Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

Moved by

[Baroness Jones of Whitchurch]

That the Bill be now read a second time.

Welsh, Scottish and Northern Ireland legislative consent sought

[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, when this Government came into office, we made a commitment to deliver the biggest upgrade to workers’ rights in a generation—a commitment I particularly support, given that I have been a proud member of UNISON for many years. We promised to introduce a Bill focused on improving workers’ rights and creating the necessary conditions for long-term economic growth within 100 days of taking office. This was delivered in October last year, fulfilling a key manifesto commitment.

This Bill addresses the pressing issues workers face today. Workers have waited too long for change due to the legislative stasis over the past decade and more. Average salaries barely increased under the previous Government and the average worker would now be over 40% better off if wages had continued to grow as they did leading up to the 2008 financial crisis. This lack of action means that there are far too many people in low-paid and insecure work. As few as one in six low-paid workers moves into and stays in better-paid work, and 2 million employees report feeling anxious about hours worked or shifts changing unexpectedly.

This is why Labour committed to making work pay as a key pillar of our election manifesto last year. In that manifesto, we were clear that our core mission as a Government would be not just economic growth but growth which raised living standards in every part of the United Kingdom so that working people have more money in their pocket. The mandate that the British people returned was clear. Further polling by Opinium and Focaldata since the election has highlighted that there is broad and strong support across the political spectrum for the policies in this Bill. British people have waited long enough. They now urgently want protections in their workplaces from day one of their job, an end to exploitative zero-hours contracts, and greater flexibility so that work works around their lives.

This legislation was developed in close collaboration with business and trade unions, and we are committed to ongoing engagement to ensure that all stakeholders, including SMEs, receive appropriate time to prepare for the ensuing changes. The improvements it offers in improving workers’ well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits worth billions of pounds per year. The Bill seeks to address the gaps and outdated provisions in current employment law and helps us turn the tide on the debilitating trend of in-work poverty.

I will now speak to the specifics of the Bill. Part 1 introduces changes to various high-profile areas of employment law. Here, we make good on our commitment to end exploitative zero-hours contracts. The Government are committed to ending one-sided flexibility, ensuring that all jobs provide a baseline of security and predictability so that workers can better plan their lives. The changes set out will require employers to offer qualifying workers guaranteed hours, reflecting the number of hours they work regularly during a reference period. This will be set out in regulations but is expected to be 12 weeks.

We will also require employers to provide in-scope workers with reasonable notice of shifts, as well payment for shifts that are cancelled, curtailed or moved at short notice. Corresponding rights are being introduced for agency workers who may also experience that one-sided flexibility. These changes could improve the security of work for around 2.4 million people, which is approximately 8% of all employed people in the UK.

On flexible working, this will be made the default, except where not reasonably feasible, to benefit workers and their families. Businesses also benefit from this change, as it will help give them access to a larger pool of candidates. However, we recognise not all workplaces can accommodate requests for flexible working. Businesses will still be able to reject unfeasible requests, provided the decision is reasonable and based on one of eight business grounds.

On statutory sick pay, the Government’s view is simple: no one should feel forced to struggle through work when they are unwell. This legislation will mean that the 1.3 million lowest-paid employees will have access to the safety net of sick pay at a rate of 80% or the flat rate, whichever is lower. We are also removing the waiting period for SSP, meaning employees will be able to access it from the first day of sickness, benefiting millions of people.

The previous Government took laudable steps to improve the law around tipping. We are building on this by strengthening the law to make it mandatory for employers to consult with workers at the place of business when developing their tipping policies.

Turning to entitlements to leave, we will improve access to paternity and unpaid parental leave by making them day-one rights and by allowing paternity and shared parental leave and pay to be taken in any order. This will give employees the peace of mind that changing jobs will not affect their access to this leave, and it will provide working parents with greater flexibility.

We will also establish a statutory entitlement for a day-one right to bereavement leave. Under this, at least 900,000 workers will benefit from bereavement leave following the death of a loved one every year. This sensitive issue is one we will consult on, with the detail to be set out in secondary legislation.

Regarding harassment in the workplace, it remains a sad reality that too many people often find their workplace unsafe. This can have a detrimental impact on people’s lives and careers, and this is particularly true for women. We are clear as a Government that we will do all we can to tackle this. We are legislating to strengthen the legal duty for employers to take all reasonable steps to stop sexual harassment before it starts, including harassment by third parties, and we will strengthen protections for whistleblowing to make it clear that, if an employee speaks up about sexual harassment, they can qualify for whistleblowing protections.

We are making changes around dismissal as well. First, we will make it unlawful to dismiss pregnant women and mothers during maternity leave and for a six-month period after their return to the workplace, although there will exceptions to this in specific circumstances. Secondly, we will create a new automatic unfair dismissal right for employees who have been unscrupulously fired and rehired, or fired and replaced, ending the unnecessary threats of these practices. Thirdly, we will ensure that all employees are better protected from unfair dismissal by making it a day-one right, benefiting nearly 9 million people.

Turning to Part 2, changes will be made to collective redundancy. These will ensure employers fulfil collective consultation obligations which will be triggered where 20 or more redundancies are proposed at one establishment, as is currently the case, or where a threshold number of employees are proposed to be made redundant across the organisation. The threshold number will be set in regulations following consultation with those with a stake in good employer-employee relations, and we will set the thresholds for this requirement at a level that balances the needs of growing business and protecting employee rights.

We are also amending notification requirements so that employers must notify the Government when they are proposing to make employees redundant across their business, and when they meet the new threshold. This will ensure employers acting in bad faith cannot circumvent their consultation obligations by proposing smaller numbers of redundancies across multiple worksites, allowing more employees to benefit from those collective consultations.

We are closing a loophole in the maritime sector to ensure seafarers have the collective redundancies protections they deserve.

We will also deliver on our commitment to reinstate and strengthen the two-tier code on workforce matters. This was first introduced by the last Labour Government and repealed by the coalition Government of 2010. By reinstating the code, we are taking a step towards ending unfair two-tiered workforces, where employees hired from the private sector to work on an outsourced contract have less favourable employment terms and conditions than those transferred from the public sector.

Our country has a national gender pay gap that stands at over 13%, so we are also taking overdue action through action plans. These will require employers to take action to improve gender equality, as well as to better support staff during the menopause. This is good for women, economic growth and our country as a whole.

Part 3 addresses pay and conditions in specific sectors. Chapter 1 will reinstate the school support staff negotiating body to give a voice to support staff, who make up roughly half of the school workforce. This body will not only negotiate pay and conditions but advise on training and career progression to properly recognise the vital role these staff undertake. While an important part of reinstating the body is to improve consistency, it does not commit us to a one-size-fits-all approach. Our intention is for support staff in all state-funded schools in England to benefit from a core pay and conditions offer, while allowing the flexibility for all schools to respond to local circumstances, above minimum agreements reached. We will be consulting on this over the summer. The body will help address the recruitment and retention challenges that state schools of all types face and drive up standards to ensure we give every child the best possible chances in life.

Chapter 2 will establish a framework for fair pay agreements in adult social care in England, and, after constructive discussions with the Scottish and Welsh Governments, this will be the case for the adult and children’s social care sectors in those nations too. This will help empower workers’ representatives and trade union officials, employers and others in partnership to negotiate pay, terms and conditions. The introduction of sectoral agreements aims to ensure that care professionals are properly recognised and rewarded for the important work they do. It will help tackle the long-standing workforce issues in this sector and improve the situation for workers and those for whom they care across Great Britain.

Chapter 3 focuses on two measures relating to seafarers. Together, these changes will benefit our seafarers, who are the present-day standard bearers of the UK’s proud maritime history, and send an important signal that we will continue to be a world leader in international maritime employment law. The first change will deliver a legally binding seafarers’ charter. This will be achieved by expanding the scope of the Seafarers’ Wages Act to provide powers to require harbour authorities to request safe working and remuneration declarations from operators in scope. It will require operators to confirm that they are meeting the requirements of these declarations, the exact details of which we will consult on in due course. Secondly, we will give effect to international maritime conventions the UK has ratified, such as the Maritime Labour Convention, which will fix a powers gap that has been left following the UK’s exit from the European Union.

Part 4 focuses on trade unions and the right to take industrial action. First, we will introduce a legal duty for employers to inform workers about their right to join a trade union. This aligns with the Government’s focus on empowering workers by ensuring they are fully informed of their rights. We will also be providing for a right of access for trade unions. This will provide a framework for the negotiation of access agreements between employers and trade unions. Once agreement is reached, trade union officials will be able to access the workplace to represent, recruit or organise members and to facilitate collective bargaining. These agreements can also cover digital forms of communication.

Changes will be made to the conditions for trade union recognition too. Where an employer refuses to recognise a trade union voluntarily, currently it can apply to the Central Arbitration Committee to obtain statutory union recognition. There are, however, unnecessary hurdles that apply to that CAC process that hinder the recognition process. The Bill will tackle these hurdles by, for example, deleting the current requirement for unions to have the support of at least 40% of the workforce in the proposed bargaining unit in a trade union recognition ballot. In future, unions will need only a simple majority of those voting, ensuring greater fairness in the process.

Other changes we are making include strengthening the existing right to reasonable paid facility time for union representatives to carry out their duties, simplifying the information required for industrial action notices, changing the law around blacklisting, ensuring those lists produced by predictive technology cannot be used to discriminate, protecting against detriment for those who take industrial action and protecting against dismissal for taking such action.

Turning to the punitive trade union legislation passed by recent Governments, we will be making repeals to the Trade Union Act 2016 to effectively return the law to its pre-2016 position. There are three exceptions to this. First, we will retain the industrial action ballot mandate expiration date but extend it to 12 months. Secondly, we will shorten the notice period for industrial action from 14 days to 10 days, rather than the seven days it was before 2016. Thirdly, we will retain the independence of the Certification Officer from political control.

We are also repealing the Strikes (Minimum Service Levels) Act, which has failed to prevent a single day of industrial action. The framework set by the Bill will foster a new partnership of co-operation between trade unions, employers and the Government.

The current system of state enforcement is fragmented and inefficient, which is complicated for workers and employers. Part 5 focuses on the enforcement of labour market legislation and lays the groundwork for the establishment of the fair work agency. This agency will deliver upgrades to enforcement of workers’ rights. It will bring together existing state enforcement functions, including the regulation of employment agencies, national minimum wage enforcement, gangmaster licensing, action against serious labour exploitation and the unpaid employment tribunal award penalty scheme. This will simplify the overall enforcement process and improve access to rights for workers, while levelling the playing field for the vast majority of businesses that already operate in good faith.

We also expect the agency to be able to make more effective and efficient use of the resources currently used by enforcement bodies. Creating this agency is more than just shuffling deckchairs. It will have a wider remit than just the existing enforcement bodies, such as enforcing holiday pay for workers. These reforms will help to ensure that non-compliance does not pay. That is fair for workers and fair for businesses, too.

Finally, Part 6 contains provision to increase employment tribunal time limits for making claims from three to six months. This will benefit both employees and employers by providing more time for disputes to be resolved internally, potentially reducing pressure on the employment tribunal system. The additional time will support employees to consider the merits of bringing a case to the employment tribunal, which will help improve the quality of claims entering the system.

The Bill is a significant upgrade to legislation and I look forward to the forthcoming debate, including the maiden speeches from my noble friends Lady Gray and Lady Berger, and the noble Baroness, Lady Cash, and the noble Lord, Lord Young of Acton.

In the context of our ambitions to make work pay, I hope noble Lords will agree that this Government are delivering on improving workers’ rights. I emphasise that this legislation seeks to benefit employers and the economy by levelling the playing field between good employers who already go beyond measures in the Bill and the less scrupulous ones. These benefits are recognised by many of the businesses we have engaged with throughout the Bill’s development and passage to date, including Centrica, the Co-op, Richer Sounds and Thomas Kneale & Co.

In the words of Nick Cooper, managing director of the Manchester-based SME Adept Corporate Services,

“fair treatment and job security aren’t luxuries—they’re the foundation of a high-performing workforce”.

When less scrupulous businesses are challenged, it is those that are already doing right by their workers—as the vast majority already do—that benefit.

I urge the House to support the Bill and the commitment it represents to improving the lives of millions of people and growing the economy. I beg to move.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, it is a pleasure to be able to conclude this debate, which has been as insightful as it has been passionate and informed. The debate today has been very well attended and I hope that noble Lords will understand that time constraints mean that I will be unable to respond to every individual contribution, as I would normally do, but I shall do my best. Where I have not been able to respond, I am of course available to talk to noble Lords and to discuss: I am sure that we will have plenty of discussions between now and Committee, and after that. I hope that this will be an ongoing dialogue.

I know that many noble Lords have considerable expertise in running their own businesses. The noble Lords, Lord Londesborough and Lord Pitkeathley of Camden Town, and the noble Baroness, Lady Cash, spoke with these valuable insights. The Bill seeks to raise the floor for employment rights in our country and includes practices that many good employers—such, no doubt, as those operated by those noble Lords—already have, to the benefit of themselves and their workforce. I am sure that noble Lords will value the level playing field for employers that the Bill will ensure.

I dare say that the noble Lord, Lord Balfe, was preaching to the choir with his much-needed intervention from the Benches opposite on why people joint trade unions, and the range of benefits that collective bargaining brings: I hope that his Front Bench were listening to those points. I thank the noble Lords, Lord Barber of Ainsdale, Lord Pitkeathley of Camden Town, Lord Hendy, Lord Katz, Lord Watson, Lord Monks, Lord Prentis of Leeds, Lord Browne of Ladyton, and the noble Baronesses, Lady Carberry of Muswell Hill, Lady Hazarika, Lady Bousted and Lady Lister, all of whom expressed their strong support for this landmark legislation and powerfully articulated the need for it to reach the statute book.

I take this opportunity to pay tribute to those who made their excellent maiden speeches. I congratulate my noble friend Lady Berger on her marvellous maiden speech. My noble friend brings a valuable perspective to this debate, and it is great to hear how she is proudly advocating for, and championing, strong employment rights. It is warming to see her back in Parliament, and I am sure your Lordships’ House will value her wisdom and expertise, as well the courage and integrity she embodies so well. I thank my noble friend Lady Gray of Tottenham, whose extensive career in the Civil Service is greatly respected in your Lordships’ House. My noble friend brings a wealth of experience and insights to our discussions on advancing workplace rights. It was a pleasure to hear from the noble Baroness, Lady Cash, whose roles as commissioner of the Equality and Human Rights Commission and as an employer bring unique insight into many important issues regarding workplace equality. Finally, I pay tribute to the noble Lord, Lord Young of Acton. Having another strong voice in your Lordships’ House is always welcome. The perspective the noble Lord brings through his work with the Free Speech Union is important, and I have no doubt his discussions on this legislation will continue to be of great interest.

I thank the noble Lord, Lord Palmer of Childs Hill, and the noble Baronesses, Lady Lister and Lady Smith of Llanfaes, for their passionate interest in those with caring responsibilities. An important part of our plans to modernise the world of work is ensuring carers can enjoy a good job and contribute their skills alongside their valuable role as carers. The Government will examine the feasibility of introducing paid carer’s leave in the upcoming carer’s leave review. On making caring a protected characteristic, many people with caring responsibilities are already likely to be afforded protections under the Equality Act 2010, by the provisions relating to age and disability discrimination which specifically protect people from direct discrimination by association. Individuals with caring responsibilities for someone who is, for example, elderly or disabled within the meaning of the Act are likely to be protected from unlawful discrimination from their association with someone with a protected characteristic. I am sure that noble Lords will understand that this means that this intervention would be unnecessary.

I thank the noble Baroness, Lady Barran, and the right reverend Prelate the Bishop of Newcastle for raising the issue of kinship care and foster caring. We are committed to ensuring that all employed parents and carers receive the support they need to strike the appropriate balance between their work and family lives. For the first time, the Government’s Children’s Wellbeing and Schools Bill will create a legal definition of kinship care, for the purposes of specific measures in that Bill. By defining kinship care in law, the legislation will ensure that all local authorities have a clear and consistent understanding of what constitutes kinship care. I hope this assures noble Lords of the Government’s intentions in this sensitive area.

A number of noble Lords, including the noble Lords, Lord Hunt, Lord Ashcombe, Lord Vaux and Lord Sharpe, and the noble Baronesses, Lady Foster and Lady Cash, raised the issue of the financial implications of the Bill. The noble Lord, Lord Sharpe, suggested that we should listen only to business voices, but I have to say to him that our history and our economy is based on partnership. That is always what has made us thrive, and that will underlie our growth strategy going forward. This is not a case of hearing one voice over another. The noble Lord, Lord Sharpe, also raised the issue of business confidence. According to the latest Lloyds Business Barometer, which surveys 1,200 businesses every month, business confidence has increased 12 points, to 49% in February, the highest since August 2024. This shows that the Government are improving the business environment.

Of course, we recognise the concerns about the cost to business. The £5 billion figure from our impact assessment is a top-end estimate which will largely represent a direct transfer to the lowest paid in society, with the bottom end of the range close to £1 billion. The costs, therefore, are likely to be under 0.4% of our national wage bill and could even be as low as 0.1%.

A number of noble Lords also mentioned the OBR comments, but I stress that it has yet to make an assessment, so it is premature to read anything into its comments so far. Meanwhile, improving worker well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers will grant significant benefits worth billions of pounds per year, off-setting those costs.

The noble Lords, Lord Hunt of Wirral, Lord Palmer of Childs Hill, Lord Vaux and Lord Fox, the noble Baronesses, Lady Noakes and Lady Coffey, and the noble Viscount, Lord Colville of Culross, raised the issue of parliamentary scrutiny. I reassure your Lordships’ House that the approach we are taking to many of the delegated powers in the Bill is in line with existing precedents for use of delegated powers in employment law, and the department believes that these are necessary and justified. They will enable the Government to remain responsive to the changing needs of the modern labour market and the economy, and to ensure that the employment rights framework remains relevant to these needs. Of course, we will give the Bill full scrutiny in its stages here, and I look forward to the many conversations we will have with noble Lords about this.

Noble Lords also raised the issue of amendments made by the Government in the other place. Throughout the development and passage of the Bill, the Government have made great efforts to listen to a range of views from businesses, trade unions, representative organisations, civil society and others. The insights gained, including from the formal consultations the Government have conducted since introducing the Bill, have informed the amendments made in the other place. These have been invaluable in ensuring that the Bill works in practice both for workers and for businesses of all sizes across the country.

The noble Baroness, Lady Barran, raised concerns about the school support staff negotiating body. While an important part of reinstating the body is to improve consistency, it does not commit us to a one-size-fits-all approach. Our intention is for support staff in all state-funded schools in England to benefit from a core pay and conditions offer, while allowing the flexibility for all schools to respond to local circumstances, above minimum agreed standards. We will be consulting on this over the summer.

My noble friend Lady Whitaker asked about seafarers. My noble friend is right to point out the important role that seafarers play in our economy and the necessity of improving protections. These clauses provide powers to require operators of frequent international services to the UK to meet certain standards on board their vessels in order to continue having access to UK ports without having to pay a surcharge or risking refusal of access. We will continue to engage at consultation stage with the trade unions representing seafarers and seafarer charities to ensure that the unique needs and voices of seafarers are represented in this process.

