncodified nature of the UK constitution and lead to a far-reaching and undefined statutory right that risks legal uncertainty and conflict with long-established frameworks that carefully balance the rights of unions and employers.
Lord Sharpe of Epsom (Con)
My Lords, it is a pleasure to follow my noble friends Lady Coffey and Lord Moynihan, and the noble Lords, Lord Goddard and Lord Hutton. I will come back to their amendments shortly.
I will speak to Amendments 245, 251B and the question of whether Clause 68 should stand part, which is tabled in my name. On the clause stand part, this clause represents a dangerous step backwards. The noble Lord, Lord Goddard, objected to it in the sense that he thought it might introduce a lack of clarity. But the fact is that the clause itself is a step backwards in transparency and democratic accountability that this Committee must not allow to pass unchallenged.
The provisions that Clause 68 seeks to remove, notably subsections (2B) to (2D) of Section 229, are not bureaucratic obstacles but fundamental pillars of informed democratic participation. They require that voting papers should include a summary of the dispute, specify the types of industrial action proposed and indicate when such action is expected to take place. These are not unreasonable burdens. They are the basic information any voter needs to make an informed decision.
Democracy thrives on transparency, not opacity. When we ask working people to vote on whether to take industrial action—a decision that may affect their employment, their families’ livelihoods and their future prospects—surely they are owed the courtesy of clear, comprehensive information about what they might be voting for.
Consider the absurdity of what this clause actually proposes. It is a ballot paper that asks, “Are you prepared to take part in industrial action short of a strike?” without specifying whether this means a work-to-rule, an overtime ban, a refusal to cover additional duties or any combination of actions. How can any reasonable person make an informed choice without knowing what they are agreeing to participate in?
The Government may well argue that these requirements impose administrative burdens on the trade unions, which is an argument we have heard on a couple of groups tonight. But since when did we consider informing voters to be an administrative burden rather than a democratic duty? We would not accept a general election ballot that failed to specify what office candidates were seeking or what their party stood for, so why should we accept industrial action ballots with less information?
Furthermore, these information requirements serve to protect union members themselves. Clear information helps ensure that workers understand not just what they are voting for but the potential consequences of their actions. This protects both their interests and those of their unions by reducing the likelihood of disputes over the course, scope or nature of mandated action.
Turning to Amendment 245, I agree with the amendment in the name of my noble friend Lord Moynihan of Chelsea, and the noble Lord, Lord Goddard. I will speak to this amendment, although I must emphasise that my primary concern is not with the amendment itself but the Government’s fundamentally flawed approach to this critical issue. To be absolutely clear, the 50% turnout threshold for industrial action ballots should be maintained. This threshold exists for the very good reason that it ensures that strikes and other industrial actions have genuine democratic legitimacy, as the noble Lord, Lord Goddard, pointed out, and that they represent the will of a substantial portion of union membership and not merely an activist minority.
If the Government are determined to weaken these democratic protections, and regrettably it appears that they are, they must not compound this error by hiding behind secondary legislation. Businesses across this nation deserve better. They need to know the regulatory framework within which they will operate—a theme to which we have returned a number of times through the Bill. They cannot plan for investment, assess risk or make employment decisions when fundamental aspects of industrial relations law are left hanging in regulatory limbo. The Government’s approach creates precisely the uncertainty that undermines economic confidence and job creation.
I urge the Government to reconsider entirely and maintain the 50% threshold to provide the certainty that businesses need and the democratic legitimacy that industrial action requires. If the Government insist that they are going to lower the threshold, which we think will be disastrous, it should be in the Bill, so that we can scrutinise it fully, which is what my amendment would ensure. As my noble friend Lord Moynihan pointed out, a 20% threshold could lead to only 10% of a workforce supporting strike action. The House deserves the opportunity to examine and debate such fundamental changes properly and not have them smuggled through in statutory instruments with minimal parliamentary oversight.
