Employment Rights Bill

Baroness Foster of Aghadrumsee Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I congratulate the noble Baroness, Lady Berger, on her excellent maiden speech, and I wish her well. I very much look forward to the remaining maiden speeches to come.

Ever since this Government were elected in July last year, we have been told that growth is their key marker for success. The Bill that we are debating today seems completely counterintuitive to that stated desire. Employees, of course, need to have rights in the workplace, and these have developed in a sensible and proportionate manner over the years, whether that be in connection with pay or conditions of employment. However, this Bill completely unsettles the balance required for competitiveness, growth and productivity on the one side and the rights of employees on the other. That can lead only to discontent and a lack of investment, and, inevitably, to a fall in growth and productivity, not an increase.

This Bill comes after hits have already been made to businesses across the country. The recent increase in the minimum wage is, on the face of it, a good thing. However, when taken with an increase in national insurance contributions at the same time, it is not hard to understand why many small firms are struggling.

Take one sector—the retail sector. Retail NI conducted a survey, published in February of this year, which established that 86% of those surveyed expect to cancel expansion plans following the increase in employer NI contributions and the rise in the minimum wage. It found that 74% of those surveyed were planning to reduce the number of employees and other staff following those announcements. These are significant figures that cannot be ignored or brushed aside.

The Government are certainly listening to the voices of trade unions, but are they balancing that in a responsible way by listening to the voice of job creators, both big and small? Speaking of the unions, small business owners are very concerned about how the Bill allows access by unions to workplaces, almost regardless of their size. As one small business in England said to me: “Typically, small businesses are run in the spirit of good teamwork, care for staff, with a drive and vision for the business to succeed. In a difficult trading environment small businesses could easily be overwhelmed by the legislative burden imposed by this Bill including the need to proactively engage with unions to comply with the law”. I hope that His Majesty’s Government will clarify that they are not intending to burden businesses with fewer than 250 staff with these proposals.

In the time left, I want to concentrate on one aspect of the Bill which I think is highly detrimental to growth and will need to be revisited by the Government: namely, the ability to gain full employment rights on day one of employment. That is definitely going to slow down business expansion and growing the workforce. I argue that it will impact on investment in research and development and innovation, as there is little incentive to innovate when the costs of growing the workforce are prohibitive. In a survey carried out nationally by the FSB on this, the largest issue was the worry of unfairly dismissed employees from day one: 75% of small business employers listed it as the number one concern, followed quickly by the removal of the current three-day waiting period, so that statutory sick pay will be payable at 74% from the first day of absence.

I quickly say that, in Northern Ireland, we have the added problem of a poor economic inactivity rate, currently at 26.6% of the workforce. If we cut the opportunities for more jobs, how can we deal with that issue, never mind the issue of the unemployed? The Government alone do not grow the economy, but they should facilitate the private sector to grow. To be competitive at home and internationally, we must give businesses the tools and the environment to grow, and I do not see that presently in this Bill. I look forward to the detailed examination of the Bill, where I hope we can deal with some of the issues raised.