The noble Lords, Lord Whitty and Lord Fox, the noble Viscount, Lord Colville of Culross, and the noble Baroness, Lady Coffey, raised issues concerning the fair work agency. Better enforcement against the non-compliant minority of businesses means that more workers will get their due and that businesses are on a level playing field. That is fair for business and fair for workers. We will discuss extensively with businesses and employers how to use this power most effectively, and take the view of the fair work agency’s tripartite advisory board. This will include discussing what to do when workers are unwilling to enforce their rights.

On inspecting umbrella companies, the Bill will bring umbrella companies’ activities that are not currently captured in existing frameworks within scope of state enforcement. This will allow the application to them of a bespoke regulatory framework, which will be set out in regulations and, in time, enforced by the fair work agency. We will consult on these regulations. I hope that this alleviates noble Lords’ concerns.

On the structure and actions of the fair work agency, it will subsume three existing agencies and additional functions from HMRC into one single body—so we are reducing the number of quangos, not adding to them, while increasing efficiency. The agency will take a balanced approach to enforcement. It will have strong powers that will enable it to take action against rogue employers that exploit their staff, and it will provide support to businesses to help them comply with the law.

The noble Lords, Lord Young of Acton and Lord Strathcarron, and the noble Baroness, Lady Bray, raised concerns about third-party harassment. Conduct that is merely upsetting or causes minor offence will not be sufficiently serious to meet the Equality Act 2010’s definition of harassment, which requires significantly more than that for it to be unlawful. It is not enough for the claimant to simply feel that someone’s conduct is offensive. There is an objective test in which the reasonableness and the facts of the individual situation will always be considered. The steps an employer can reasonably take in respect of third parties are clearly more limited than those for their employees. Employers will not be penalised for failing to anticipate the unforeseeable or to take other impractical steps. Likewise, any step that was disproportionate interference with a customer’s right to freedom of expression would not be reasonable. Therefore, we do not expect this Bill to have the chilling effect on free speech that the noble Lords envisage.

Several noble Lords, including my noble friends Lady Whittaker and Lady O’Grady, the noble Lord, Lord Palmer, and the noble Baronesses, Lady Morrissey and Lady Kramer, raised the issue of non-disclosure agreements. The Bill means that a provision in the NDA seeking to prevent a protected disclosure about sexual harassment will be unenforceable. An NDA entered into in respect of sexual harassment may still stand to protect confidentiality in other circumstances, such as requiring the employer to keep the identity of the worker and the details of the incident confidential. This is the case now and is not changed by this measure.

I respect noble Lords’ interest in this important topic, and we are progressing with some reforms through other legislative means. The Government are pressing ahead with plans to commence the provisions relevant to NDAs in the Victims and Prisoners Act 2024 and in the Higher Education (Freedom of Speech) Act 2023. The provisions in the Higher Education (Freedom of Speech) Act 2023 that will, when commenced, ban NDAs for staff members, visiting speakers and students in cases of bullying, harassment—including sexual harassment—and intimidation were made by an amendment from this Government when in opposition, of which we remain proud. When commenced, Section 17 of the Victims and Prisoners Act 2024 will ensure that confidentiality clauses, including those in non-disclosure agreements, cannot be legally enforced to the extent that they seek to prevent victims of crime reporting a crime, co-operating with regulators in relation to the crime, or accessing confidential advice and support.

I recognise the points raised by the noble Baroness, Lady Browning, and my noble friend Lady Rafferty about the adult social care negotiating body, to be introduced by the Bill. The Government’s immediate work to support the social care sector will help to professionalise the workforce by expanding the national career structure, identifying and funding quality learning and development, and ensuring that there are progression and development opportunities so that people can build their careers in care.

To reassure noble Lords on the scope of the negotiating bodies, the bodies will be established through regulations, which will have the option to include more details on their remit and could include specifying that training and career progression are included. These regulations will follow further engagement and consultation with the sector.

I will address the comments made by the noble Lord, Lord Burns, the noble Baroness, Lady Coffey, and others on the political funds and the supposed contradiction between subscription traps and the reminder to opt out of a political fund. Subscription traps often occur when consumers are misled into signing a contract that they do not want through a free or reduced-price offer, or face unnecessary barriers to exit a contract. This is absolutely not akin to how trade union political funds work. The situations are not comparable.

A union is a collective of workers, and its political fund should be considered in that light. A union member should be aware of what their monthly fees will be, and that will include the political fund levy. The rate payable stays the same from day one; therefore, the member should know what they are paying and are free to opt out. There is no deadline after which their contribution rate will rise significantly. For opt-outs, the Bill will simply restore the position as it was before the passage of the Trade Union Act 2016. This has been the position for 70 years, and I am sure that noble Lords will understand that it is fair and definitely not the same as a subscription trap.

My noble friend Lord Prentis of Leeds raised the dispute involving Livv Housing in Knowsley. I hope that I can give him some reassurance on this issue. The Government are looking into how the pre-existing range of protections are currently operating and if and where the law may fall short. We are also conscious that this particular case has not been tested in the courts to see whether the existing law offers sufficient protection. The law on inducements and detriments is complex and needs to be carefully considered. I will continue to liaise with my noble friend on that issue.

This Bill is but the first part of the much wider make work pay agenda that this Government are endeavouring to implement. Many noble Lords have made vital contributions to this debate, suggesting reforms that go further than this Bill does now. The noble Lord, Lord Freyberg, and the noble Viscount, Lord Colville of Culross, proposed the creation of a commissioner for freelancers. My noble friend Lady Prosser proposed further action to tackle gender equality. The noble Baroness, Lady Penn, and my noble friend Lady Lister both raised the importance of reforms to parental leave. I respect these contributions and the desire to go further, but we must strike the right balance, while continuing to ensure that this remains a pro-worker, pro-business Bill. I stress that this is part of our bigger reforms under the ongoing make work pay agenda.

To conclude, this Bill is a crucial step towards the Government’s manifesto commitment to enhance workers’ rights and improve the lives of millions. Alongside our new industrial strategy, it will increase productivity and create the right conditions for long-term, sustainable and secure economic growth. This Bill is a testament to the Government’s resolve to improve workers’ rights, while levelling the playing field between good employers and less scrupulous ones. I urge all noble Lords to support the Bill.

Bill read a second time.

Moved by

[Baroness Jones of Whitchurch]

That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee of the Whole House that they consider the Bill in the following order: Clauses 1 to 4, Schedule 1, Clauses 5 and 6, Schedule 2, Clauses 7 to 23, Schedule 3, Clauses 24 to 35, Schedule 4, Clauses 36 to 53, Schedule 5, Clauses 54 to 57, Schedule 6, Clauses 58 to 87, Schedule 7, Clauses 88 to 128, Schedule 8, Clauses 129 to 132, Schedule 9, Clauses 133 to 146, Schedules 10 and 11, Clauses 147 to 149, Schedule 12, Clauses 150 to 157, Title.

Motion agreed.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[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 Fox, for his detailed engagement with our Bill and for Amendments 1, 283 and 327. I thank all noble Lords who have contributed to this wide-ranging debate, which has revisited many of the debates that we had at Second Reading.

Amendment 1 seeks to insert a new clause of the beginning of the Bill to set out the overarching purpose and to provide a framework for understanding the aims of the legislation. I thank the noble Lord, Lord Fox, for his challenge on this issue, but it is important to reflect on why we are bringing the Bill forward and what we hope to achieve through it.

The plan to make work pay sets out a significant and ambitious agenda to ensure that workplace rights are fit for the modern economy, to empower working people and, importantly, to contribute to economic growth. Delivery of that plan was, as we have heard, a manifesto commitment and part of the mandate on which the Labour Government were elected. On 10 October, the Government fulfilled their manifesto commitment to bring forward legislation within 100 days of entering office by introducing the Employment Rights Bill.

The noble Lords, Lord Fox and Lord Hunt, and others have asked about the later amendments that have been tabled. I reassure noble Lords that these are technical amendments and that the Committee will have adequate opportunity to scrutinise them all properly. The noble Lord, Lord Hunt, and others asked about an implementation plan. I reassure noble Lords that that will be shared as soon as it is available. We agree that businesses need guidance on the timescale and implementation of the measures in this Bill. We are working at pace to ensure that they have that information.

There is strong support for the measures included in the Bill. The Institute for Public Policy Research found that every constituency in the UK has a majority or plurality of people who believe that workers’ rights should be strengthened. My noble friend Lady O’Grady mentioned the latest poll. In addition, the TUC’s polling and that of HOPE not hate of over 21,000 people across the political spectrum has found strong support for key policies in the Bill. More than seven in 10 of UK voters—72%—support a ban on zero-hours contracts. Three-quarters of voters support giving all workers the right to statutory sick pay and ensuring that it is paid from the first day. Three-quarters of voters support giving all workers protection from unfair dismissal from the first day in their job.

This is a comprehensive Bill which delivers on a clear mandate from the British public. Once implemented, the Bill will represent the biggest upgrade of workers’ rights in a generation. Good employers support this package, because many of them are already delivering these standards. What they do not want is to be undercut on an uneven playing field.

I can give a few examples; I know the Opposition like to ask this question. Centrica, the Co-op, Richer Sounds, Nationwide, IVC Evidensia and IKEA UK and Ireland have all given their support to the measures in the Bill, and a lot of SMEs have done likewise, so it does have resonance with the business community.

Modernising the world of work will raise standards and tackle undercutting so that businesses are empowered to compete in a race to the top. I can reassure noble Lords that the Government, of course, recognise the concerns about the costs to business. The £5 billion figure from our impact assessment is a top-end estimate of the costs, which will largely represent a direct transfer to the lowest paid in society, with the bottom end of the range close to £1 billion.

The costs, therefore, are likely to be under 0.4% of our national wage bill and could even be as low as 0.1%. Furthermore, improving workers’ well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits worth billions of pounds per year. That is why delivering the benefits of the Bill would offset the costs.

I can reassure noble Lords that a number of these measures, as I have already said, have strong support from businesses, and we will of course carry on consulting them as we put these plans into practice to ensure that they are as effective as possible. The noble Baroness, Lady Stowell, mentioned the tech sector and will know that I am very minded of this. We will continue to engage with the tech sector on a regular basis to make sure that it contributes everything it can to the Government’s growth strategy.

The noble Lord, Lord Fox, and others have mentioned SMEs, and we will have the chance to debate this later in the Bill. In short, we do not agree that there should be two-tier employment rights: employment rights for all is a fundamental principle.

The noble Lord, Lord Empey, and the noble Baroness, Lady Stowell, talked about skills. We are absolutely committed to a new skills agenda, which is why Skills England is modernising our skills provision. It is an area where, traditionally, the unions and employers have made common cause to make sure that the upskilling of the workforce happens on a comprehensive basis.

This Bill shows the Government’s commitment to strengthening collective bargaining rights and trade union recognition. Our approach will foster a new partnership of co-operation between trade unions, employers and the Government. In response to the point made by the noble Lord, Lord Fox, our reforms remove hurdles that frustrate the voices of workers, but trade unions will still need to win a majority of workers’ votes in a ballot to be recognised by an employer. If workers do not want to be represented by a trade union, they will have the option to vote against recognition in that ballot.

On Clause 1 and the proposed list of priorities, I agree with my noble friends Lord Hendy and Lady Carberry that the purposes are already covered in the Bill. My noble friend Lord Hendy pointed out that the Long Title already addresses the purposes within the Bill, and as my noble friend Lady Carberry pointed out, the list is not exhaustive. If we are to have a list, it would need to be a whole lot longer than it is at the moment and cover a whole range of other aspirations already covered in Labour’s Plan to Make Work Pay.

The noble Baroness, Lady Neville-Rolfe, raised other issues that could be included in that list. Again, I assure her and others that all these issues have been consulted on extensively in the Bill. I would like to reassure noble Lords that there is no need for such a clause to be inserted to achieve this aim. The Explanatory Notes set out the purpose of the Bill clearly and provide further detail on the aims of the legislation. These notes were updated when the Bill transferred to this House and will be updated again when it receives Royal Assent. The Government have also published a series of fact sheets, which are available on GOV.UK and aid the understanding of the Bill’s aims.

Finally, from a legal perspective, inclusion of such a clause could risk producing unintended consequences on the interpretation of specific provisions within the Bill, which have been drafted to achieve the particular purposes concerned. While I understand what the noble Lord, Lord Fox, is trying to achieve, and I appreciate the debate that he has created, I hope I have persuaded him that it is not appropriate to include this in the Bill.

Amendment 283 seeks to require the Secretary of State

“to publish a code of practice providing employers with guidance on complying with the Act”.

This has had much less attention in the debate but, nevertheless, I will attempt to address the concerns that the noble Lord raised.

We have consulted and remain committed to consulting widely on the detail of implementation. The Government have also committed to ensuring that, where appropriate, guidance is published to ensure that all stakeholders have the information they need to make necessary adjustments. However, a Bill-wide code of practice, as suggested in the amendment, would be duplicative of the policy-specific guidance and codes of practice that the Government will already produce to support workers, employers and trade unions in implementing the reforms.

There is existing provision for the issue of guidance and codes of practice across employment law. Where relevant, the Bill amends those provisions to reflect that they will need to be updated to take account of the changes made by the Bill. This includes codes of practice issued by ACAS under the Trade Union and Labour Relations (Consolidation) Act. Such codes are subject to consultation requirements and must be laid in draft in both Houses for approval, and we are already working closely with ACAS to plan ahead for this work.

Where new statutory guidance is required, this is also provided for, such as in Clause 30, which inserts new Section 83D into the Procurement Act to make provision for the issue of codes of practice on relevant outsourcing contracts by appropriate authorities.

By requiring a single Bill-wide code of practice, this amendment would also risk delaying the Government in offering certainty on the details of policy and regulation on individual issues as they become available. I hope I have persuaded the noble Lord that this would therefore result in duplication and unnecessary delay.

Amendment 327 would prevent the implementation of measures in the Bill until the point at which the Government produce a Bill-wide code of practice. Some measures in the Bill will not require any further guidance before they are implemented—for example, the repeal of the Strikes (Minimum Service Levels) Act 2023. Delaying the date on which these measures can commence would unnecessarily delay the point at which workers can benefit from measures in the Bill.

Codes of practice are used to provide guidance to employers on how to comply with employment law. By nature they are detailed, building on and clarifying requirements set out in statute. There are several measures in the Bill where further consultation will be required to develop regulations setting out key details of reforms. Within six months, it would not be possible for all the outstanding policy details to be finalised to inform the content of a Bill-wide code of practice. Codes should bring clarity, but these timelines would risk patchy or unclear content if we were to go ahead on the basis of these amendments.

I agree with the need to ensure that workers, trade unions and employers are sufficiently supported for the implementation of the Bill, but this amendment is unnecessary and duplicative. I hope I have persuaded the noble Lord that the codes of practice that he envisages would not help to provide the detailed guidance that employers and workers require. I thank him for raising the issue, but I hope I have persuaded him not to press those amendments.

[Lord Hunt of Wirral (Con)]

The Minister has shared with the Committee that there is an implementation plan. As we are now moving to consider each clause, the first few in particular, it would be helpful for the Committee to be made aware of the part of the implementation plan that governs each and every clause. Is she able to share it with the Committee and, if so, by when? Might we at least see a draft of the implementation plan, so that businesses across the UK know what lies ahead?

[Baroness Jones of Whitchurch (Lab)]

I know the noble Lord has already raised this, and he tempts me, but there has to be further consultation. He will understand that. Part of the legislation obviously requires further consultation to take place. We are still looking at the timescales for all this, and we obviously understand the need to provide guidance as soon as we can, but what I can say that will be reassuring to everybody concerned is that this will be a phased process; this is not a day-one process. We just need to make sure that the phasing of all this makes sense for employers so that it can be done on a proper basis and with the appropriate guidelines behind it. We are working on it, we will share it as soon as we can, and we understand the need for it, but it is not available at this time.

--- Later in debate ---

Finally, I thank the noble Lord, Lord Goddard, for his Amendment 15. This amendment addresses an important gap in the current draft of the Bill, particularly for workers in industries such as hospitality, retail and other seasonal or temporary employment areas where fluctuating demand and short-term contracts are the norm. I believe it is vital to recognise that many workers in these sectors actually value the flexibility that comes with non-guaranteed hours. For some, the opportunity to accept irregular work, tailored to their availability and lifestyle, is not just desirable but essential. For students, people looking for part-time work and those balancing other commitments, this flexibility is often more important than the certainty of a fixed number of hours. I am particularly curious to hear the Minister’s thoughts on this amendment, as it seems to me to offer a practical and reasonable solution to the challenges posed by the Bill’s current provisions. The introduction of flexibility, in a way that empowers both the employer and the employee, can only enhance the working arrangements available to those in temporary or short-term roles.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lords, Lord Sharpe of Epsom, Lord Goddard of Stockport, Lord Moynihan of Chelsea and Lord Parkinson of Whitley Bay, for tabling their amendments to the clauses on zero-hours contracts. I will begin with Amendments 7, 11 and 12, which seek to amend Clause 1 to set the initial reference period for the right to guaranteed hours at 26 weeks. They would also remove the power to define the length of the initial reference period in regulations, or would render it obsolete. I say to the noble Lords that the length of the initial reference period will be set out in regulations, and of course we will consult further on this issue, but it is expected to be 12 weeks—that is the figure we are currently thinking about.

The noble Lord, Lord Goddard, urged that the measures be proportionate and reasonable. We feel that our proposals as they stand are exactly that. I am grateful to my noble friend Lord Hendy for reminding us that 1.3 million people will never reach the reference period if it is 26 weeks, as their employment will not be that long. There is a very good reason why we should not extend the period.

We believe that 12 weeks is the appropriate length. It would be long enough to establish the hours that the workers regularly work while allowing qualifying workers to be offered guaranteed hours reasonably soon after they start a job, or after the right to guaranteed hours comes into effect. If the initial reference period was set at 26 weeks, workers in precarious and unpredictable work would have to wait six months to access their right to guaranteed hours. We believe this is too long in the current labour market circumstances.

Similarly, Amendment 13 would specify in the Bill that the subsequent reference period for the right to guaranteed hours is 26 weeks. The length and frequency of the subsequent reference periods will be set out in regulations. Subsequent reference periods may well be of a different length and frequency from the initial reference period. This is because, unlike the initial reference period, subsequent reference periods are not qualifying periods. Therefore, a different balance needs to be considered. It is necessary to set out both the initial reference period and subsequent period lengths in regulations to allow changes to reference periods to be made, for example in response to emerging evidence about how this novel right is working in practice or in light of evolving working practices. As I said, we intend to consult on the length and frequency of subsequent reference periods.

Amendment 9 seeks to amend Clause 1 to take workers on fixed-term contracts out of scope of the right to guaranteed hours. This could lead to avoidance behaviour, whereby employers move workers from open-ended zero-hours contracts to fixed-term zero-hours contracts. We also believe that workers on limited-term contracts lasting longer than the duration of the reference period should be entitled to a guaranteed-hours offer. This is because such workers may experience one-sided flexibility in the same way as those on permanent contracts.

I emphasise that the right to guaranteed hours will not prevent employers using limited-term contracts. Employers can make a guaranteed-hours offer resulting in a limited-term contract if it is reasonable for that contract to be of a limited term. For example, as has been mentioned several times, it might be reasonable to provide a worker with a limited-term contract only to cover the increase in retail demand during the Christmas period. If a limited-term contract is shorter than the initial reference period, then the worker would likely not qualify for a guaranteed-hours offer, but that would depend on the conditions as to regularity or number and whether it was reasonable for the contract to be of a limited term.