I will speak very briefly to Amendment 251A, in the name of the noble Lord, Lord Hutton. I could not agree with him more. It would be a very regrettable error if the Bill were to inadvertently introduce an unintended consequence of potentially swingeing fines for airlines, for reasons that are not really any fault of their own. It is to be supported, and I hope he will return to the theme.
My Amendment 251B proposes a modest but vital extension, from 10 to 14 days, of the notice period required before industrial action can commence in the railway sector, for slightly different reasons. This is not an attempt to restrict workers’ rights but rather a recognition of the unique role that our railway system plays in the economic and social fabric of the nation. The railway network is not just another industry. As my noble friend Lady Coffey pointed out, it is the circulatory system of the economy and it moves millions of passengers and vast quantities of freight every single day. When railway services are disrupted, the effects cascade through every sector of society, from healthcare workers unable to reach hospitals to students missing examinations and businesses losing millions in productivity. The current 10-day notice period that is proposed is simply insufficient for the complexity of railway operations. I could go on, but I think I have said enough on the subject.
Four additional days may seem modest, but, in the context of the operations of the railway and airlines, it represents the difference between chaos and managed disruption. It allows time for proper contingency planning, for negotiations to continue and for the travelling public to make alternative arrangements. With that, I shall wind up, but I hope the Government are paying attention and will at least listen to these carefully considered amendments.
Lord Katz (Lab)
My Lords, I thank the noble Lords, Lord Sharpe of Epsom and Lord Goddard of Stockport, and my noble friends Lord Hutton of Furness and Lord Hendy for tabling amendments on the subject of industrial action ballot mandates, thresholds and notice. Despite the late hour, I recognise that there is significant interest here. I will try to do justice to all those amendments and to the opposition to certain clauses standing part of the Bill.
Before I go into the detail, I want to make it clear that a lot of what we are discussing relates to the repeal of the great majority of the Trade Union Act 2016, which was a clear manifesto commitment for this Government. I think it is worth framing why that is the context. This does, in a way, speak to a lot of what the noble Lord, Lord Moynihan, mentioned. Far from supporting the economy, the strike legislation in the 2016 Act that we inherited from the then Opposition did not actually prevent strikes. In 2022, we lost more days to strikes than France. In 2023 and 2024, NHS strikes alone cost the taxpayer £1.7 billion.
Lord Katz (Lab)
With respect, there are definitely elements in the group of amendments we are talking about that relate to the 2016 Act. I was simply setting out the context for my remarks. Perhaps the noble Lord will let me make some progress, and, if he is still not satisfied towards the end of the speech, we can spend a bit more time on this.
As I was saying, 2.7 million working days were lost to strike action in 2023, up from 2.5 million in 2022, and these were the highest annual number of working days lost to strikes since 1989. Put frankly, the 2016 Act did not achieve its objective of reducing strikes—in fact, it made things worse.
Amendment 244, tabled by the noble Lord, Lord Goddard, and Amendment 245, tabled by the noble Lord, Lord Sharpe of Epsom, both seek, in different ways, to remove the repeal of the 50% industrial action ballot turnout threshold. The Bill as drafted repeals this threshold in its entirety, returning us to the situation pre 2016, where only a simple majority of members voting in favour of strike action was required for industrial action to be deemed lawful.
We want to create a positive and modern framework for trade union legislation that delivers productive, constructive engagement, respects the democratic mandate of unions and reduces bureaucratic hurdles. The date for repeal of the 50% threshold will be set out in regulations at a future date, with the intention that it is aligned with the establishment of e-balloting as an option for trade unions. In combination with the delivery of modern, secure workplace balloting, we hope that this will ensure that industrial action mandates will have demonstrably broad support.
I turn to the opposition to Clause 66 standing part. In answer to the concerns expressed by the noble Lord, Lord Moynihan, this clause does indeed seek to amend Section 226 of the Trade Union and Labour Relations (Consolidation) Act to reverse the change made by Section 3 of the Trade Union Act 2016. Section 226 is amended to omit subsections (2A) to (2F), thereby removing the requirement for industrial action ballots in six defined public services—health; fire services; education for those aged under 17; transport; decommissioning of nuclear installations, management of radioactive waste and spent fuel; and border security—to have the support of at least 40% of those entitled to vote for the industrial action in order to be valid.