Amendment 8 seeks to amend Clause 1 to set the hours threshold in the Bill at a maximum of four hours a week. It would also remove the power to set the hours threshold in regulations. I listened carefully to the arguments, in particular from the noble Lord, Lord Wolfson, on the interests of part-time workers, but under this amendment workers who are guaranteed more than four hours per week would not be eligible for the right to guaranteed hours.

The hours threshold will be crucial to determining how many workers are included in scope of the right to guaranteed hours. It is partly intended to act as an anti-avoidance measure, preventing employers avoiding the duty to offer guaranteed hours by moving a worker on to a contract guaranteeing only a very small number of hours. Setting it to only four or fewer hours per week would mean, for example, that any worker with only five hours guaranteed per week would fall out of scope of the new provisions, even though they may experience unpredictable hours and income in the same way as other zero-hours workers. Similarly, if we were to set the threshold too high, it could have unintended consequences and impact the overtime arrangements of workers who already have sufficient predictability and security.

Additionally, given the novelty of these provisions, it is important that the Government retain the flexibility to amend the threshold in future, for example in the light of evolving work practices. I reassure the noble Lord, Lord Wolfson, and others that we intend to consult on the hours threshold, including the issues raised today, as part of the consultation. Including the threshold in the Bill at this stage would remove the opportunity to have that consultation and for unions, employers and workers to feed in their views.

[Lord Wolfson of Aspley Guise (Con)]

Would the Minister accept that having a maximum number in the Bill would be enormously important so that business can prepare for this? The number of hours set as the threshold will determine the number of employees who need to be dealt with. If it is 3% of our workforce, that will be one thing; if it is 50%, that will be another. While I accept that the Government need flexibility, would they at least consider setting a maximum number of hours in the Bill so that business can start to prepare now, as we will need to do if we are to have the systems in place in one year’s time to implement this Bill?

[Baroness Jones of Whitchurch (Lab)]

As we have said when other people have suggested fixed rates, we need to avoid unintended consequences or the gaming of those arrangements. I am inclined at the moment to resist what the noble Lord has said, but we can consider that further as the Bill progresses.

[Baroness Verma (Con)]

My Lords, in adult social care or care, you are at the mercy of people going into hospital or passing away and those hours suddenly becoming contracted. Where are the safeguards for the employers at that point? There is no guarantee that people will come out of hospital. You cannot wish more hours to happen; you are at the mercy of people wanting care. I do not understand how this will work in the care sector, so it would be really helpful to understand the Government’s thinking on that.

[Baroness Jones of Whitchurch (Lab)]

The same thing would apply as for seasonal workers, in the sense of that unpredictability. The Bill allows seasonal work to continue; fixed-term contracts can be an effective way for an employer to meet temporary or seasonal demands for work—

[Baroness Verma (Con)]

Forgive me; I thank the Minister for her patience. Seasonal work is incredibly different from care, which is about the elements around you. We cannot predict when somebody will fall sick, go into hospital for long or short periods or pass away. It is a very different discussion point. I want us to be mindful, in thinking about the overall picture, of how certain sectors fit in.

[Baroness Jones of Whitchurch (Lab)]

Obviously, we want all sectors to have the right facilities for them. I am not sure whether the noble Baroness is talking about home care or the care home sector. Perhaps we can have a conversation outside; I will attempt to set up a meeting with her, because I do not want to be misconstrued.

Amendments 10 and 31 seek to amend the Bill so that agency workers do not have a right to guaranteed hours. We are determined to ensure that agency workers who seek more certainty of hours and security of income are protected. Some workers choose agency work because they value flexibility, but they can also experience one-sided flexibility in the same way as other workers. Failing to include agency workers in the scope of the Bill could also see employers shift to using more agency workers to avoid the zero-hours measures altogether. As with other eligible workers, agency workers who prefer the flexibility that agency work provides would be free to turn down the guaranteed-hours offer.

After public consultation, the Government brought forward amendments to the Employment Rights Bill so that hirers, agencies and agency workers are clear where responsibilities will rest in relation to the new rights. However, we recognise that some measures may need to apply in a different way to agency workers because of the tripartite relationship between the end hirer, the employment agency and the agency workers. The Government will consult further and continue to work in partnership with employers’ organisations, the recruitment sector and trade unions to develop the detail of regulations in a way that avoids unintended consequences for employment agencies and hirers.

Amendment 32 seeks to remove from the Bill the power to place the duty to make a guaranteed-hours offer on the work-finding agency, or another party involved in the supply or payment of an agency worker instead of the hirer. We included this power in line with the responses to the Government’s consultation on applying zero-hours contract measures to agency workers. Responses from stakeholders were split about whether this new duty should lie between the hirer, the agency or another party in the supply chain. We are clear that, as a default, the hirer should be responsible for making the offers of guaranteed hours because they are best placed to forecast and manage the flow of future work.

However, given the unique and complex nature of agency worker relationships, which vary in different parts of the economy, the power is required to allow the Government flexibility to determine specific cases in which the responsibility to offer guaranteed hours should not sit with the hirer. For instance, this could be the case with vulnerable individual hirers who receive or procure care from agencies—I am not sure whether that is the point to which the noble Baroness referred earlier—where instead the agency might be in a better position to offer guaranteed hours. We are aware of the importance of this power and the impact these regulations could have on agency workers, hirers, agencies and others in the supply chain. For this reason, this power will be subject to the affirmative procedure, ensuring both Houses of Parliament get further opportunity to debate its use.

[Baroness Neville-Rolfe (Con)]

Can the Minister talk us through the agency question a little bit more? If you need emergency care, you go to an agency and it finds you someone, then you pay a very large sum of money for agency care. Is the Minister suggesting that in future, and considering the ups and downs, the agencies will have to guarantee those who are involved in emergency care these very high salaries, which they will have to pay, even if they do not find clients? Is that how she thinks it will work out in practice? Is it enough to say it is going to go into regulations, when this is so important for the care sector and emergency care?

[Baroness Jones of Whitchurch (Lab)]

I was making the point that this has complications because there are some people who are individual hirers. Some people get benefits to employ people directly, so it is not always done through a third party. That is why we need to have clearer rules about this. I am happy to write to noble Lords or explain this in a little bit more detail if that helps.

[Baroness Verma (Con)]

The problem with direct payments is that you are making the person who receives the payment into the employer. They are usually individuals who are looking after their own care; they will not have the facilities to go through the quagmire of rules and regulations. I say this just to give some assistance.

[Baroness Jones of Whitchurch (Lab)]

I take that point. I was attempting to explain in my description, which I obviously need to develop a little bit more, that we understood some of those issues and are trying to find a way through it.

Amendments 3, 4 and 6 seek to change the model for the right to guaranteed hours from a right to be offered to a right to request. We have debated this at some length. These amendments would mean that a qualifying worker experiencing one-sided flexibility would need to make a request to their employer to access their right to guaranteed hours. Noble Lords underestimate the imbalance of powers that employees in this circumstance face. The noble Baroness, Lady Lawlor, mentioned young people, which is the group that is likely to be the most intimidated by having to request guaranteed hours. Therefore, we are attempting to make sure that these rights are balanced in a proper and more effective way.

I am grateful to my noble friend Lady Carberry for reminding us that the Low Pay Commission also looked at a right to request and, understandably, rejected it for exactly that reason. It understood that the people in those circumstances had the least power in the labour market and would therefore, quite rightly, feel intimidated about coming forward. She also raised the issue of what happens if the request is denied. I know the noble Lord, Lord Fox, attempted to address that, but I do not know that the amendments necessarily do so. The noble Lord, Lord Sharpe, says that employment has changed since those days. I would say that employment has become even more unpredictable and unreliable. Nothing that the Low Pay Commission said—or indeed that I said—addresses the potential exploitation which the commission identified. There is an imbalance, and it is very difficult for people to come forward and make that request; that is why we are insistent that it is done in the way that we have suggested.

After receiving an offer, the workers would then be able decide whether to accept it, based on its specific terms. That would empower the worker to decide for themselves, having seen the offer on the table. This addresses the point that some people do want to work flexible hours, and we understand that.

Amendment 15 would allow workers on limited-term contracts of four months or less to voluntarily waive their right to guaranteed hours. We believe that workers should be able to retain the flexibility of a zero-hours contract or arrangement if they wish, which is why those who are offered guaranteed hours will be able to turn them down and remain on their current contract or arrangement if they wish. This amendment would add an additional opt-out mechanism for workers that could create needless confusion for both employers and workers.

Amendment 17 would provide workers with the ability to opt out of receiving guaranteed-hours offers. We understand the importance of workers being able to retain the flexibility of zero-hours contracts or arrangements if they wish, which is why those receiving a guaranteed-hours offer will be able to turn it down. However, to ensure that all qualifying workers will benefit from the legislation, all workers should be able to receive a guaranteed-hours offer. We want to ensure that employers and workers are starting from a position of equal bargaining power. Therefore, through the Bill we have allowed for employers and unions to collectively agree to opt out of the zero-hours contract measure, if they agree. Unions can make these deals based on their knowledge of the industry and a holistic view of what is best for the workers. We feel it is more appropriate than individual workers opting out of receiving offers. After receiving an offer, qualifying workers would then be able to decide whether to accept, based on their individual circumstances.

Finally, Amendment 2 would remove from the Bill the right for qualifying workers to be offered guaranteed hours. We think that all employers should be required to offer their qualifying workers guaranteed hours, as this is the best way of addressing one-sided flexibility in the workplace and ensuring that jobs provide a baseline of security and predictability.

Without guaranteed hours, workers do not have any form of certainty as to their earnings, making it difficult to apply for credit or a mortgage, to rent a flat, to plan for major events, or even to manage their day-to-day life expenses. As I have previously iterated, those who are offered guaranteed hours will be able to turn them down and remain on a current contract or arrangement if they wish. We believe that this is the right balance. I therefore hope that I have persuaded noble Lords not to press their amendments.

[Lord Sharpe of Epsom (Con)]

The Minister is relying a great deal on the fabled consultation that we are going to have. Can we have some idea of when that consultation is likely to take place? Can I suggest that it perhaps takes place before we get to Report, because it will iron out a great many of these arguments? The Minister asserted that some businesses have supported the 12-week reference period. Can she say which ones?

[Baroness Jones of Whitchurch (Lab)]

The Bill sets out, in a number of ways, that there will be regulations that will be consulted upon. This goes back to the issue of when that consultation will take place, but there is a framework for that set out in the Bill which should cover that point.

[Noble Lords]

And the second point?

[Baroness Jones of Whitchurch (Lab)]

As I said, I read out the names of a number of businesses that are broadly supportive, but we have not gone through clause by clause asking which particular pieces of the Bill they are supporting. However, businesses that are household names are in support of the Bill.

[Baroness Verma (Con)]

My Lords, very quickly, large businesses may be able to be supportive. Could the Minister name any small business that she has come across that supports this?

[Baroness Jones of Whitchurch (Lab)]

Again, there is a list of SMEs that support the basis of the Bill. I do not think it is going to help anybody if we go back and ask them for the specifics of whether they agree with each clause. The fact is that they agree with the direction of travel and a number of businesses, big and small, are already carrying out many of these practices, so it will not be unusual to them. This is about good employment practice and I am sure a lot of businesses will support it.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I agree with the noble Baroness, Lady Kramer, that we need to brief as we have debated this area already. But we do have a great debt of gratitude to my noble friend for bringing forward this amendment. He was, of course, a distinguished Minister for the arts. I do not think people have yet recognised the dangers of one size fits all.

We are very grateful to the noble Earl, Lord Clancarty. I join with him in wanting a detailed impact assessment, particularly for the instance he gave of front-of-house workers. I do not believe that the effect on creative industries has been properly assessed so far as this Bill is concerned, and, as the noble Lord, Lord Berkeley of Knighton, said, there is a need for flexibility.

The theatre industry has only just now recovered—or perhaps it has not yet recovered—from the effects of the Covid-19 pandemic. The last thing it needs now is to be hit by this crude instrument of a Bill, which makes no allowance for the unique nature of the work that it does, and the flexibility that is necessarily inherent in how it delivers for audiences. I really do want to hear from the Minister the extent to which theatres—the larger groups, such as ATG and Delfont Mackintosh, but also small and independent theatres—have been consulted. To what extent have they been consulted about the effects of this Bill?

I will finish off with five questions for the Minister. First, does the Minister accept that the right to guaranteed hours as drafted risks reducing work opportunities for the very people it claims to support, such as students, carers, disabled workers, et cetera? Secondly, can the Minister explain how theatres and other seasonal or project-based employers are meant to reconcile guaranteed hours with programming closures, touring breaks or production gaps?

Thirdly, what modelling have the Government done to assess the potential job losses or reduced shift allocations that could result from this policy, and will they please publish that modelling? Fourthly, why have the Government ignored the clear expert evidence submitted by the Society of London Theatre and UK Theatre to the Public Bill Committee? Finally, does the Minister seriously believe that this legislation embraces inclusion and opportunity for the creative sector, when the sector itself is warning that it will do precisely the opposite?

[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 Parkinson, for tabling Amendment 16, which would require the Secretary of State to have regard to sector-specific work patterns when making regulations relating to the right to guaranteed hours. I am grateful to all noble Lords for their contributions and for highlighting the sometimes unique employment practices that occur in the creative sector and, in particular, the theatre sector.

In response to the noble Lord, Lord Hunt, I would say that we have engaged extensively with the Society of London Theatre and are happy to carry on doing so. We appreciate that some sectors—including the theatre sector, which is highlighted in the noble Lord’s amendment—do have fluctuating demand across the year.

This is a sector that I know all noble Lords recognise we need to support, for all the reasons that the noble Lord, Lord Parkinson, said, particularly for social value reasons. We therefore want to take note and make it right for the sector.

I reassure the Committee that flexibility is already built into the Bill to address issues of seasonal demand. There are several ways under the Bill that an employer could approach that issue while upholding the new rights to guaranteed hours depending on the circumstances, particularly by using limited-term contracts where that is reasonable. Those who are offered guaranteed hours will be able to turn those down and remain on their current contract or arrangement if they wish. Furthermore, through the Bill we have also allowed for employees and unions to collectively agree to opt out of the zero-hours contract measures. Unions can make these deals based on their knowledge of the industry and with a holistic view on what is best for their workers.

We will ensure that the needs of different sectors are considered when we come to design the regulations. We will continue to work in partnership with employers across the different sectors, their representatives, the recruitment sector and the trade unions to develop those detailed regulations, and we will provide clear guidance for both employers and workers in advance of implementing these measures.

The amendment from the noble Lord, Lord Parkinson, had a new concept of available hours for sectors with varying seasonal demand. We would push back on that issue. It could risk creating a two-tier guaranteed-hours framework for workers in sectors with more or less seasonal fluctuation. We believe that the reference period provided for in the Bill will ensure that qualifying workers are offered guaranteed hours that reflect the hours that they have previously worked.

I hope that, in that short contribution, I have been able to persuade the noble Lord that we are aware of the issues and are on the case. We feel that there is considerable flexibility in the Bill as it stands. We are happy to have further discussions. As we have heard from noble Lords, there are a range of issues and a range of options here, so there is not just one way of solving this problem. We are happy to get round the table and talk some more. We feel that, as the Bill is currently designed, it answers the concerns that are being raised with us, but we are happy to talk further. I therefore hope that, on that basis, the noble Lord will be prepared to withdraw his amendment.

[The Earl of Clancarty (CB)]

The Minister talked about the reference period. SOLT would like to see a longer reference period because a year is much more of a real time length than 12 weeks. Is that something that the Government would consider at all?

[Baroness Jones of Whitchurch (Lab)]

We have previously had a debate on the nature of reference periods, and that is something that we are going to consult further upon. If we are going to have a discussion, let us have a discussion on that as well, and I will see if I can reassure noble Lords on that matter.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am grateful to the Minister, particularly for the willingness she has just indicated to continue discussions. SOLT and UK Theatre updated their briefing on the Bill in the light of the amendments that the Government have brought but they retain some concerns about the amendments in this area, so I am sure that they and others across the arts sector will be glad to continue to discuss it with the Government as they continue to write the Bill as it is before us.

I am grateful to the noble Lords who have spoken, especially the noble Earl, Lord Clancarty, and the noble Lord, Lord Berkeley of Knighton, at this late hour; their championing of the arts knows no temporal limit. I am grateful to them for staying to express support for this amendment. I should say that I am much attracted to many of the amendments that the noble Earl, Lord Clancarty, and the noble Lord, Lord Freyberg, have tabled later in the Bill on the need to consider its differential impacts on certain sectors. I look forward to the debates we will have those.

I am grateful too to my noble friend Lord Hunt of Wirral for his generous remarks. I am happy to say that the UK’s theatres have indeed bounced back well from the pandemic. Last year, more than 17 million theatregoers attended a show in the West End alone—an 11% increase on pre-pandemic levels. In fact, the West End outperformed the Premier League, attracting 2.5 million more attendees. As we have just finished a long Bill on football, perhaps we ought to spend a bit more time on the things that people go to in greater numbers.

However, the sector remains precarious. As the noble Earl, Lord Clancarty, said, the people who are that smiling welcome at front of house are often taken for granted. During the pandemic, we saw how challenging it was for them, especially when enforcing some of the Covid restrictions. They deal with exuberant, sometimes well-oiled audiences, and during that time they had to explain to people why they had to sit two metres apart or wear face masks, or why the show had been cancelled or much delayed. They perform a vital role in welcoming people to theatrical productions, orchestral recitals and much more. As the noble Earl said, that relates just as much to cinemas and many other cultural venues. The UK Cinema Association has provided a helpful briefing on the Bill and its impacts on our cinemas.

I am grateful to noble Lords who have taken part in this short but important prelude to the other debates that we will have on the creative industries and the cultural sector, and I am grateful to the Minister for her willingness to continue to discuss these matters with those organisations. On that basis, for now, I beg leave to withdraw the amendment.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I begin by thanking the noble Lord, Lord Leong, for his letter explaining certain matters that were left over from the last day of Committee. The fact that the algebraic question required a three-page, detailed answer for one worked-up example rather illustrates our point that this adds a huge and possibly unnecessary level of complexity for small businesses in particular. But I will let that lie for now.

Amendments 18 and 19 standing in my name would remove the broad delegated power in new Section 27BD. This Bill continues the concerning trend of the steady transfer of legislative authority from Parliament to Ministers. As I noted at Second Reading, it contains no fewer than 173 delegated powers. The Government may, and probably will, argue that this is justified by ongoing consultation, but that is in effect an admission that this Bill is not yet complete or ready for full and proper scrutiny by this House.

Time and again, we have seen ill-defined powers handed to the Executive allowing for significant policy changes to be made by regulation without meaningful parliamentary oversight. Clause 1 exemplifies this problem. It inserts new sections into the Employment Rights Act 1996, establishing a framework for a new statutory right relating to guaranteed hours. However, through new Section 27BD(6), it grants the Secretary of State a remarkably wide power to make regulations specifying circumstances in which the duty to offer guaranteed hours does not apply or where an offer may be treated as withdrawn. There are no limitations, no criteria and no guiding principles. There is no requirement for a consultation or justification. In effect, the Secretary of State is given a blank cheque.