Alongside Clause 65, which removes the turnout threshold, a trade union will need only a simple majority of those voting in the ballot to vote in favour of industrial action for the industrial action to be deemed lawful. This was the case prior to the Trade Union Act 2016. This clause is a key part of the Government’s agenda. Again, I want to be clear that this is part of our commitment to repeal the Trade Union Act 2016.
I turn to Amendment 246, tabled by the noble Lord, Lord Goddard of Stockport, and will speak to the opposition to Clause 69 standing part of the Bill. The noble Lord’s amendment seeks to retain the current six-month mandate period for industrial action following a successful ballot. The Government want to strike the right balance between ensuring that industrial action is based on a recent vote and reducing the need for re-ballots. Strike action is always a last resort; it is costly to workers as well as employers. For this reason, we consulted on the appropriate length of time before a trade union should re-ballot its members.
In that consultation, trade unions were very keen to have no need to re-ballot for a mandate at all. However, following the consultation, the Government have set the mandate period at 12 months, because the majority of industrial action concludes within that time. This will ensure the appropriate balance between reducing the costs of re-balloting and allowing mandates to continue for longer where they are likely to have continued members’ support, without prolonging disputes or permitting action to be called based on a more than year-old mandate. Retaining the six-month mandate period would prevent the Government delivering on their commitment substantively to repeal the Trade Union Act 2016.
I turn to the opposition to Clause 68 standing part from the noble Lord, Lord Sharpe of Epsom. The purpose of this clause is to reduce the information that unions are required to include on a voting paper for industrial action, through repealing Section 5 of the Trade Union Act 2016, which introduced additional requirements into Section 229 of the Trade Union and Labour Relations (Consolidation) Act 1992. Section 5 of the 2016 Act required trade unions to include on the ballot paper a summary of the issues that are in dispute between the employer and the trade union; the type of industrial action that amounts to action short of a strike; and an indication of the time period during which it is expected that those specific types of action are to take place.
Repealing Section 5 will not remove all the information requirements. Under Section 229, the ballot paper will still require unions to ask their members on the ballot paper whether they support industrial action and which type of action they want to take part in, expressed in terms of whether it is strike action or action short of a strike. The noble Lord, Lord Sharpe of Epsom, made an analogy with ballot papers not containing details such as the names of candidates or the nature of the election. I respectfully point out that there is a danger in that analogy; I do not think it is fair. After all, noble Lords opposite would not expect democratic elections for elected office to carry the kind of mandate threshold that they are insisting trade union ballots should have. Whether they want to make the analogy that democratic elections are like union ballots or not, there is a bit of a pick and mix going on—
Lord Sharpe of Epsom (Con)
That is fair enough; I accept the noble Lord’s point when it comes to general elections but, in effect, this is a referendum, which is usually much more clear-cut.
Employment Rights Bill
Lord Sharpe of Epsom ExcerptsTuesday 3rd June 2025
(2 months, 3 weeks ago)
Lords ChamberRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-VI(a) Amendments for Committee (Supplementary to the Sixth Marshalled List) - (3 Jun 2025)
Lord Davies of Brixton (Lab)
I thank my noble friend for his powerful and clear speech; he has said it all. I just want to add that this issue has arisen from the P&O scandal that took place three years ago. The maritime unions are particularly concerned about this, and I hope that my noble friend the Minister will be able to provide some comfort for the arguments that have been presented. The issue of pre-emptive injunctive relief for seafarers and other workers is a crucial issue and it is possible that we will need to return to it on Report.
Lord Sharpe of Epsom (Con)
My Lords, I appreciate the intent behind Amendment 143. After all, we are all familiar with the high-profile cases, such as P&O Ferries, to which the noble Lord, Lord Hendy, referred in his introduction.
I cannot pretend that I was au fait with the case details that the noble Lord explained, but we have some concerns about the practical and legal consequences of what is being proposed here. It seems to us that the amendment would allow employment tribunals to declare dismissals void and as having no effect; therefore, in effect, reinstating employees regardless of circumstances.
That is a major departure from the current legal framework, where the remedy for a breach is compensation, not nullification. That obviously raises serious questions. What happens if a dismissal is declared void months later? Is the employee reinstated, and are they entitled to back pay? What if the role no longer exists or has been filled? For many businesses and many workers, that would create uncertainty and not protection.
There is also the issue of enforcement. Giving tribunal decisions the force of the High Court, and allowing contempt proceedings for breach, risks confusing two fundamentally different judicial systems. Tribunals are meant to be accessible and the High Court is not.
I also question whether this change would meaningfully deter bad-faith employers. Those who already factor in the cost of breaking the law may simply budget for this risk too. Meanwhile, small and medium-sized employers acting in good faith could face disproportionate legal exposure for administrative or technical errors. I look forward to hearing the Minister’s response.
Lord Watson of Invergowrie (Lab)
My Lords, I am pleased to speak in support of my noble friend Lady Warwick on an issue that, as far as I am aware, has not appeared anywhere else but is of some importance. There is growing unease in the higher education sector about the potential implications of Clause 30. Universities UK has said it is frustrated that its letters to both officials and Ministers—they would be the same thing, I imagine—remain unanswered. UUK is probably being a bit polite in saying that it is frustrated; I suggest that it is unacceptable for a letter from any UK-wide organisation not to receive a response. If nothing else, I hope my noble friend will be able to give an assurance in her reply that she will ensure that Universities UK receives a considered response to its very legitimate concerns.
As my noble friend said, the higher education sector is concerned at the potential impact of measures proposed in Clause 30, which relate to outsourcing, on current arrangements within the sector and on the viability of steps that universities have taken or are planning to take in order to stabilise their financial position. Many universities consider themselves as falling within the definition of contracting authorities and may therefore be inadvertently caught in this clause of the legislation.
As originally introduced, the public sector outsourcing provisions applied to contracting authorities in England only. However, Ministers introduced an amendment in Committee in another place, and provisions now apply to contracting authorities in England, Scotland and Wales. Again as my noble friend said, the major point on which clarification is essential is whether and in what circumstances universities will be considered to be contracting authorities for the purposes of this legislation.
There is also the question of whether the planned separate outsourcing rules for different UK nations will or even might create complex and prohibitive arrangements for universities. As an example, if an institution is working across the UK nations—a good example would be the Open University—that could mean it is subject to two or more sets of outsourcing rules, potentially providing a conflicting legislative framework for its operational practice. I hope my noble friend will be able to clarify how the Government envisage such separate outsourcing rules will operate, and that in doing so she will provide reassurance to many in the higher education sector who, as my noble friend Lady Warwick said, are very supportive of the Bill in general but fear that universities could become victims of unintended consequences.
Lord Sharpe of Epsom (Con)
My Lords, I thank both noble Lords for their contributions, and I thank the noble Baroness, Lady Warwick of Undercliffe, for her introduction to her Amendment 143B. We think it is important to recognise the unique position of higher education providers when considering worker protection in public sector outsourcing. Because universities and similar institutions operate outside the traditional public sector framework, they possess a level of autonomy that sets them apart from government bodies, so applying the same regulatory requirements to these institutions clearly risks imposing unnecessary burdens that could affect their ability to focus on their core missions of education and research.
The amendment seems to us to thoughtfully acknowledge that difference by excluding higher education providers from the scope of these specific worker protection provisions. Such an approach would allow the focus of these protections to remain on core public sector organisations, where procurement processes are more standardised and closely tied to government accountability. At the same time, it would respect the operational independence of universities.
The fair treatment of workers remains an essential principle across all sectors, including higher education. Encouraging good employment practices within universities should continue through other means, but the amendment recognises the practical realities faced by these institutions. I look forward to hearing the Minister’s answer.