The Delegated Powers and Regulatory Reform Committee has been very clear that the power is “inappropriately broad” and should be

“restated with a greater degree of precision”.

While the Government’s memorandum refers to

“maintaining the original policy intent while allowing reasonable exemptions”,

the committee rightly points out that nothing in the Bill legally constrains the Secretary of State’s discretion in that regard. Moreover, as we raised on the first day of Committee, businesses need clarity on the operation of guaranteed hours. If there are to be sector-specific exemptions—and there may very well be a case for them—they should appear in the Bill, not be left to future ministerial discretion. Uncertainty benefits no one—not workers, not employers and not enforcement bodies. Allowing such fundamental aspects of the regime to be decided later by regulation undermines the transparency and stability of the framework that the Government are seeking to establish.

I remind the Minister that, during the passage of the Data Protection and Digital Information Bill, she rightly accepted similar concerns and tabled amendments which directly reflected the recommendations of the Delegated Powers and Regulatory Reform Committee. At the time, she said:

“I hope the Minister is able to commit to taking on board the recommendations of the Delegated Powers Committee in this respect”.—[Official Report, 27/3/24; col. GC 198.]


Why should that principle not apply here? If it is truly the Government’s intention that this power will be used only in limited and specific cases, then the legislation should make that clear. As it stands, any future Secretary of State could by regulation significantly weaken or disapply this statutory regime without the involvement of Parliament.

Regardless of one’s views on the underlying policy, that is not an acceptable way to legislate. When Parliament creates new rights in statute, they should not be left vulnerable to being hollowed out at the stroke of a ministerial pen. This amendment removes that overly broad delegated power and ensures that any substantive changes to the scope of the duty must be brought back to Parliament through primary legislation. Will the Minister now commit, as she has done before, to taking seriously the recommendations of the Delegated Powers and Regulatory Reform Committee and amending the Bill accordingly?

[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, it is very good to return to the subject of zero-hours contracts as we start day 2 of Committee. As we debated last week, the Government are committed to ending one-sided flexibility and exploitative zero-hours contracts, ensuring that all jobs provide a baseline of security and predictability so that workers can better plan their lives and their finances.

Employers who already provide this security and predictability for their workers will benefit from a level playing field, but these measures will help drive up standards and eliminate undercutting across the board. Meanwhile, employees who enjoy the flexibility of their current zero-hours arrangements will not be pressurised into accepting a guaranteed-hour contract.

I thank the noble Lord, Lord Sharpe of Epsom, for tabling Amendments 18 and 19, which would remove the power to make regulations specifying circumstances in which the duty to offer guaranteed hours does not apply, or an offer may be treated as withdrawn. This power would allow the Secretary of State to react dynamically to changing employment practices that may arise, allowing for updates to maintain the original policy intent of providing a baseline of security and predictability so workers can better plan their lives. It could provide the required economic flexibility that businesses have been asking for, to ensure that the policy is working as intended while adapting to changing circumstances.

This power is separate to the power in the Bill to exclude categories of workers. Regulations made under the excluded workers power would allow specified workers to be taken out of scope of the right to guaranteed hours. Since the right to guaranteed hours is a new, novel right, it could be necessary to exclude certain workers in order to respond to the changing employment environment.

The power at issue here relates to specified circumstances where the right to guaranteed hours would otherwise apply but limited and specified circumstances justified an exception to the duty to make a guaranteed-hour offer. We envisage that any exceptions to the duty to offer guaranteed hours will be narrow and be applied in specified circumstances; for instance, where the measures would otherwise have significant adverse impacts, even when the employers and the workers act with good intentions and there is no other accepted way to mitigate the risk. Examples could include unforeseen circumstances such as a pandemic or a state of emergency.

Consultation is required to further determine which specific circumstances may justify a potential exemption. I assure the Committee that we will give full consideration to any representations made in this House and by respondents to that consultation. Gathering the views from those who will be impacted by the policy via consultation remains of the utmost importance to this Government. By removing the power, we would become unable to make such exceptions and to provide flexibility in those specific circumstances. The power will also be subject to the affirmative procedure, meaning that both Houses will have the opportunity to debate this matter.

Like the noble Lord, Lord Sharpe, I am, as ever, grateful to the Delegated Powers and Regulatory Reform Committee for its careful consideration of the Bill, including in relation to the power with which we are here concerned. The committee continues to serve your Lordships’ House well by providing a thoughtful analysis of the Government’s legislative programme, and I thank it for that.

As acknowledged by that committee, the need to respond to changing circumstances is an appropriate basis for such a power, but in the committee’s view, that power should be narrowed—whereas the amendment goes much further than what has been proposed by it. On that basis, I hope I have been able to set out more information on how the Government intend to use this power, and I of course look forward to responding more fully to the Delegated Powers Committee report in due course. I hope that reassures the noble Lord so that he feels able not to press his Amendments 18 and 19.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I was a little disappointed that the noble Lord, Lord Moynihan, did not welcome me back as well, but I am coming to terms with that disappointment. To briefly refer back to the first group, the noble Lord, Lord Sharpe, made some comments about the letter from the noble Lord, Lord Leong, and had I not had to leave before we got to that group, I fear I was going to subject the Minister to a somewhat satirical analysis of that particular amendment—but, frankly, the letter did a much better job than anything I could have done.

I ask the Minister and the noble Lord, Lord Leong, to take that letter and that response and discuss it with 10 people responsible for HR in businesses of different sizes to ask them what they think of it, then perhaps they could tell us what the result of those discussions were. I absolutely concur with the noble Lord, Lord Sharpe: it is beyond parody that that algorithm should lead to that sort of calculation that any company is expected to make. There has to be a simpler way of getting the same result; that is what we should be thinking about.

I was somewhat intrigued by the degrouping strategy. We have amendments on guaranteed hours in the previous group, this group and the next, which is why I reserved the small comments I have to just this group. I have tried to pick through the bones of what we heard. There are some bones, and I should like the Government to comment on them.

I point to the use of language by the noble Lord, Lord Hendy. On one side they are talking about flexibility and on his side they are talking about evasion and escape. Thereby hangs the problem of the debate that we might be having overall in your Lordships’ Committee. When we are talking about escape and flexibility, we are not using the same language. We have to try to find a way to bridge that divide in culture that we are dealing with. If we were doing conflict resolution, that would be the starting point.

Where I do agree completely with the noble Lord, Lord Hendy, is that we should not be looking to create a two-tier situation. We have to create a system that works for employers across the board. However, the noble Lord’s point was that it would extract a huge number of people from the benefits of the Bill were we to exclude. We have to work hard to ensure that the micro-businesses are not disadvantaged by what we are seeking to do, rather than exempt them from it. That is our view from these Benches.

Back to those bones: I look to the Minister to recognise that there are businesses that have lumpy—perhaps I should say fluctuating—demand. Some of these businesses fluctuate predictably—they are cyclic. Christmas comes at the same time every year, so we always have roughly the same amount of bulge. However, as the noble Baroness, Lady Coffey, pointed out, for others that lumpiness can come with the weather. I want the Minister to recognise that these businesses exist and then for us to explain that a number of issues have already come up around how to manage a workforce fairly while being economically sensible to the business within this lumpiness and fluctuation. We had groups on the first day in Committee, we have these groups, and we will have more.

I would like to sit down with the Minister to understand how the Government envision the Bill allowing businesses that know that they will have lumpy, fluctuating demand to manage a workforce. What will be the fair approach, in the Government’s view, and the economic approach, in businesses’ view, to ensure that there is a win-win? This should not be seen as an evasion or a flexibility but as an opportunity to bring things together and make them better for business and employees, because the two are completely linked in this. We have to cross that divide and sit down with the Government, to work out how flexibility comes into this and how a business will manage this process properly, while delivering the fairness that the noble Lord, Lord Hendy, put forward.

Can those of us who are interested sit down with the Minister in a seminar where she explains how, if the Bill goes through as it is, businesses with lumpy and fluctuating demand, whether seasonable or variable, can manage that going forward?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Sharpe, for tabling Amendments 19A, 20 and 21 to Clause 1 on the right to guaranteed hours. I say to the noble Lords, Lord Sharpe and Lord Fox, that the detailed analysis of the algorithms by the noble Lord, Lord Leong, was presented only on the basis of a request for a detailed analysis of where those arguments came from. There was a much simpler version, which my noble friend gave in his verbal response, so there is more than one version of that challenge.

Amendment 20 seeks to allow employers to propose changes to permanent contracts issued after a guaranteed-hours offer within six months of acceptance, as long as there is a genuine material need in business operations. I am pleased to reassure noble Lords that this amendment is not required. As my noble friend Lord Hendy said, the zero-hours provisions in the Bill do not prevent employers offering their workers variations to their contracts following the acceptance of a guaranteed-hours offer as long as the variation does not amount to subjecting the worker to a detriment. I say to the noble Lords, Lord Moynihan and Lord Londesborough, the noble Baroness Noakes, and other noble Lords, that the Bill does have the flexibility that should reassure businesses that the zero-hours provisions can be changed. As we debated previously, when talking about zero-hours contracts in the context of, for example, individuals such as students or those with caring responsibilities, those who are offered zero-hours contracts will be able to turn the offer down and remain on their current contract.

Going back to Amendment 20, employers will still be able to propose and make changes to their workers’ contracts after they have accepted a guaranteed-hours offer, including in the sectors such as hospitality, to which the noble Lord, Lord Hunt, refers. This can be done following the usual process of negotiation and agreement between employers and workers. It would be subject to the terms of the workers’ contracts as well as existing and new legislation, such as the provisions on fire and rehire. Adding a provision stating that employers can propose variations—something that they will already be able to do—while considering only a limited number of matters may risk creating legal confusion. It may, for example, inappropriately suggest that variations can be proposed only in these circumstances or suggest that other provisions of legislation that do not include similar wording restrict employers’ ability to propose variations of contracts when this is not the case.

Amendment 21 seeks to make provisions that employers may still make redundancies where these are based on genuine business needs and not linked principally to a worker’s right to guaranteed hours. I am again pleased to reassure noble Lords that the amendment is not necessary. The zero-hours provisions in the Bill do not prohibit dismissals by means of redundancy following the acceptance of a guaranteed-hours offer. There are some restrictions on selecting an employee for dismissal by redundancy because they have accepted a guaranteed-hours offer, but this is not what the amendment seeks to address.

The Bill otherwise creates protection only against detriments and makes dismissals automatically unfair in very limited scenarios—including, for instance, where the principal reason for the dismissal is an employee accepting or rejecting a guaranteed-hours offer. If an employer wished to make an employee redundant, they would be required to follow the required processes in line with the terms of the employee’s contract and with employment law relating to individual or collective redundancies, to ensure that the dismissal is fair. This amendment would not substantially change the effect of the provisions, as the zero-hours measures in the Bill do not prohibit dismissal by reason of redundancy following the acceptance of a guaranteed-hours offer. But it could create unhelpful doubt as to how the legislation on redundancy already operates.

Amendment 19A seeks to list in the Bill a number of factors and circumstances that would need to be considered when determining whether it was reasonable for an employer to give a worker a limited-term contract. I emphasise that the right to guaranteed hours will not prevent employers using limited-term contracts. Under the guaranteed-hours provisions, it is reasonable for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract would terminate after that task has been performed—for example, waiting at tables at a wedding—or the worker is needed only until an event occurs or fails to occur, after which the contract would terminate. This could include a worker covering another worker who is on sick leave or a worker needed only for some other kind of temporary need that would be specified in regulations, the contract expiring in line with the end of that temporary need.

--- Later in debate ---

[Lord Fox (LD)]

I thank the Minister for her partial response, but will she reveal the draft of those regulations while we still have an opportunity to debate them? Secondly, I think she was going to talk about consultation and so I ask what question that consultation will be asking.

[Baroness Jones of Whitchurch (Lab)]

I will write to noble Lords about when the regulations will be available. This may well be part of the implementation plan, which is still awaited. Noble Lords can genuinely take it from me that they will receive it as soon as it is available.

We will consult on the contents of the draft regulations and engage with a range of stakeholders, including trade unions and businesses. The noble Lord, Lord Fox, asked whether we could have further discussions about this. Of course I am happy to talk to noble Lords in more detail about how this might apply, because I want noble Lords to be reassured that the flexibility they seek is already in the Bill in its different formulations of wording. But I am happy to have further discussions about this.

I hope that that provides some reassurance to noble Lords. I therefore ask the noble Lord, Lord Hunt, to withdraw his amendment.

[Lord Lucas (Con)]

I join the noble Lord, Lord Fox, in saying that I would really appreciate the opportunity to look at how this Bill deals with lumpy demand— not only predictably lumpy but randomly lumpy. I ask the Clerk at the Table to transmit to the Clerk of the Parliaments a request to tell us how the Bill will affect the House’s employment practices, because we are a great generator of lumpy demand, not least on the Public Bill Office. I would really like that immediate understanding of how the Bill affects a substantial organisation, but one with a very unpredictable set of demands such as the Houses of Parliament.

This lumpiness is a characteristic of, say, the NHS, which may suddenly get a demand and have to do things. Suddenly something emerges and the pattern of working has to change. Will the Bill fix those longer hours so that they become set and cannot be rowed back from when the lump disappears? A good understanding, before we reach Report, of how the Bill will work in practice and interact with a range of real businesses would be really valuable, and I hope the Minister can offer it to us.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thought I had already offered to have further discussions, but I take the noble Lord’s point.

[Lord Hunt of Wirral (Con)]

My Lords, I think my noble friend Lord Lucas and the noble Lord, Lord Fox, were looking for the draft regulations. I do not think I need to remind the Committee of my declaration of interests; at Second Reading, I reminded the House that I am still a practising solicitor. It is no accident that, last week, City AM—a newspaper circulated widely through the City—said that the Bill is the biggest boost for the legal profession that anyone had ever seen. Many more lawyers will be needed to wade through the complexities of the Bill.

In particular, as my noble friend just pointed out, we are constantly debating the Government’s power to introduce regulations, but Parliament is not allowed to see those regulations when it passes the primary legislation that gives Ministers the power, after consultation, to do whatever they wish whenever they wish to do it. We are going to have this time and again in this series of debates. Surely it is right that, if the Government are taking the power to introduce detail—in particular by amending primary legislation—we should see that detail, if only in draft, before we decide to give that power to Ministers.

--- Later in debate ---

There is precedent in legislation to restrict full-time students to accessing particular rights, and that is in universal credit. Full-time students are not allowed to have universal credit, apart from one very narrow exemption. This is a good example of where we are considering the legislation in detail and recognising that we are talking here about the approach that the Government are taking to families and households. I think this is a good exemption that would still allow the flexibility wanted.

[Baroness Jones of Whitchurch (Lab)]

My Lords, this has been a useful debate on the subject of those who may be made exempt from the scope of the right to guaranteed hours. First off, I say to the noble Lord, Lord Hunt, that it is quite right that the Government have a detailed plan to get young people into work and training. Of course, we want to provide new opportunities for all young people, and we are determined to do that.

Amendment 19B in the name of the noble Lord, Lord Sharpe, seeks to take workers who are full-time students out of the scope of the right to guaranteed hours. I say to the noble Lord, Lord Hunt, that the Government appreciate that zero-hours contracts or those sorts of arrangements can work well for many full-time students, who desire the flexibility that they provide. We have heard that from around the Chamber this afternoon. The noble Lord, Lord Hunt, talked about term-time or seasonal work, but I urge him to look back through the previous debates we have had and the comments I have made, because there are a variety of ways in which employers can offer that flexibility of contract and the limited-terms contracts that could address those term-time only or seasonal work issues. I am not persuaded of his argument in that regard.

I say to the noble Lord, Lord Jackson, and the noble Baronesses, Lady Lawlor and Lady Coffey, that there are workers who nevertheless are full-time students, and they can still experience that one-sided flexibility, similarly to the workers who are studying part-time. It seems disproportionate to exclude workers from the scope of that right simply on the basis that they are enrolled in full-time studies. Full-time students may value guaranteed hours to help them manage their job around their studies or arrange their childcare in the same way as those in full-time work.

I think there is an assumption in this debate that we are talking only about a particular age group of people and that it is a group of young people who are earning some extra beer money. This is far from the case. Many full-time students are mature students with family or other caring responsibilities, or even simply with rental or mortgage commitments. For those people, guaranteed hours can be a financial lifeline. According to a 2024 TUC poll, the majority—80% of students on zero-hours contracts—also reported that they had experienced difficulties managing study and education alongside their work. They certainly, in this generation, try to manage both of those a lot more than they did in my generation, and it is now much more expected that young people will work alongside their study. Many of those students want the opportunity to have regular hours to avoid the burden of incurring long-term student debt, which they would otherwise take into their ongoing working life. As we have said, it is entirely up to the student to say what is right for them, but there are very good reasons why the guaranteed hours should apply to all people and we should not make an exemption for students.

However, as we noted, flexibility for workers is important and the Government are not seeking to change that, where workers value that flexibility and have some benefit from a zero-hours contract. As I say, that is why workers who are full-time students and want to retain their zero-hours contracts or arrangements will be able to do so by rejecting the guaranteed-hours offer. They can accept it or reject it.

However, it is the Government’s view that they should be able to choose, based on their individual circumstances, whether to accept a guaranteed-hours offer, rather than being denied that right, as the noble Lord’s amendment seeks, purely on the basis of the fact that they are studying. I hope the noble Lord will look again at his amendment. I feel as if it is penalising young people and students in a way that feels quite unreasonable in the circumstances where everybody else is entitled to this right. Therefore, I hope he will be prepared to withdraw the amendment.

[Lord Hunt of Wirral (Con)]

My Lords, this has been a valuable debate; I agree with the Minister. Indeed, I welcomed her admission that zero-hours contracts work very well for students and are valued by them. I was interested in the TUC survey. All the surveys I have seen so far tell this Committee that full-time students do not want to lose zero-hours contracts.

It may be that the Minister will say, “Why is this amendment necessary, because they will not request full-time employment?” However, under the Bill, the employer has to work out how the business will be able to offer someone on a zero-hours contract full-time employment as and when they request it. It comes later, of course, when we are moving amendments, that we can say that it should not be the duty of the employer to give the opportunity of full-time employment; it should be the right to request full-time employment. What I think we are arguing about is whether all employers will have to go through the process in advance of any request being received. Under this legislation, they have to work out how they will be able to respond positively to an offer.

My noble friend Lady Lawlor shared the real-life experience and the way in which various students have taken advantage of these contracts. But what if they are not going to be offered them and given the opportunity of working as and when, in the flexible, lumpy way they want to organise their studies, as my noble friend Lord Jackson of Peterborough, pointed out? I thank him for going down memory lane; it was a fascinating glimpse of life as a stacker. I suppose all of us will remember what we did as students. I volunteered. I crossed Whiteladies Road in Bristol and offered my services to the BBC. The BBC took me on as a freelance newsreader.

--- Later in debate ---

Moved by

[Baroness Jones of Whitchurch]

34: Schedule 1, page 171, line 37, leave out from “given” to end of line 2 on page 172 and insert “—
(i) less than a specified amount of time before the earlier of when the shift would have started (if the shift had not been moved, or moved and curtailed) and when the shift is due to start (having been moved, or moved and curtailed); (ii) on or after the start of the shift;”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that expands the meaning of the movement of a shift.

--- Later in debate ---

Moved by

[Baroness Jones of Whitchurch]

39: Schedule 1, page 174, line 17, after “(4)” insert “(b)”
Member’s explanatory statement
This amendment corrects a cross-reference, bringing paragraph 23(5) of proposed Schedule A1 to the Employment Rights Act 1996 into line with the equivalent provision (section 27BR(3)) inserted by clause 3.

--- Later in debate ---

[Lord Hendy (Lab)]

I endorse what my noble friend Lord Davies said a moment ago. A trade union is defined by Section 1 of the Trade Union and Labour Relations (Consolidation) Act, and it is an organisation of workers the primary purpose of which is to regulate relations between employers and workers. That is the only definition. Any body that does that is a trade union. So the sorts of organisations identified in these amendments will be trade unions. But, as trade unions, they have consequential obligations. For example, they have to elect their general secretary and their national executive committee by ballot every five years, and so on. So there are consequences to these amendments. By the way, a trade union defined by Section 1 is not necessarily independent. There are independent trade unions listed by the certification officer and non-independent trade unions. “Independence” has a specific meaning under the legislation.

[Baroness Jones of Whitchurch (Lab)]

Phew—I do not know whether I want to join in this philosophical debate because, clearly, we have heard strong views on both sides, and they have strayed way beyond the amendments we are trying to moderate today. But I would say that the Bill overall seeks to find the right balance between workers, unions and businesses, recognising that each has an important role to play. Our aim in the Bill is to modernise those arrangements for the 21st century so that we are not playing “Yah-boo, you did that back in 1953” but are actually looking to the future. We hope that is what the Bill will deliver.

These amendments aim to broaden the provisions in the Bill to allow employee representative bodies or staff associations to collectively agree to modify or opt out of the zero-hours measures. The Bill already allows these collective agreements to be made, but only by trade unions. As we are allowing for modification of statutory employment rights, it is vital that the appropriate safeguards are in place. This includes that only trade unions that have a certificate of independence, and are therefore free from employer control, can agree with employers to modify or opt out of rights, and that rights are guaranteed in exchange and incorporated into a worker’s contract.

I make it clear that staff associations and employee representative bodies, some of which we have heard described this afternoon, can do really good work, and we welcome engagement between employers and workers in all forms. However, we do not think it is appropriate for these associations and bodies to be able to modify statutory employment rights. This is not least because they may not have sufficient independence from the employers—a point well made by my noble friend Lady O’Grady—unlike independent trade unions, which do have that independence and which offer high levels of protection to workers. Furthermore, there is a well-established framework for trade unions, including recognition, independence and incorporation of terms, and the provisions build off these provisions.

I can see that the noble Lord’s amendments suggest a framework of requirements that staff associations and employee representative bodies would need to meet in order to modify or exclude zero-hours rights. These include requirements around independence, recognition, elections and record-keeping.

However, as my noble friends Lord Hendy and Lord Davies have said, the more you incorporate those requirements, the more you add to a staff association or employee representative body, the more similar it appears to be to an independent trade union. Given that the trade union framework is well established, historically and legally, it is not clear to me that it makes sense to establish a similar but different structure just for the purposes of the zero-hours measures. I am grateful to my noble friends Lord Davies, Lady O’Grady and others for reminding us of the hard-won rights that we have achieved through organisations within the trade union movement. Trade unions already serve to protect and advance the interests of workers.

I felt that the noble Lord, Lord Moynihan, presented a caricature of the unions. For every criticism he has, we could come back with all the advantages that trade unions have delivered for working people over the years in pay and conditions and in some of the fantastic campaigns—for example, around the environment, women’s rights, and so on. They have already contributed enormously to modernising workplace rights, so I do not feel that it would be appropriate or proportionate to try to recreate them. The trade unions already provide the constructive dialogue with employers to which the noble Lord, Lord Sharpe, refers, and membership of trade unions remains voluntary for employees.

I say, too, to the noble Lord, Lord Sharpe, that there is a technical issue around all this. If his amendment was accepted as drafted, it would not achieve the aims that he intends. Collective agreements have a specific definition in the Employment Rights Act 1996, which the zero-hours provisions are being inserted into. The definition, referring to the definition in the Trade Union and Labour Relations (Consolidation) Act 1992, provides that collective agreements are ones between independent and certified trade unions and employers’ or employees’ associations, so there would not be scope in the way that the noble Lord has worded his amendment for a wider definition of employee representatives.

We have had a debate which I have a feeling we are going to return to on some of the other trade union issues, but, for the time being, with this set of amendments in mind, I hope that the noble Lord, Lord Sharpe, will consider withdrawing his amendment.

[Lord Sharpe of Epsom (Con)]

That was a short but most interesting debate, and I am grateful to all noble Lords who participated. I am particularly grateful to the noble Lord, Lord Davies of Brixton, and the noble Baroness, Lady O’Grady, for their comments. No one on this side is denying that trade unions often have a proud history. As my noble friend Lord Deben pointed out, they have a very strong history in securing workers’ rights which has been constructive for our country over many years—no one is denying that. However, as the noble Baroness, Lady Fox, pointed out, not all modern trade unions support that history. I am sure that noble Lords would accept that.

The fact is that the world has evolved, and these amendments simply respect that evolution. My noble friend Lord Moynihan points out that only 22% of workers are currently unionised. The latest figure that I can find for the private sector is 12.3%. The other 88% have not been prevented from joining a trade union; they have exercised a choice not to, a democratic choice, so trying to argue that this proposal is somehow undemocratic makes no sense in the context of the rest of the Bill. Why, for example, does the Bill later on scrap the 40% turnout requirement for statutory recognition? That seems profoundly undemocratic.

Having said all that, I am obviously very grateful to the Minister for her response, and I accept that there are probably technical issues with my amendment. With that helpful hint, I shall improve them for the next time that we debate these measures. However, on the first day in Committee, we heard the Government argue that, in relation to guaranteed hours:

“Unions can make these deals based on their knowledge of the industry and with a holistic view on what is best for their workers”.—[Official Report, 29/4/25; col. 1203.]


If the Government are willing to accept that logic for trade unions, surely the same reasoning must be extended to independent staff bodies and employment forums, many of which are embedded deeply within the day-to-day life of a company and have even greater practical knowledge of their specific industries and workplaces. In some cases, those bodies are closer to the operational realities of individual businesses than remote union structures, and they are more trusted by the employees themselves.

The debate should ultimately be about respecting individual workers and their choices. The Government’s stance suggests a lack of trust in individual workers and the belief that, unless a worker is represented through a traditional trade union, their voice is somehow less valid or less informed. Fundamentally, it appears that the Government do not believe in the individual and do not trust workers to know what works best in their own context; instead, they insist on a one-size-fits-all approach, even when that model may be entirely foreign to a smaller business or industries where union involvement has never been the norm.

What about the many employees who are content with their current representation? Will they now be told that their structures are not good enough and that they have to change, bring in new frameworks, hire experts and prepare for union-led negotiations, whether they want them or not? Will industries that have long enjoyed stable relations be pushed into more adversarial models, creating the very tensions that this Bill should be seeking to avoid? Can the Minister perhaps enlighten us as to how smaller businesses and those that have never operated within a unionised environment will adapt to rigid models such as this, which assume that union involvement is the only valid route to collective agreement?

These amendments do not challenge the value of trade unions—very far from it. They simply recognise that unions are not the only route to fair and effective representation. If the Government are truly serious about modernising employment rights, we must begin by acknowledging the diversity of how workers organise today. For now, I am of course content to withdraw the amendment.

--- Later in debate ---

Moved by

[Baroness Jones of Whitchurch]

45: Clause 6, page 34, line 14, at end insert—
““work-finding agency” has the meaning given by section 27BV;”Member’s explanatory statement
The definition of “work-finding agency” in proposed section 27BV of the Employment Rights Act 1996 applies for the purposes of Part 2A of that Act. This amendment adds reference to the definition to the Part 2A interpretation provision in proposed section 27BZ2 of that Act.

--- Later in debate ---

Moved by

[Baroness Jones of Whitchurch]

46: Schedule 2, page 178, line 27, at end insert—
“Insolvency Act 1986
A1 In the Insolvency Act 1986, in Schedule 6 (categories of preferential debts), in paragraph 13(2), before paragraph (a) insert—“(za) a payment under section 27BP(1) of, or paragraph 21(1) of Schedule A1 to, the Employment Rights Act 1996 (payment for a cancelled, moved or curtailed shift);”.”Member’s explanatory statement
This amendment will make payments under proposed section 27BP(1) of, and paragraph 21(1) of Schedule A1 to, the Employment Rights Act 1996 (payments for cancelled, moved or curtailed shifts) preferential debts for the purposes of the Insolvency Act 1986.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, the minute hand of legislation is approaching the blessed relief of adjournment, so I am going to reserve what I have to say about statutory sick pay to when I speak to Amendments 73 and 74 in the next group, in which I think some issues of the costs are addressed. I know the noble Baroness, Lady Coffey, and I have come up with amendments that are broadly similar, and I think it would be more appropriate to speak there.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I am pleased that we have moved on and that we are now debating the Bill’s important provisions to improve the provision of statutory sick pay for millions of people across the country. I therefore thank the noble Lords, Lord Sharpe and Lord Hunt, for tabling Amendments 68, 69, 70 and 71 on this topic and speaking to them. These amendments would significantly change the statutory sick pay measures in the Bill.

The pandemic exposed just how precarious work and life are for those on low incomes, with many forced to choose between their health and financial hardship. Strengthening statutory sick pay is part of the Government’s manifesto commitment to implement our plan to make work pay, ensuring that the statutory net of sick pay is available to those who need it most. These changes are important. Estimates indicate that up to 33% of influenza-like illnesses are acquired in the workplace. One sick employee coming into work can lead to 12% of the workforce becoming sick, according to WPI Economics’ modelling.

The changes to remove the waiting period and lower earnings limit from the SSP system will therefore benefit employers by reducing presenteeism, which in turn can lead to overall productivity increases and can contribute to a positive work culture that better helps recruit and retain staff. This can help to reduce the overall rate and cost of sickness absence to businesses, and also contribute to reducing the flow of employees into economic inactivity.

I will turn first to Amendments 68 and 70. Removing the waiting period is essential to ensure that all eligible employees can take the time off work they need to recover from being sick, regardless of whether they are an agency worker. Removing the waiting period will also better enable phased returns to work, which evidence shows can be an effective tool in supporting people with long-term health conditions to return to and stay in work. This change should help to reduce the overall rate and cost of sickness absence to businesses, contributing to reducing the flow of employees into economic inactivity.

I regret that the noble Lord’s amendment would make this more challenging, as it would mean that employees would have to take two consecutive days off to be eligible for statutory sick pay. I do, however, understand the noble Lord’s concerns about the impact of the waiting period removal on businesses, but if employers have the right policies and practices in place—and most good employers do—the risks of inappropriate absenteeism can, of course, be mitigated. Crucially, the additional cost to business of the SSP reforms is around a relatively modest £15 per employee. We have been lobbied from both directions on these provisions because, for example, many on our own Benches would say that the rates we are proposing here should be much higher. I am sure they will make their concerns heard at some point during the passage of the Bill. It is not a great deal of money—as I say, it is £15 per employee—and it is certainly aimed at the lower rate that could be available.

On Amendment 69 regarding agency workers, one of the fundamental principles of the Bill is to ensure that people who work through employment agencies and employment businesses have comparable rights and protections to their counterparts who are directly employed. Amendments that limit the entitlement of agency workers would undermine this objective and have no reasonable justification. The noble Lord, Lord Hunt, said that employment agencies have more of an arm’s-length arrangement with their agency workers, but I would say the opposite: in fact, employment agencies are in a powerful relationship over their agency workers, meaning that those workers are less likely to abuse such a scheme.

Amendment 71 seeks to limit the maximum entitlement of SSP for employees with multiple employers so that they would receive no more statutory sick pay than they would be entitled to if they worked for only one employer. However, this would be administratively very complicated to deliver for businesses, particularly SMEs, and carries a high risk of SSP being miscalculated and employees being underpaid. It would particularly harm the very lowest-paid people who are working a limited number of hours. I also question the necessity of such an amendment. As it stands, employees with more than one job can already receive SSP from their employers if they earn above the lower earnings limit. The measures in the Bill will not change that, and I regret that this amendment would impact only the lowest-paid employees.

That is all I have to say on this issue at this stage, and I therefore ask the noble Lord to withdraw his amendment on the basis of the assurance I have given.

[Lord Hunt of Wirral (Con)]

My Lords, I recognise that the Minister says that she understands the concern that has been expressed. We are aware too that many agencies have raised with the Government the serious impact on small businesses and the risk of increased absenteeism. I believe their concerns are valid and I hope the Minister will continue to keep an open door for those agencies to perhaps respond in more detail directly to the Minister.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, there have been some excellent debates in this group. I ask for some clarification, particularly from the Government, on something I am confused about. I am sympathetic to Amendment 74A. The noble Baroness, Lady Cash, made a very useful and insightful contribution that brought another layer to the discussion. There is a danger of us talking about these things technically, yet in a rather old-fashioned way, when there is a lot more evidence and new phenomena to consider.

Amendment 74A looks at the impact on—

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

I am sorry to interrupt the noble Baroness, but we are not debating Amendment 74A. It is grouped elsewhere.

[Baroness Fox of Buckley (Non-Afl)]

I have the right group; I have just said the wrong thing.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I thank all noble Lords who have spoken in what has been a very interesting debate. I will try to reflect on what I have heard as I speak; that will make my job quite difficult and probably make my speech completely incoherent, but I will do my best.

We closed last week with a couple of de-grouped Conservative amendments. I promised to reserve what I would say on statutory sick pay for this group, which means that I am unlikely to speak on the next group. Last week the noble Lords, Lord Sharpe and Lord Hunt, spoke firmly against the Government’s proposed changes. I have seen evidence of businesses arguing strongly either for the status quo or for a two-day threshold.

I am not a behavioural scientist, but I can read a room politically. The party that is sitting on a huge majority in the Commons has made it very clear where it stands on this issue, and that has been reasserted by some of the even stronger comments we have heard from the Benches opposite. Businesses have drawn the same conclusion. Many of those I talk to are seeking ways to ameliorate this, rather than eliminate it, which is probably unlikely.

I was interested to hear the noble Lords from the Conservative Front Bench speak to Amendments 71A and 71B. Their version of amelioration appears to be to reduce the amount of SSP, or at least severely limit it. We heard a different story from the noble Baronesses, Lady Lister and Lady O’Grady, who set out why SSP is important and why the rate is meaningful. To contextualise poverty, we are talking about the poorest people who are working people but still extremely poor. It is difficult to overestimate the generosity of this scheme, but that is what I have heard from several on the Conservative Benches. This is a very modest offer. With her statistics, the noble Baroness, Lady Lister, set it out very clearly, as did the noble Baroness, Lady Smith.

Before I talk to my own Amendment 74 and Amendment 73, I will deal with the others. In Amendment 75, the noble Lords, Lord Sharpe and Lord Hunt, call for a reviewer to report within two years. I mentioned there is a subsequent group which also has impact assessment amendments in it. I am not really sure why we are debating them separately. Rather like the noble Baroness, Lady Fox, I am going to mention 74A to 74C, which have been shunted into a separate group. Taken together, there is a slightly curious mismatch of timings: Amendment 75 is after two years, 74B and 74C after six months and 75A after a year. I agree that there do need to be impact assessments following whatever your Lordships decide, perhaps on a more systematic calendar than the ones suggested.

I am interested in the pre-emptive impact assessment. For the benefit of your Lordships’ Committee, it would be good to hear the Minister spell out the detail of the impact assessment of business on the current proposed measures. If, as the Minister says, the costs will be relatively modest, the costs of Amendment 73 or 74 would also be relatively modest, which takes me to the point in question.

As we have heard very eloquently from the noble Baroness, Lady Coffey, she and I have come up with very similar suggestions in terms of amelioration, which is what I was talking about earlier. Rather like the noble Baroness, Lady Noakes, I slightly prefer the version from noble Baroness, Lady Coffey, but that is not the point—this is not a competition. We would like to sit down with the Government and thrash through a way whereby a rebate scheme can be reintroduced. This seems to be the sensible approach. We care deeply about SMEs—they drive a huge part of our economy. This is a way of making sure that they do not get disadvantaged as employees get what they deserve as SSP. That is what I am asking for from these Benches. Very sensibly, the noble Baronesses, Lady Coffey and Lady Noakes, and others supported it. I hope that the Minister will be able to make a positive noise about that and we can sit down and have that conversation.

Today, we have heard that SSP is absolutely vital for a section of society who are already massively disadvantaged. We should not be drawing lines and pushing them further down. We should be finding ways of making sure that they are not disadvantaged even more and, at the same, we should find ways of making sure that our SME sector is not also disadvantaged.

[Baroness Jones of Whitchurch (Lab)]

My Lords, we have had a really good debate on these issues, and I hope that I can do justice to all the questions and points that have been raised.

I begin with Amendment 75, tabled by the noble Lords, Lord Sharpe and Lord Hunt, on independent reviews into the effects of SSP reforms on small and medium enterprises. As noble Lords will be aware, the Government have already undertaken a regulatory impact assessment, which was published on 21 November 2024 and can be found on GOV.UK. This considered the likely direct business impact of the SSP changes, including on small and medium enterprises. In the regulatory impact assessment, the Government estimated that delivering these measures will cost businesses a modest £15 extra per employee. I assure noble Lords that the Government remain committed to monitoring the impact of these SSP measures. We intend to conduct a post-implementation review of the measures in the Employment Rights Bill within five years of implementation. Additionally, the Department for Work and Pensions conducts regular employer and employee surveys and will continue to do so, providing further monitoring of the impact of the SSP changes on a range of employers and employees.

I draw attention to the Keep Britain Working review. We asked Sir Charlie Mayfield to lead this independent review, which will consider recommendations to support and enable employers to promote healthy and inclusive workplaces, support more people to stay in or return to work from periods of sickness absence and retain more disabled people and people with health conditions.

While I am speaking about the variety of illnesses that people on sick leave incur, let me address the issue of mental health absences, which was raised by the noble Baronesses, Lady Cash and Lady Smith, the noble Lord, Lord Sharpe, and my noble friend Lord Davies. Our proposals have to be seen in the wider context of the Bill. The Bill is intended to improve the experience of employees at work, so measures such as flexible working, guaranteed hours and protection from harassment could—we believe will—reduce stress at work, potentially leading to fewer incidents of burn-out and better employee mental health, and therefore fewer related absences. For us, that is an important challenge that we intend to monitor.

Amendment 73, in the name of the noble Baroness, Lady Coffey, would introduce a rebate scheme to reimburse SMEs for the cost of SSP for the first four days, although I think she clarified that she meant three. I thank her for her interest in SSP, and of course I appreciate her extensive knowledge and experience in this area, as a former Secretary of State for Work and Pensions. As previously mentioned, regarding waiting days, the changes we are making to SSP will cost businesses around an additional £15 per employee, a relatively modest amount in comparison with the benefits of reduced presenteeism and the positive impact that this will have on our lowest paid members of society. As the noble Baroness may recall, we previously delivered SSP rebate schemes such as the percentage threshold scheme. This was abolished due to SMEs underusing it, and feedback that the administrative burden was complex and time consuming. So I suggest that a rebate scheme that covered only the first three days of sickness and absence would also be quite administratively burdensome, both for businesses to claim and for the Government to process.