Lord Sharpe of Epsom
“Use of positive action in the workplace(1) In this section—(a) “P” is a public sector worker who reasonably thinks that the application by P’s employer, in relation to P’s employment or a working practice, of sections 158 and 159 of the Equality Act 2010 has caused or risks causing detriment to P,(b) “R” is P’s public sector employee, and(c) P reasonably thinks that R is responsible for the detriment in subsection (1)(a).(2) A Minister of the Crown must by regulations make provision for—(a) forms through which P may anonymously question R on any matter relevant to subsection (1),(b) forms through which R may answer questions by P, and(c) such forms to be made publicly available.(3) Within six months of the passing of this Act and every three months thereafter, R must publish a report setting out―(a) the number of forms received under subsection (2), and(b) a summary of the nature of the complaints to which they relate.(4) A Minister of the Crown may by regulations require R to report on the use of sections 158 and 159 of the Equality Act 2010.(5) This section does not apply to activities undertaken by R under paragraph 1 of Schedule 9 of the Equality Act 2010.”Member's explanatory statement
This amendment introduces a mechanism for public sector employees who believe they have been disadvantaged by their employer’s use of positive action under sections 158 and 159 of the Equality Act 2010. It would require the Government to create a process allowing such employees to anonymously question their employer and requiring employers to respond.
Lord Sharpe of Epsom (Con)
My Lords, I rise to speak to Amendment 145 standing in my name and that of my noble friend Lord Hunt of Wirral. This amendment introduces a mechanism for public sector workers who reasonably believe that they have been subjected to detriment as a result of their employers’ use of positive action under Sections 158 and 159 of the Equality Act 2010. It does not seek to outlaw such action, nor does it obstruct efforts to promote fairness. Rather, it seeks to ensure that fairness extends to all employees, not only those whom the state or the employer happen to deem underrepresented.
We must confront the uncomfortable truth that some public bodies have begun to apply positive action in ways that no longer reflect the careful balance envisaged by Parliament when the Equality Act was passed. We have now entered territory where lawful positive action shades into unlawful positive discrimination —where the scales of justice have been not merely tipped but turned. For example, let us consider West Yorkshire Police, a force whose conduct in this area raises urgent and serious concerns. It has come to light through both media investigation and internal whistleblowers that recruitment processes have been operated in a manner which in practice delays, restricts or even excludes applications from white British candidates. Candidates from certain ethnic minority backgrounds were allowed to apply early and, in some cases, were mentored through the process by dedicated positive action teams. Meanwhile, white British applicants were told to wait until a general window opened, often for as little as 48 hours. This, we are assured, is not discrimination but rather the fair operation of the law. I do not agree. This is not the spirit nor, arguably, even the letter of the Equality Act. It is a distortion of the law, and it demands redress.
What makes this all the more troubling is that these actions are being taken not by private corporations but by the state, or at least by institutions that act in the name of the state and are funded by the public purse. The taxpayer in this case is being forced to subsidise policies that they might find discriminatory and from which they may be excluded. There seems to be something especially perverse, indeed, almost Orwellian, about that.
This is not merely an abstract concern. West Yorkshire Police, for example, reportedly spent over £1.4 million in recent years on equality, diversity and inclusion staff—more than any other force in the country. That is public money. It is money earned by ordinary citizens, some of whom now find themselves effectively barred from entry into public service not because they lack ability but because their ethnic background does not satisfy an internal diversity target. When questions are raised, when whistleblowers from within these forces speak up, what happens? We hear of them being silenced, reprimanded or warned not to interfere. We hear of secret job listings marked “hidden” in the system, visible only to certain candidates. We hear of candidates greeted with hugs and reassurances that their interviews are merely a formality. That is not recruitment, and it is not equality. It is institutional manipulation.
The amendment before your Lordships seeks to restore a measure of transparency and accountability. It proposes a system by which a public sector worker who reasonably believes that they have been harmed by the operation of positive action can submit a formal question anonymously to their employer. The employer, in turn, must respond. Moreover, employers will be required to publish data on such queries, allowing Parliament and the public to monitor the use and potential abuse of these provisions. This is not a punitive or burdensome requirement; it is the most basic form of procedural fairness.