Previous SSP rebate schemes also did not encourage employers to support their employees. We know that employers having responsibility for paying sick leave helps maintain a strong link between the workplace and the employee, with employers encouraged to support employees to return to work when they are able.

Sticking with the theme of rebate schemes, Amendment 74, from the noble Lord, Lord Fox, would introduce an SME rebate scheme for the whole duration of sickness absence. I reiterate the points I made earlier about the limited cost to business as a result of SSP changes and the experience of previous rebate schemes. I agree with the noble Baroness, Lady Lawlor, that we have moved a long way from the Beveridge system of social insurance. The costs and the mechanisms are very different now.

A rebate for the full cost of SSP could cost the Government up to £900 million a year. I do not believe that a rebate scheme is the best way to support our SMEs at this time. We will be considering the findings of the aforementioned Keep Britain Working review, which is expected to produce a final report with recommendations in the autumn. The noble Lord, Lord Fox, challenged me to keep talking about this, and of course I am very happy to do so.

Amendments 71A and 71B were tabled by the noble Lords, Lord Sharpe and Lord Hunt. As they may be aware, the Government consulted on what the rate of SSP should be for those who currently earn below the lower earnings limit. There was no clear consensus from stakeholders on the percentage. The Government believe that the 80% rate strikes the right balance between providing financial security to the lowest paid employees when they need to take time off work to recover from illness and limiting the cost to business. As the noble Lord, Lord Fox, said, if we are not careful, we will be penalising the very poorest in our society.

Crucially, the total amount saved by business, if the rate were set at 60% compared to 80%, would be around £10 million to £30 million per year. That is about a £1 difference per employee per year, or less than 0.01% of total spending on wages annually by businesses. On the noble Lord’s Amendment 71A, which would set the rate at 60% for the first three days of a period of incapacity for work, the amounts potentially saved by business become even smaller, with the difference in cost being a matter of pennies. Given the minimal savings for businesses, the complexity for employers in administrating different rates is difficult to justify.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, like the noble Lord, Lord Fox, I am a little puzzled by the groupings between this and the previous amendments. I have gone the opposite route and decided to speak to this group rather than the last one, but everything that I say in this group applies equally to Amendment 75, which would have created a review of the impact of the changes on small and medium-sized businesses. This group would require impact assessments to carried out for the various other effects that the Bill would have—so really it is the same subject.

Frankly, a lot of this would not be necessary if the Bill had been properly thought through from the beginning, if there was not so much detail to be filled in later by regulation and, in particular, if a proper impact assessment had been carried out on the various changes proposed. The Bill will, by the Government’s own admission, impose costs on business, disproportionately on smaller businesses, of around £5 billion, and will, again by the Government’s own admission, have potentially negative impacts on employment opportunities for those with poorer employment records. It is deeply unsatisfactory that it should not have been properly impact-assessed.

The Regulatory Policy Committee rated the impact assessment as “not fit for purpose”. It is worth reminding noble Lords what it said:

“Given the number and reach of the measures, it would be proportionate to undertake labour market and broader macroeconomic analysis, to understand the overall impact on employment, wages and output, and particularly, the pass-through of employer costs to employees. The eight individual IAs and the summary IA need to provide further analysis and evidence in relation to the rationale for intervention, identification of options (including impacts on small and microbusinesses) and/or justification for the preferred way forward”.


It is damning that that was not done before the Bill was presented to us.

Now, before the Minister points this out, I concede that the statutory sick pay individual impact assessment is the only one of 23 that is rated as good—in itself a pretty damning statistic. However, the impact assessment for the monitoring and evaluation plan for the statutory sick pay part is rated as weak. The noble Lord, Lord Hunt, has already referred to the potential behavioural aspects that arise, which are not in any way covered in the impact assessment. In fact, there is a complete cop-out; it says, “We can’t do this because of the behavioural impacts”.

Sadly, these proposed amendments and Amendment 75 in the previous group are clearly necessary, as are the others that we will debate later today and throughout the Committee process. The five-year review that the Minister referred to earlier frankly does not cut it, given the significance of the measures in this Bill and how quickly how they will have impact. Five years is way too long to wait to understand whether it is damaging.

I do not wish to test noble Lords’ patience by repeating this speech multiple times during the process of the Committee, so I ask the Minister to take as read my support for proper and timely reviews and assessments of the impacts of this Bill as we go forward.

[Baroness Jones of Whitchurch (Lab)]

My Lords, as noble Lords have identified, we are now continuing the important debate on statutory sick pay and specifically to address the impact of these measures on businesses.

It is important to highlight that the statutory sick pay system, and the changes that we have brought about as part of this Bill, is designed to balance providing support for the individual with minimising the costs to the employer. This group of amendments, Amendments 74A, 74B and 74C, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require impact assessments on absenteeism, enhanced sick pay schemes, occupational health, and short-notice shift working.

As I mentioned earlier, and as the noble Lord, Lord Fox, has already identified, the Government have already undertaken a regulatory impact assessment which considered the likely direct business impact of SSP changes. This included considering the impact on small and medium enterprises and sectoral impacts.

Overall, in the regulatory impact assessment, the Government estimated that the cost of delivering these measures would be approximately £15 extra per employee, a relatively modest amount when compared to the positive impacts that these changes will have for employees and overall productivity. I thank the noble Lord for the three amendments tabled in this group, all of which would require impact assessments. I look forward to debating those with the other 23 or so requests for impact assessments that the Opposition have already tabled. We have a plethora of requests for impact assessments. I reassure the noble Lord that we are at the same time updating our regulatory impact assessment and operating a post-implementation review of the measures—so the Opposition’s requests are probably not necessary.

On the noble Lord’s Amendment 74A, requiring an assessment of the impact of the changes to SSP in the Bill on absenteeism, we acknowledge that overall sickness absence may increase as a result of this Bill. This is not a loophole, nor are the Government not considering businesses; rather, it is the very objective of these changes to enable the lowest-paid employees to take time off when they are sick. Under the new system, employees will be able to take the time that they need to recover from short-term illness without struggling through work and often risking the spread of infectious diseases such as influenza. Similarly, employees with long-term or fluctuating conditions should feel able to take a day of sickness absence to manage their condition to prevent it worsening. The noble Lord, Lord Hunt, suggested that employees might be encouraged to misuse the system. However, if employers have the right policies and practices in place, the risk of inappropriate absenteeism can and should be mitigated.

Additionally, the noble Lord’s amendment would be quite difficult to deliver in practice. There is not a standard measure of absenteeism versus legitimate sickness absence, and in many instances, it would depend on whether you asked the employer or the employee. The Government intend to build on the regulatory impact assessment and, as I have said, we intend to conduct a post-implementation review of the measures in the Employment Rights Bill.

I turn to Amendment 74B, to assess the impact of the reforms in the Bill on employers’ ability to continue offering enhanced sick pay and occupational health services, particularly in low-margin sectors such as retail. I appreciate the noble Lord’s concern about the potential impact on this matter, and the Government certainly agree that it would not be in anyone’s interest for there to be a rollback of occupational sick pay or occupational health provision. However, the Government’s view is that these changes will serve only to strengthen the link between the workplace and the employee. I question why any business would want to use these changes as a reason to reduce the support that they provide their employees to help them stay in, and return to, work.

The noble Baroness, Lady Fox, asked about the Government’s policy on getting people back to work, and she was right to raise the issue. We are talking about a balance here; when people are sick, they should have the right to be off sick. I also accept the point that she made that being at work can in itself be a healing experience, and we should not lose sight of that—that there can be a positive health impact from being at work.

I once again draw noble Lords’ attention to the Keep Britain Working review. As I set out earlier in the debate, Sir Charlie Mayfield will consider recommendations on how the Government can support and enable employers to promote healthy and inclusive workplaces and support more people to stay in or return to work from periods of sickness absence. That review is expected to produce a final report in autumn this year. I believe that much of what the Keep Britain Working review is doing will address the noble Lords’ concerns, and I hope this reassures them that the Government are taking this matter seriously. We look forward to the results of the review.

Finally, I turn to Amendment 74C, which seeks to review the effects of the SSP changes on shift management and short-notice scheduling in the workplace. As discussed in relation to Amendment 74A, the number of sickness absences may go up as a result of these changes. This is because it would enable employees to take time off when they are sick.

I again reassure noble Lords that the Government are committed to understand the impact of these changes on businesses. We intend to conduct a post-implementation review of these measures in the Employment Rights Bill within five years of implementation. Additionally, as I set out in the earlier debate, the Department for Work and Pensions conducts regular employer and employee surveys and will continue to do so, providing further monitoring of the impact of SSP changes on a range of employers and employees.

However, this amendment would require the Government to collect a significant amount of data from businesses on what noble Lords will understand is quite a wide range of issues. We believe that this would be administratively challenging for them to provide, particularly in less than six months. This is the very thing that the noble Lord is seeking to avoid—the extra bureaucracy that he has talked about. For example, asking employers, including SMEs, to accurately record and report to government the frequency of shift cancellations and redeployments because of sickness absence is not practical or reasonable.

We have had a worthwhile, short debate on these issues, but I hope I have persuaded noble Lords that we are on the case and therefore that the amendment can be withdrawn.

[Baroness Noakes (Con)]

My Lords, the Minister said during her remarks that there would be a cost per employee of £15; I think she said that in the earlier group as well. Can she provide any more information on this? It seems counterintuitive. If the average number of sick days per employee is around eight, which is what the most recent survey data showed, that implies that employers are already bearing the cost of something like seven and a half days and are going to pay only for an extra half day. That does not seem to be consistent with the evidence of the nature of absences that also exist, which implies that most are at the shorter end and probably are going to be below the level at which they are currently being reimbursed by statutory sick pay.

It has been troubling me for some time, but I hope that the Minister will be able to provide some further information. I do not expect it from the Dispatch Box, although I would be delighted if it were to come from the Dispatch Box right now, but if she could write to me, I would be most grateful.

[Baroness Jones of Whitchurch (Lab)]

I suppose the simple answer to that is that it is in the regulatory impact assessment, which the noble Lord, Lord Vaux, acknowledged was one of the things that we got a fair rating for. I refer the noble Baroness to that, which I think will give more details.

[Baroness Noakes (Con)]

I have read it. There is no more detail in that impact assessment on the £15. That is why I am asking whether the Minister can provide further detail on how that £15 was arrived at.

[Baroness Jones of Whitchurch (Lab)]

I am happy to write to the noble Baroness.

[Lord Fox (LD)]

It would be very useful if she could share it with the other Front Benches as well.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Monday 19th May 2025 Lords Chamber

[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, this has been a good introduction to the further debates we will have today on provisions in the Bill on harassment. I am grateful to the noble Baronesses, Lady Kramer and Lady Morrissey, for tabling Amendment 82A. Both made important points about investigation and action being crucial.

The Government agree that while the preventive duty places broad requirements on employers, it is important to ensure that specific steps are taken by employers to combat sexual harassment in the workplace. This is why, in addition to strengthening the preventive duty, we are introducing a delegated power, enabling us to specify steps that are to be regarded as reasonable for the purpose of meeting the obligations set out in the Equality Act 2010 to take all reasonable steps to prevent sexual harassment.

The regulations may also require an employer to have regard to specific matters when taking those steps. The regulations that the power will introduce will help clarify what is expected of employers, as well as guiding the EHRC or employment tribunals when taking enforcement action. These steps may include requirements on employers to undertake investigations following complaints and action recommendations, in addition to the requirements set out in the ACAS code of practice on disciplinary and grievance procedures. To better understand what steps are effective and proportionate, we have launched a call for evidence, and we will give responses careful consideration.

I have to say to the noble Baroness that it would be premature to introduce specific requirements in relation to investigations at this stage. I ask her to withdraw Amendment 82A, but I hope she will take on board that I am happy to continue discussions with her on these issues after the call for evidence concludes. I am sure we can reach an agreement going forward on that basis.

[Baroness Morrissey (Con)]

My Lords, I thank the noble Lord, Lord Hunt of Wirral, and the noble Baroness, Lady Kramer, for their thoughtful remarks, and in particular for highlighting the need for investigation and action to protect the victims.

I was slightly surprised at the grouping of this amendment, as it probably sits better among the other provisions and amendments designed to combat sexual harassment that we will be discussing later.

I am glad to hear from the Minister that a consultation is planned, which may include provisions requiring employers to conduct proper investigations. I look forward to hearing further about that. But for now, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friends Lord Young of Acton and Lady Noakes very much for their expert, valuable and important introductions to and insights into this group. I also thank my noble friends Lady Meyer, Lady Lawlor, Lady Cash, Lord Strathcarron, Lord Ashcombe and Lord Murray for their practical, legal and philosophical objections to Clause 20, which, as noble Lords will perhaps not be surprised to know, I do not regard as straw-man arguments. It was also wise of my noble friends to note that these amendments have the support of UKHospitality. They also have the support of the British Beer and Pub Association.

These amendments are vital in ensuring that we do not inadvertently restrict fundamental rights of free expression in the workplace and beyond. We all recognise the importance of protecting employees from harassment. It is not about not caring about their plight, as the noble Lord, Lord Fox, implied; it is about also ensuring that we are not creating a framework that stifles open and honest conversation. That is especially true in matters of political, moral, religious or social debate.

Clause 20 as it stands is, as my noble friend Lady Cash pointed out, poorly drafted and therefore risks leading to unintended consequences. In fact, I agree with the comments of the noble Baroness, Lady Deech, about the speech from the noble Baroness, Lady Carberry, who made a very persuasive case that Clause 20 is superfluous in its current form.

The inclusion of speech or conversation that simply expresses an opinion on a political, moral, religious or social issue would lead to significant restrictions on individuals’ freedom to speak openly. This could lead to employees feeling that they cannot express their thoughts and ideas or, perhaps worse, would be penalised for expressing an opinion that someone else may find uncomfortable or offensive. As my noble friend pointed out, we must be mindful of the unintended consequences that could arise from an overbroad definition of harassment. Both he and the noble Lord, Lord Londesborough, gave strong examples from the footballing world. If I may speak as a fellow West Ham United fan, I am very aware that being a supporter of that august club can be a very testing experience that can drive one to the occasional profanity.

It is not just in sports that these concerns arise. Think about public spaces such as pubs, about which we have been hearing. If an individual overhears a conversation that they find offensive or upsetting, where does the line lie? What happens if somebody misunderstands something that is said and it is taken to an employment tribunal as a case of harassment? In such situations, the burden placed on employers would become unreasonable. Would they be required to intervene every time someone overhears an opinion that they find discomforting or just dislike?

If I may ask a genuine question, how are people supposed to judge, to quote the noble Baroness, Lady Carberry, whether a conversation is obviously fake or not? As my noble friend Lord Young and the noble Lord, Lord Londesborough, argued, are we expecting publicans to make finely calibrated judgments on ECHR Article 10 in particular? We should remember that even senior police officers, who are trained in these matters, often struggle to make such judgments. Employers will inevitably err on the side of caution and that is chilling.

I believe that we must ensure that harassment in this context remains focused on behaviours that are truly indecent or grossly offensive, not on speech that is merely uncomfortable or challenging. People must have the right to engage in conversations, to express differing opinions and to debate issues of public importance without the fear of being accused of harassment. To allow an employer to be forced or encouraged into silencing this kind of expression would be a serious violation of freedom of speech, which is a cornerstone of our democracy and society.

The amendments before us offer balance. They ensure that employers are not required to protect their employees from hearing or overhearing expressions of opinion, provided that those opinions are not indecent or grossly offensive. This is a reasonable and sensible approach. It respects individuals’ rights to express their views without creating an environment where every opinion has the potential to be deemed harassment.

Moreover, these amendments recognise the specific context in which such protections should apply. By excluding certain sectors, such as the hospitality industry, sports venues and higher education, we acknowledge the diverse nature of these environments where debate, disagreement and the expression of differing opinions are often the fabric of daily life. To apply the same strict rules in these settings as we would in an office environment or a more controlled space would be misguided. The noble Lord, Lord Fox, may well say that this is not the purpose of Clause 20. However, as my noble friends Lady Cash and Lord Murray pointed out, the drafting means that that is unlikely to be the effect.

The requirement for repeated instances of harassment before an employer must take action, as outlined in Amendment 86, aligns with the principle of proportionality. We should not expect employers to become the arbiters of every comment or opinion expressed, especially when such comments are made in good faith. The amendment rightly recognises that harassment should be defined as something that occurs repeatedly, not something that might result from a single isolated incident of disagreement or discomfort. I agree with my noble friend Lord Young of Acton that this is a solution in search of a problem or, based on his statistics, a sledgehammer in search of a nut.

When the Minister responds, can she please answer my noble friend Lady Noakes’s point on territorial extent? These issues are clearly not going away, so I urge the Government to take them very seriously. As it stands, Clause 20 is garbled and needs rewriting.

[Baroness Jones of Whitchurch (Lab)]

I thank all noble Lords who have spoken. I hope I can reassure the Committee of the Government’s approach, as well as set straight some considerable misunderstandings on how the provisions will operate. I stress at the outset that the provisions in the Bill will protect employees while preserving existing human rights, such as freedom of speech, which I hope we can all agree are core British values. Also core to our identity is the belief that with rights come responsibilities.

I will first address the noble Lords, Lord Young of Acton and Lord Strathcarron, and the noble Baroness, Lady Fox, who oppose Clause 20. I am grateful to the noble Lord, Lord Young of Acton, for meeting me to share his views. When we met, he pushed his position that our proposals are anti-banter, and he has reiterated that today. I make it clear that we are anti-harassment, not anti-banter, and this is what Clause 20 delivers.

I agree with the noble Lord, Lord Fox, that I feel that we have been subjected to a wave of synthetic rage by many on the other Benches this evening, who have given examples that simply would not be covered by the harassment provisions in Clause 20. Removing Clause 20 would not only go against the manifesto on which this Government were elected but deprive employees of protection from all types of harassment by third parties under the Equality Act 2010. This Government are committed to tackling all forms of harassment in the workplace. In order to make workplaces safe, we must require employers to create and maintain workplaces and working conditions free from harassment, including by third parties.

For example, if a woman is sexually harassed by a customer at work today, she has very few effective options by which to seek legal redress, even if her employer has made no effort whatever to address the issue. The only possible employment law action in this scenario at present is for the Equality and Human Rights Commission to exercise its unique enforcement powers against the employer. However, such powers can be used only very selectively and strategically by the commission, and would be unlikely to be used in anything other than an exceptional case.

Sexual harassment is, sadly, not the only type of harassment that is experienced in the workplace. Employees can experience racial harassment or harassment related to their disability or other protected characteristics. In the case of non-sexual harassment, not even the possibility of enforcement exists at present. As such, Clause 20 is required for employees to be able to seek legal redress where they have experienced third-party harassment, and to ensure that employers are clear about their responsibilities.

--- Later in debate ---

[Baroness Fox of Buckley (Non-Afl)]

I would like some clarity. There is some confusion over what the definition of harassment is in law. If you asked whether I was for the harassment of employees and workers, I would of course reply that I am not, but we have to look at the way the law defines harassment, particularly indirect harassment and some of the issues that were raised.