Let us be clear. This amendment does not challenge the principle of inclusion; it does not deny that discrimination has existed; but it says unequivocally that the answer to past unfairness is not the imposition of new unfairness, that the pursuit of diversity must not come at the expense of justice, and that inclusion must include everybody. Equality before the law is not a suggestion or a secondary consideration to be weighed against modern ideological preferences. It is a constitutional principle that underpins this very Chamber. When we allow it to be weakened quietly and gradually by well-meaning policies that turn into arbitrary practices, we invite division, resentment and, ultimately, more injustice.
The Minister may say that everything that I have described—the delays, the exclusion of white British applicants, the unequal mentoring and the hidden vacancies—is perfectly lawful under existing legislation. He may say that this is precisely how the Government intend for positive action to operate in the public sector. However, I sincerely hope that is not the argument that is to be advanced. Alternatively, the Minister may offer reassurance to the Committee and to the public that existing law already contains sufficient safeguards, and that what we have heard from West Yorkshire Police, Thames Valley Police and others would not and should not be permitted under any reasonable interpretation of the Equality Act. If that is the case, I would welcome that clarification. I would also welcome assurance that there is already a functioning system of redress for individuals who believe that they have been mistreated on the basis of how positive action has been applied.
If the Minister agrees with the points that I have made—that West Yorkshire Police should not have discriminated against white applicants and that there is no mechanism to stop this—then I very much look forward to the Government accepting this amendment. I beg to move.
Lord Liddle (Lab)
I came into this debate by chance, but it seems to me that this is part of a very undesirable development: an attack on the principle of equality, diversity and inclusion policies. These principles are at the heart of my politics. I have fought for racial equality ever since I was a student, when I went on marches against Enoch Powell and what he stood for. I thought that the response of the Labour Government in the 1960s—to make racial discrimination illegal—was very important. In more modern times, when I was chair of Lancaster University and looking at the question of student admissions, I always thought that we should make allowance for the fact that some working-class people had not had the best chance in life and take this into account in admissions procedures Therefore, I rather regret what the Opposition Front Bench is trying to do, which is to undermine the political acceptability of these policies.
There is a danger here. I have seen it from some people in my own party who say that, in response to the alleged great Reform upsurge, we should start abandoning EDI. That would be catastrophic for a social democrat like me, who has always believed in these things. I hope that the Members opposite will withdraw their amendment.
Lord Sharpe of Epsom (Con)
I thank the Minister for that comprehensive answer, and I thank all noble Lords who have spoken in this quite lively debate. I have to say I was disappointed that the greatest lady of them all who did not need a helping hand did not get a mention, so I will mention her: Margaret Thatcher.
I say to the noble Lord, Lord Liddle, that we are not seeking to undermine anything in this; I was very clear about that. I want to make it clear that, as I said in my opening remarks, this amendment does not seek to outlaw such action, nor does it obstruct efforts to promote fairness. It just seeks to ensure that fairness extends to all employees, not only to those whom the state or the employer happens to deem underrepresented.
I am grateful to the Minister for his extended quote from the Yorkshire case, but I also mentioned the case in Thames Valley. A tribunal there ruled that the three white police officers who won a claim after they were passed over for promotion were overlooked by Thames Valley Police because of their race and an ethnic-minority sergeant was promoted—this is the killer line—
“without any competitive assessment process taking place”,
which is precisely not the spirit of the laws that we have just been discussing.
Lord Sharpe of Epsom (Con)
That is why we were asking these questions and laying this amendment. It is good to have it out in the open. The amendment sought not litigation but clarity. It sought not courtroom battles but a simple mechanism for transparency and accountability. It would have been a route for asking questions and a structure for reporting. It would be a reminder that positive action must remain within the bounds of the law and fairness, and not become a euphemism for sanctioned discrimination. However, I have heard the arguments from the Minister and, not least because of the lateness of the hour, I am content to withdraw the amendment.