Despite the noble Lord, Lord Fox, imagining that we have all been whipped up into some synthetic rage by the noble Lord, Lord Young, because we are incapable of working out for ourselves what we think about a piece of legislation, there is concern about free speech. I am confused about what the Minister is saying free speech is. She keeps saying that we cannot allow unacceptable behaviour. Is that part of the legislation? What unacceptable behaviour is she referring to? Is it detailed in the law? Which things is she talking about? It is one thing to say that a football team has rules, but have the Government come up with a new behaviour code in this Bill that society must adopt? If they have, I have not seen the details.

[Baroness Jones of Whitchurch (Lab)]

There is harassment, and what we are debating now is third-party harassment. Obviously, tribunals would have to take into account the practicality of enforcing third-party harassment, and I have been trying to set out the grounds on which it would be considered either reasonable or unreasonable. That would have to be considered case by case, but nevertheless the issue is very different from an employee’s absolute right not to be harassed directly in the workplace.

[Baroness Lawlor (Con)]

I am a bit puzzled as to how the tribunal will measure this alleged harassment, given the different interpretations that could be put on it. There are some conflicts, as we have heard today.

[Baroness Jones of Whitchurch (Lab)]

I thought I had explained that in my description, and I do not really want to have to repeat it. I explained the grounds that would be considered when comparing harassment with acceptable behaviour.

Amendment 85 also seeks to significantly reduce the scope of Clause 20 by excluding the hospitality sector, sports venues and higher education. This would create a disparity and a hierarchy of protections across employers and sectors, leaving swathes of employees without equal protection. This cannot be justified, given that employers in these sectors will be required only to do what is reasonable, and this will depend on their specific circumstances.

Amendment 86 seeks to reinstate the three-strike rule that was repealed in 2013. However, as I have explained, an isolated or one-off incident is much less likely to amount to harassment than continuing acts. The recent Free Speech Union campaign against this clause stated that

“when the Equality Act was originally passed, it included a clause making employers liable for the harassment of employees by third parties, but it was repealed in 2013 because it proved to be so costly and difficult for employers to comply with. We mustn’t make the same mistake again”.

We agree that we should not make that mistake again. We cannot see why the noble Lord, Lord Young of Acton, would wish to impose on employers the unnecessary costs and burdens that this amendment would bring. By contrast, the Government’s approach will make it simpler for employers to understand their obligations and will ensure that victims can be confident that they are protected by law.

[Lord Murray of Blidworth (Con)]

In relation to the last passage of the Minister’s speech, it appears to be the Government’s position that it is not accepted that carve-outs for three strikes are necessary because that would impose a burden on business. The Explanatory Notes to the Bill, and to the Equality Act, specifically state that in determining the effect of the unwanted conduct, courts and tribunals must balance competing rights on the facts of a particular case—the point that the Minister has just made. Will she not accept that the effect of the provision, as presently drafted, will be for a sensible employer to take overly defensive approaches to prevent actions being brought against them under these provisions? It is that reaction which will cause a stifling of free speech, and this Committee should be very worried about that.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I cannot see why we should carve out some of the most customer-facing sectors, where the sorts of harassment we are talking about are probably more prevalent. I cannot see the point of that. Surely every employee in this country has the same right to be protected from harassment, and that is what we are attempting to achieve. Most of the pubs and sports grounds that I frequent already have these policies, so it is a minority of pubs—obviously the sorts of pubs that the noble Lord, Lord Young, likes to go to—that do not have them. I think most people would like to frequent places where they feel that the employees are treated with respect and are protected.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, can the Minister explain why Clause 21 gives power to the Secretary of State to make provisions in relation to reasonable steps only for sexual harassment and not non-sexual harassment? I think she said something about it being an area in which there is evidence that this would be useful—I cannot remember her exact words. I cannot understand why the Government have not extended the logic of giving assistance in this area to tribunals beyond sexual harassment, especially given the broadening of the extent of non-sexual harassment by including third parties.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I can say only that it is for the reasons I have outlined previously in my speech. We want to make sure that where we broaden the protections, it is done on a very careful basis and achieves the desired effect.

[Baroness Noakes (Con)]

We are not talking about broadening protections; we are talking about setting out what constitutes reasonable steps in the case of sexual harassment, which is included in Clause 21, and other kinds of harassment, which, incomprehensively, are not included. I am simply asking why the Government have gone down that particular route.

[Baroness Jones of Whitchurch (Lab)]

My Lords, the easiest thing is for me to write to the noble Baroness to explain this. It is obviously based on previous experiences of case law and so on. I will write to the noble Baroness.

Her previous question was about the Bill’s jurisdiction over overseas employees. While I cannot necessarily speak to the example that she raised, the Bill does not broaden the jurisdiction of employment tribunals beyond their current jurisdiction over any overseas employees. The situation will remain as it stands.

[Baroness Noakes (Con)]

Can the Minister explain what the current jurisdiction is? What is the current territorial extent for all tribunal cases?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I presume that it is where employees are based here in the UK, but if I am wrong I will write to the noble Baroness and clarify that.

In conclusion, I am grateful to all noble Lords for tabling these amendments but, for the reasons set out, the Government cannot support them. The Government are on the side of workers, not abusers. We will ensure that workers have the fair protections at work that they deserve. I therefore ask that Amendment 83 is withdrawn and that Clause 20 stands part of the Bill.

[Lord Fox (LD)]

I asked the Minister to set out in detail how future regulations and these clauses will work in practice. I hope she is able to take that on board between Committee and Report.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I will attempt to update your Lordships’ House on these issues at the time the noble Lord has suggested.

[Baroness Deech (CB)]

Can I ask the Minister about one very troubling case, which I am sure is known to everybody? Professor Kathleen Stock of the University of Sussex faced three years of undoubted bullying and harassment because she held and still holds gender-critical views. She was bullied and harassed by students and other staff, which resulted in her resigning. The university was fined by the OfS for breaches of freedom of speech but still believes, according to the vice-chancellor, that being fined was wrong and that free speech was being hindered by—presumably—Professor Stock having to resign. How would Clause 20 affect this well-known situation—Professor Stock bullied for three years because of her gender-critical views? The university, like all universities, has signs everywhere saying, “We do not tolerate abuse” et cetera, but I do not know whether that does much good.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I do not think it is appropriate to talk about an individual case, but can I make it absolutely clear here that we are committed to defending free speech and upholding academic freedom? The significant penalty showed that the Office for Students will take robust action where universities fail to do so. If you go to university, you must be prepared to have your views challenged, hear contrary opinions and be exposed to uncomfortable truths. We recently announced that we are giving the OfS stronger powers on freedom of speech. The sector needs to take academic freedom and freedom of speech seriously. We hope that the OfS report and regulatory action will incentivise providers to fully comply with their freedom of speech duties.

[Lord Young of Acton (Con)]

My Lords, I thank noble Lords on all sides of the Committee who have contributed to an excellent debate. Just on the final point made by the Minister, the Government’s commitment to academic freedom and free speech and upholding them in universities was not particularly clear at the beginning of the Government’s term. Bridget Phillipson torpedoed the Higher Education (Freedom of Speech) Act within days of getting her feet under the desk and agreed only reluctantly to implement some of the clauses that were due to be implemented last year, on 1 August, thanks to a judicial review brought by the Free Speech Union.

I am not sure that the Minister responded to the very good question that my noble friend Lady Noakes asked about whether the liability of employers for third-party harassment would extend to their employees overseas.

I would like to respond in a bit of detail to the points made by the noble Baroness, Lady Carberry of Muswell Hill. One of the safeguards she mentioned against the overapplication of Clause 20 is that only an employee with the relevant protected characteristic could sue if they had been offended or upset—if they felt harassed—by virtue of that protected characteristic. But that is not quite accurate. You do not have to have the protected characteristic in question to sue your employer for failing to protect someone with that protected characteristic from being harassed, as established in the case of English v Thomas Sanderson Ltd, in which someone successfully sued their employer in the employment tribunal for not protecting a notional employee with the relevant protected characteristic, when she herself did not have that protected characteristic.

The noble Baroness also said she thought it very unlikely that an employee could sue their employer for failing to take all reasonable steps to protect them from overhearing remarks, jokes, expostulations et cetera made by customers or members of the public. But in the case of Sule v Shoosmiths in the employment tribunal, a woman did successfully sue her employer, Shoosmiths, for a conversation she overheard about immigration. She was a Nigerian lady and she overheard a conversation —not directed at her—which she found upsetting or offensive by virtue of her protected characteristic. If that woman had been employed in Downing Street and had overheard a conversation between the Prime Minister and his aides last week about the speech the Prime Minister was about to give about immigration, it may well be that she could have sued the Civil Service for not taking all reasonable steps to protect her from being harassed in that way—overhearing a conversation about immigration that she found offensive or upsetting.

If the noble Baroness, Lady Carberry, sincerely believes that Clause 20 is not intended to be invoked to ban banter, why not accept Amendment 88, which would exempt employers from being sued for indirect third-party harassment? We have heard the argument over and over again on the other side of the Committee that the amendments that my noble friends and I and other noble Lords have suggested as ways of improving the Bill and clarifying exactly what steps employers would need to take to protect their employees from third-party harassment are completely unnecessary because the clause is not intended for things such as overheard conversations—banter—to be in scope. But it seems a little naive to imagine that the clause will be applied only in ways that the Government currently intend. What about unintended consequences? The noble Baroness said that she was not anti-banter, just anti-harassment. I am anti-unintended consequences. If you want to avoid those unintended consequences materialising, these vexatious complaints being brought in the employment tribunal or eccentric decisions being made by the tribunal, why not clarify exactly what the limits of employers’ liability are by accepting some of these amendments?

The noble Lord, Lord Fox, accused me of erecting a straw man and said that I was trying to generate synthetic rage about the risks I claim arise from this clause. Well, it is not synthetic—it is real. I know this because the Free Speech Union has taken on at least five cases in which people have been silenced because of a misunderstanding about the scope of the Equality Act due to a belief that the Equality Act, as it stands, requires employers to protect their employees from third-party harassment.

The noble Baroness, Lady Fox of Buckley, mentioned that one of the likely consequences of this clause is that gender-critical feminist groups might find it difficult to book spaces in pubs and other venues for fear that trans and non-binary employees of those venues might object that merely inviting women with those views into the pub would constitute a form of harassment. That has happened three times. We have cases of gender-critical feminist groups being ejected from pubs because the managers have misunderstood what their responsibilities and legal duties are under the Equality Act. They believe that those duties extend to protecting their trans and non-binary employees from being harassed by allowing third parties to discuss views they find offensive, deeply upsetting or disagreeable.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Monday 19th May 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I agree that this has been an extremely interesting debate. I thank all noble Baronesses—they are mostly Baronesses, with some noble Lords—for their contributions. In particular, the noble Baroness, Lady Kramer, deserves singling out for her very thought-provoking introduction to this group.

As my noble friend Lord Hunt of Wirral pointed out in the previous group, every individual should feel safe and supported in their working environment. We recognise that NDAs have deviated from their original purpose, which was to protect trade secrets and intellectual property, as the noble Baronesses, Lady Kennedy of The Shaws and Lady Goudie, pointed out. They have been abused in some circumstances, particularly where they are used to silence the victims of misconduct, which includes sexual harassment.

However, we must also acknowledge there are some cases where NDAs may serve a legitimate purpose. Some individuals may wish to resolve disputes privately, without the need for public disclosure. It is important, therefore, that we do not take a blanket approach but instead consider the context in which NDAs are being used. Many of the amendments acknowledge those simple facts. Having said that, we also need to consider the wider impact that NDAs might have—for example, in cases of medical malpractice. How can society and the medical profession learn from mistakes that are not made public?

It is clear that further scrutiny of NDAs is essential. The potential for abuse cannot be ignored, and we must ensure that any agreement entered into is fully informed and entirely voluntary. I will briefly speak as a non-lawyer, because I was particularly taken by Amendment 281, in the name of the noble Baroness, Lady Chakrabarti. Like the noble Lord, Lord Cromwell, I was rather shocked that such an NDA might exist even under the current regime. How can one sign a legally binding document that prevents the disclosure of a breach of the law? With apologies to my noble friend Lord Hunt of Wirral, I say that only the legal profession could manage the perverse logic to invent such a thing.

As we have seen, particularly in the NHS, whistle-blowers are often the individuals who bravely speak out against wrongdoing, misconduct or unethical practices that might otherwise go unnoticed. Their courage in raising concerns is critical to maintaining trust and ensuring that the organisation remains committed to the highest ethical standards.

Both noble Baronesses, Lady Kramer and Baroness Jones of Moulsecoomb, referred to the NHS. I looked into this earlier, and in one high-profile case, the NHS spent over £4 million on legal action against a single whistleblower, including a £3.2 million compensation settlement. This sparked criticism from Professor Phil Banfield, the chairman of the British Medical Association, who argued that whistleblowing is often not welcomed by NHS management. He emphasised that NHS trusts and senior managers are more focused on protecting their reputations than addressing the concerns of whistleblowers or prioritising patient safety. That is clearly a very unacceptable state of affairs, and that example alone suggests that the Government should take these amendments extremely seriously.

I am sure that the Minister is about to stand up and offer to have further discussions on this subject. We will pre-empt her and volunteer to take part in those discussions. There is clearly much more work to be done in this area. I look forward to hearing the Minister’s remarks.

[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 genuinely thank all noble Lords—they have mainly been noble Baronesses—who have taken part in this excellent debate, in which we have addressed some important, salient and highly concerning issues about the misuse of non-disclosure agreements. We have heard some very moving and completely unacceptable examples that have no place in the modern workplace.

I thank the noble Baroness, Lady Kramer, and my noble friends Lady Kennedy of The Shaws and Lady Goudie, for their Amendments 98, 101 and 101C, which seek to restrict the use of non-disclosure agreements that prevent workers disclosing certain misconduct. My noble friend Lady Kennedy’s amendment looks to apply this to a broader category of misconduct, including harassment, retaliation and discrimination. I also acknowledge that the amendments tabled by the noble Baroness, Lady Kramer, and my noble friend Lady Kennedy make it clear that workers should still be able to request confidentiality protections in agreements between a worker and employer, if they so choose. A number of noble Lords have reiterated that that is an important principle.

I also thank my noble friend Lady Chakrabarti for her Amendment 281, which makes express provision for a court to void an NDA in the public interest if it seeks to prevent the disclosure of illegal conduct by the employer. I agree with the noble Lord, Lord Sharpe, that my noble friend made a very compelling case on that issue.

I also thank the noble Baroness, Lady Morrissey, for Amendment 101A and her contribution today. Her amendment would void any provision in an NDA that prevents a worker making a disclosure about sexual harassment. However, it would allow NDAs in settlement agreements to stand where the victim of sexual harassment requests them and where they have received independent legal advice. I am also grateful to the noble Lord, Lord Cromwell, for his comments in support of that amendment.

Today’s debate on NDAs demonstrates the best elements of your Lordships’ House. Points have been well made by all noble Lords, and we have listened carefully to their arguments. I was grateful to have the opportunity to meet with a number of noble Lords in recent weeks to reaffirm the Government’s position on the misuse of NDAs and to understand the intention behind these amendments. Let me be clear: NDAs should never be used to silence victims of sexual harassment and other forms of misconduct in the workplace.

My noble friend Lady O’Grady asked whether the proposals extend beyond sexual harassment. The whistleblowing measures in the Bill cover only sexual harassment. However, the whistleblowing framework already covers disclosures about criminal offences, breaches of legal obligations and endangerment of health and safety. In many cases, harassment and discrimination in the workplace will fall within those categories.

While the Government agree that NDAs should not be misused by employers to conceal misconduct in the workplace, any restrictions on their use must be carefully considered to avoid unintended consequences. For example, confidentiality can allow employers and workers to resolve a dispute and move on without publicity and expensive legal proceedings. It is vital that we take the time to consider any impacts on a worker’s ability to choose the right outcome for themselves, including the option of an NDA.

--- Later in debate ---

[Baroness Kennedy of The Shaws (Lab)]

May I just add to that? My concern is that my noble friend Lady Chakrabarti is right that, in law, one should not use contractual agreements to avoid criminal processes. However, you do not have criminal processes unless you have a complainant, and often women do not want to go through that process. They would rather have a settlement, but they want to be in control—it is about giving power to the person who is at the receiving end of abusive conduct. That is why we are asking that these amendments be considered, so that, in the light of the Government’s great commitment to the protection of women and girls, women and girls in the workplace have the opportunity of saying, “I would like an agreement, but I want it on my terms” and may choose anonymity so that it does not remain the case, as happens now, that women then carry it forward—they are the ones who bear the burden of having to go public with a complaint. Often, it affects their employment possibilities in the future.

This is about women being in the driving seat when there is a complaint of bad behaviour in the workplace. That is why just having a bland thing saying, “This is criminal conduct, if somebody squeezes a woman’s breast in the workplace or keeps patting their behind and so forth” is not good enough. Women should be allowed to say, “I do not want this to continue. I want to remain in my job. I want protection for my employment, and I want it to be dealt with by way of an agreement where I am in the driving seat”.

[Baroness Jones of Whitchurch (Lab)]

My Lords, the answer to both noble Lords—and I think I said this during my response—is that the amendments are all raising really important issues. There is an issue about the breadth of the issues and the extent to which we need to legislate or perhaps amplify things that are already the law but are not understood to be the law. We have more work to do on this, but we are working at pace on it. We still have time before the Bill passes through your Lordship’s House, so I hope we can make some progress during that time.

[Lord Sharpe of Epsom (Con)]

I am sorry to intervene on the noble Baroness once more. Does that mean she intends to talk to interested Peers before Report?

[Baroness Jones of Whitchurch (Lab)]

I have already had one meeting and, as noble Lords will know, I seem to be in perpetual meeting mode. I certainly am very happy to carry on having those discussions.

Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Young of Acton for his expert introduction to the amendments in this group. I agree with the noble Lord, Lord Monks, about common sense, but I fear that went out of the window of an employment tribunal some years ago. As my noble friend Lord Young laid out in an earlier group, this Bill threatens to restrict free expression in some cases with its provisions. It is for this reason that I support the amendments, which seek to safeguard political opinion and affiliation within our employment laws.

At the heart of any thriving democracy lies the freedom to hold and express political beliefs without fear of retribution. In a democratic society, freedom of speech and freedom of belief are not luxuries; they are fundamental rights that underpin our entire system of governance and civil life. The workplace, where so many of us spend a significant portion of our lives, must be a space where individuals can hold and express their political views without fear of unfair treatment or dismissal. As it stands, our existing laws provide only patchy protections for political beliefs, and they leave many workers vulnerable. My noble friend Lord Young’s examples are truly shocking, and I would like to take this opportunity to wish, in particular, Mr Poursaeedi well in his ongoing battles.

We should draw upon the timeless wisdom of John Stuart Mill, who was one of the great architects of liberalism. He argued in his seminal work On Liberty that the truth emerges only through free and open debate, and he warned against the suppression of any opinion, because no one person or group holds a monopoly on truth. Even opinions that we may find mistaken—perhaps such as democratic socialism—or indeed offensive, must be heard and challenged openly, for only through such dialogue can society discern truth from error. Voltaire was right on this. I must admit I find it a bit disappointing that the Liberal Democrat Benches are not more enthusiastic about these amendments.

By protecting employees from dismissal or discrimination based on their political opinions or affiliations, these amendments would ensure that the workplace remains a forum where diverse ideas can be expressed, scrutinised and debated. Suppressing political expression risks silencing valuable perspectives and preventing the emergence of truth through robust discussion.

We in this House pride ourselves on opening our minds to a broad range of political views. Obviously, that involves robust engagement, challenging each other and refining our positions through vigorous debate. If such diversity of opinion is essential to the functioning of this Chamber, why would it not apply beyond these walls, and particularly in other workplaces? Workers, like us, should be free to express their political beliefs without fear of losing their jobs or being discriminated against.

In conclusion, I urge the Government to accept my noble friend’s amendments. To go back to the great liberal John Stuart Mill, he also said:

“A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury”.


This is not the time for inaction. These amendments not only would protect workers from unfair dismissal and discrimination but would uphold our fundamental democratic values. By embedding these protections into our laws, we would reaffirm our commitment to free expression. I am afraid saying just that they are not necessary is not good enough. They clearly are necessary, as we heard in the examples from my noble friend.

[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 all noble Lords who have spoken. I think it would be helpful if I first clarify where the law stands on this.

On Amendment 101B, tabled by the noble Lord, Lord Young of Acton, let me make it clear that religious and philosophical beliefs are already protected by the Equality Act 2010, including in the workplace. However, political belief—in the sense of a party-political affiliation or opinion—was not included as a protected characteristic in the Equality Act 2010. The noble Lord referred to the Grainger case. That case and the definition that the noble Lord read out referred to the issue of philosophical belief, which is already protected by the Act.

In 2015-16, the Equality and Human Rights Commission reviewed whether Great Britain’s equality and human rights legal framework sufficiently protects individuals with a religion or belief and the distinction of a religion or belief organisation while balancing the rights of others protected under the Equality Act 2010. The review found that the definition of religion or belief in the Equality Act is sufficiently broad to ensure wide protection for many religions or beliefs. It recommended no change to the definition of religion or belief or to the approach that the court should take in deciding whether any particular belief is protected under the Act.

We are not convinced that a political opinion or affiliation should be specifically protected by amendment to the Equality Act 2010 in contrast to other religions or beliefs. The extent of protected beliefs has been developed in case law, and we have not been presented with strong evidence that any legislative amendment is necessary. The amendment the noble Lord is proposing would potentially cause legal uncertainty over its relationship to the protected characteristic of religion or belief in Section 10 of the Equality Act, which has a much wider application than just the workplace.

The Government frequently receive calls for new protected characteristics—there have been over 21 suggested to date. While some of these carry merit, it simply would not be practical to include these all in the legislation, which would quickly become unmanageable for employers and service providers to follow, and for courts and tribunals to process and judge.

The noble Lord referred to the European Convention on Human Rights. The courts and tribunals will always be required to balance competing rights on the facts of a particular case, including the rights to freedom of thought, conscience and religion, and freedom of expression under Articles 9 and 10 of the European Convention on Human Rights, as well as academic freedom.

Noble Lords have referred to a number of individual cases. They will appreciate that I cannot comment on individual cases. However, I can assure them that free speech is a cornerstone of British values. We are firmly committed to upholding the right of freedom of expression, which is protected by Article 10. I also absolutely agree with my noble friend Lord Monks that, in many cases—and preferably in all cases—it is ideal for these issues to be resolved by common sense at the workplace.

Turning to Amendment 141A, I seek to reassure the noble Lord that further legislative provision on this matter is not needed. Through the Bill, the Government are creating a day one right against unfair dismissal. As the noble Lord, Lord Young, acknowledged in his explanatory statement, additional protections for employees already exist under Section 108(4) of the Employment Rights Act 1996, which currently ensures that claims for unfair dismissal on the grounds of political opinion or affiliation are not subject to any qualification period. I can reassure the noble Baroness, Lady Kramer, that, while dismissal on the grounds of political beliefs and affiliations is not automatically unfair, if brought to a tribunal, the tribunal could find that it was unfair based on the circumstances at hand.

As we have said, these issues will very often have to be decided by a tribunal, based on the facts of the case. This will obviously also have to apply to the noble Lord’s amendment as well. I agree with the noble Baroness, Lady Kramer, that the delays in employment tribunals are a very real challenge that we are very conscious of, and we have already reported elsewhere in other debates on the Bill that we are taking steps to address this.

Relevant case law sets out the circumstances where political beliefs may constitute a philosophical belief for the purpose of the Equality Act 2010. In these cases, discrimination provisions could apply. Following a judgment from the European Court of Human Rights, the qualifying period for bringing a claim of unfair dismissal relating to political opinions or affiliation was removed, further strengthening employees’ access to justice in instances of unfair dismissal based on political views. The Bill ensures that claims for dismissal on this basis continue to be treated in the same way as claims for automatic unfair dismissal by carving them out in a new Section 108A from the requirement that any employee must have started work before a claim can be brought.

We regard this as the right approach. Making dismissal for political opinions automatically unfair, as this amendment seeks to do, would fundamentally change the way that free speech is considered in relation to dismissal for the holding of views or the expression of views that the employer regards as unacceptable. It could sweep up such a wide range of views as to be unworkable. As sufficient protection against dismissal for political beliefs already exists, I ask the noble Lord to withdraw Amendment 101B.

[Lord Young of Acton (Con)]

I thank all noble Lords who spoke in support of my amendments. I echo the tribute made by the noble Baroness, Lady Fox of Buckley, to the journalist Patrick O’Flynn, who has just been taken from us so ahead of his time. I appreciate the remarks from the noble Baroness, Lady Kramer, who I note did not oppose the amendments, although she was a little bit sceptical about the case I had made. I also thank my noble friend Lady Verma for her intervention.

In response to the Minister’s remarks, as she says, some political beliefs are protected by the Equality Act. The issue is that not all political beliefs are protected by the Equality Act. I gave some examples and I will give just one more: an employment tribunal decision that a belief in Scottish independence is protected, but a belief in unionism is not. There is often not much rhyme or reason to these employment tribunal decisions, because the Grainger test leaves so much room for bias, interpretation and subjective judgment. I am merely asking the Government to bring the Equality Act into line with the European Convention on Human Rights. Article 14 lists the characteristics that should be protected and includes the words “political … opinion”. That means all political opinions, not just those you disagree with.

Finally, I come to the intervention from the noble Lord, Lord Monks, and point out that Saba Poursaeedi did not lose his job at the housing association because he was tactless or undiplomatic; he lost it because he was intending to stand as a candidate for Reform UK. The association had no misgivings about his performance in his role; indeed, it promoted him. He was a model of tact and diplomacy when dealing with the residents managed by the housing association. That was not the reason he was fired. The noble Lord is, of course, welcome to join the Free Speech Union, and I hope that he does. I have reached out to Gary Lineker, not to defend him in any case he might want to bring against the BBC—which I do not think he intends—but because the police have said they may now be investigating his remarks. I reached out to him and said that, if that happens, we will provide him with a solicitor and, if necessary, a barrister.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, and my noble friends Lady Neville-Rolfe and Lord Lucas for their amendments and their thoughtful contributions in this group. It has been a most interesting debate. I will speak to my Amendments 103, 113 and 123.

I completely agree with the noble Lord, Lord Vaux, that it would be much better to get this right now rather than pursuing Amendment 103 in particular, which returns to the Government’s insufficient impact assessment. The assessment that has been produced states that this provision will have one of the highest impacts, yet, as we have mentioned before, the Regulatory Policy Committee has given the Government’s analysis in this section a red rating. The RPC’s critique is not a matter of minor technicalities because it identifies serious deficiencies in the Government’s case for intervention in the options that they have considered and in the justification for the policy that they propose. The Government’s impact assessment admits that it lacks robust data on dismissal rates for employees with under two years’ service. To answer the question from the noble Lord, Lord Vaux, there is no evidence for that. It proceeds regardless, however, with only superficial reference to “asymmetric information” and without any substantive analysis of any market failure.

The RPC highlights the impact assessment’s failure to consider how long-serving employees might view the equalisation of rights for new joiners—an issue of fairness and workplace cohesion that the Government have ignored. The impact assessment itself mentions that options such as reducing the qualifying period to 18 months or one year were considered and rejected without detailed assessment. No real exploration of probation periods was provided. That is not a balanced appraisal of possible alternatives; it is a justification for a predetermined decision.

On the justification of the preferred option, the impact assessment is again found lacking. The RPC calls for clarity on the costs to businesses—the costs of managing performance, handling disputes and the increased settlements to avoid tribunal risks. It also questions whether the Government have considered evidence from existing unfair dismissal claims and how risks might vary across sectors or job types, particularly in roles where reputational damage from a claim might deter employers from hiring at all.

More significantly, the Government have not addressed indirect and dynamic labour impacts, such as whether day-one rights might lead to more cautious hiring, greater use of temporary contracts or weaker overall job security. These are not abstract concerns as they go to the heart of how this policy might reshape employment relationships across the country. Noble Lords might be interested in a real example. I was talking this morning to a senior executive at a FTSE 100 company. It is an exemplary employer in every way; for example, offering many day-one rights. But this year—partly as a result of the jobs tax but also in anticipation of the Bill—it has reduced its hiring by 84%. I repeat that for the record: 84%. This is not abstract or theoretical. This is real, this is now.

It is important to note that these likely labour market impacts are not accounted for in the £5 billion cost to businesses, so the real cost is likely to be significantly higher. The result is a policy with high ambition but little practical clarity, as the noble Lord, Lord Goddard, has just noted. How will unfair dismissal rights interact with a statutory probationary period? Will employers still have access to the same set of fair reasons for dismissal? Will there be a different threshold for acting reasonably during probation? Can probation be extended if needed? None of those questions has been clearly answered.

The noble Lord, Lord Leong, reminded us of the light-touch, nine-month proposal, but what does that mean in practice? My noble friend Lady Meyer asked that. At the same time, the Government’s own analysis predicts that granting day-one rights for unfair dismissal alone will result in a 15% increase in employment tribunal claims. Using the statistics given by the noble Lord, Lord Barber, that is an additional 750 claims per year, on top of the 50,000 backlog already waiting 18 months to two years. The noble Lord argued that this is, in effect, a statistical irrelevance, but it is not to the 750 business owners who are being dragged through courts. That is a substantial impact. It represents direct costs to businesses in terms of time, legal risk and, of course, the chilling effect on recruitment.

The tribunal system itself needs to be looked at. Without significant new investment it is hard to see how the system will cope with this 15% increase. The result could be longer delays, greater costs and justice deferred for all parties. In an earlier group we heard about a case that is going to take more than two years to come before a tribunal. Yet the Government intend to bring these changes into force in 2026. On what basis? There is nothing in the impact assessment that explains why 2026 has been chosen or how the system will be ready by then. Businesses will need time to revise contracts, restructure probation processes and train managers on the new rules. What assessment has been made of whether 2026 is realistic, with all those things in mind? What engagement has been carried out with employers, particularly SMEs, about what implementation will require?

It is not unreasonable to ask the Government to explain how the timeline was determined and whether it is genuinely achievable, given the lack of clarity in both the policy detail and the supporting evidence. We all agree that employees deserve fair treatment, particularly in the vulnerable early stages of employment, but employers must also have a reasonable opportunity to assess performance, capability and suitability without the immediate threat of litigation.

We have established that there is no evidence for any of this clause. In fact, when the noble Lord, Lord Hendy, was arguing his point, he said that it is very difficult anyway for employees to take a case to an employment tribunal. The noble Lord, Lord Barber, as I just mentioned, said it is, in effect, a statistical irrelevance. If there is no evidence, it is too difficult and it is a statistical irrelevance, why are we bothering at all?

I want to raise a final point that others, particularly my noble friends Lady Neville-Rolfe and Lady Noakes, have referred to. It is not just about the policy itself; it is a more troubling concern. The policy will create unintended incentives, but for whom? It is not just about employers scaling back hiring overall but about who they stop hiring. If we remove the qualifying period for unfair dismissal and provide no workable probationary mechanism, we tilt the hiring incentives away from risk-taking, as we have heard. It will, in effect, stop employers taking a punt.

Right now, a small business owner might be willing to take that chance on someone with no formal qualifications, or from a non-traditional background, or re-entering the workforce after a time away. That chance exists because the employer has a short window to assess their suitability—and vice versa, of course—before facing the full weight of employment litigation risk. If that safety net is removed and exposure begins from day one and the probationary period lacks clarity or legal protection, that same employer will think twice. They will play it safe.

Noble Lords opposite should pay attention to those of us who have employed people. It is a simple fact. Who is going to suffer? It is not the already advantaged candidate with a polished CV. It is the young person with gaps in education, the career switcher with no references, the working parent returning after years out of the labour market, or the person coming back to work after a long period of illness. Noble Lords opposite should reread the speech given by my noble friend Lord Elliott, with his experience of the Jobs Foundation. He explained this much more eloquently than I just have. Those are the people who benefit from flexibility and second chances and who may now find those doors quietly closed.

This goes to the heart of social mobility and genuine workplace diversity. I would like to ask the Government a rhetorical question: have they considered the incentives this policy creates? If they have not—both common-sense experience of real working life in the private sector and, indeed, the RPC suggest that they have not—we risk designing a policy that sounds progressive but, in practice, reduces opportunity for the very groups that we should be helping the most. We need a decent impact assessment, and my amendment would allow for it.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. As there have been a number of questions about our intentions with these clauses, I think it would be helpful to clarify them and put them on the record.

Clause 23 introduces Schedule 3 and repeals Section 108 of the Employment Rights Act 1996, thereby removing the two-year qualifying period for protection against unfair dismissal. Schedule 3 further amends the 1996 Act, including the introduction of a statutory probationary period in legislation. Schedule 3 also removes the two-year qualifying period for the right to request written reasons for dismissal. Any employee who has been dismissed after the statutory probationary period will have the right to written reasons for dismissal within 14 days upon request.

The legislation will introduce a statutory probationary period that will maintain an employer’s ability to assess any new hires. Schedule 3 allows the duration of a statutory probationary period to be set in regulations by the Secretary of State following consultation. The Government’s preference, as we know, is for this probationary period to be nine months in length. Schedule 3 also creates the power to modify the test for whether dismissal during the probationary period is fair for reasons of performance or suitability for the role.

The Government’s intention is to use this power to set light-touch standards for fair dismissal during probation. The power will be limited to the following reasons for dismissal, which, under Section 98 of the Employment Rights Act 1996, qualify as potentially fair reasons: capability, conduct, illegality or some other substantial reason relating to the employee. The Government will consult on the light-touch standards and proceed to set out in regulations what specific reasons relate to the employee and when.

Schedule 3 amends the delegated power to set the maximum compensatory award for unfair dismissal so that a different maximum can be set for dismissals during the probationary period and when the light-touch standards apply. It is our intention to consult before the introduction of any new cap on awards.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

The noble Baroness is absolutely right. She will know that I share her ambitions for the tech sector. The UK remains the number one country for venture capital investment, raising $16.2 billion in 2024—more than either Germany or France—and since last July we have secured £44 billion in AI investment. Strengthening employment rights and giving day-one protections can help support talented people to take the leap into a start-up company.

I turn to Amendment 104, tabled by the noble Lord, Lord Vaux. Setting a statutory probationary period during which light-touch standards will apply is a crucial part of our plan to make work pay. I can reassure the noble Lord that setting out the detail in regulations is fundamental to fulfilling this commitment. It is not necessary to make this a requirement in legislation.

The noble Lord, Lord Vaux, asked a number of questions. He, the noble Baroness, Lady Coffey, and others asked why the Government are doing this. The UK is an outlier compared to other OECD countries when it comes to the balance of risks and entitlements between the employer and the employee. We believe that it is an important principle that employees should have greater security at work. Our reforms will mean that around 9 million employees—31% of all employees —who have been working for their employer for less than two years will have greater protection against being unfairly dismissed.

[Lord Vaux of Harrowden (CB)]

I hate to interrupt the noble Baroness at this late hour, but that is just a repeat of what has been said before; it is not a tangible quantified reason for doing this. Yes, for a short period of time, they will have greater security in theory, but the downsides of this—they are in the Government’s own impact assessment—are really clear. The Government say that this will reduce the life chances of people who are riskier hires. It will cost business hundreds of millions of pounds. There is no quantification of that benefit against those downsides, and I am still not hearing that.

[Baroness Jones of Whitchurch (Lab)]

I will talk about the impact assessments in more detail shortly, but the noble Lord will know that it is a lot easier to identify the costs in impact assessment than the benefits. 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.

I will pick up the point made by other noble Lords about cultural fit and other reasons why an employer might want to dismiss somebody during their probationary period. Dismissal for “some other substantial reason” is a catch-all category designed to allow employers to terminate an employment contract where no other potentially fair reasons apply. There can be cases where dismissal is legitimate and reasonable; “some other substantial reason” dismissals depend on the facts and circumstances of the employment relationship. “Some other substantial reason” is broad, and case law supports personality clashes in workplace teams or a business client refusing to work with an employee being a potentially fair reason for dismissal. The Government do not believe that an employee not being a cultural fit within an organisation should be a fair dismissal per se. We would expect an employer to be able to dismiss someone fairly only if any cultural misfit was relevant in a reasonable manner to the employer’s business objectives and the needs of the workplace.

The noble Baroness, Lady Noakes, mentioned employees with spent convictions. I gently point out to her that dismissing an employee solely for having spent convictions is currently unfair and potentially grounds for an unfair dismissal claim—

[Baroness Noakes (Con)]

I never mentioned spent convictions; I referred merely to the risk of employers taking on ex-offenders. I cannot think of a point I could have made in relation to spent convictions. The issue is these categories of potential employees who a represent higher risk in terms of judgment to employers, and I was using former offenders as one example of that.

[Baroness Jones of Whitchurch (Lab)]

I apologise if I misunderstood the noble Baroness’s point. I can only reaffirm the point I was making: with all these issues, there can be reasons for fair dismissal during the probationary period, and we have set out quite clearly what the grounds for that would be.

Amendment 107A was tabled by the noble Lord, Lord Lucas. As always, he thinks outside the box and comes up with interesting ideas, including the idea of a probationary period here in your Lordships’ House, which I am sure we all have strong views about. Going back to the specifics of his proposal, the Government have expressed an initial preference for a nine-month statutory probationary period. We intend to consult with stakeholders and the wider public before committing to a duration, which will be set by the Secretary of State through secondary legislation after this consultation has taken place. Maintaining this flexibility allows the duration and calculation of the statutory probationary period to be adapted in light of future changes in employment practices.

Amendment 108, tabled by the noble Lord, Lord Vaux, would also amend Schedule 3 to the Bill. It is of great importance to this Government to get the length of the statutory probationary period correct. The Government have already stated in Next Steps to Make Work Pay their preference for the statutory probationary period to be nine months in duration. However, this is subject to consultation, and I hope that this reassures the noble Lord, Lord de Clifford, on that matter.

On Amendment 334, tabled by the noble Lord, Lord Vaux, while I recognise what the noble Lord is seeking to achieve with his amendment, I reassure him, and the noble Baroness, Lady Meyer, that the Government have no intention of removing the two-year qualifying period until the regulations setting out the statutory probationary period are in force. We will, of course, give businesses time to prepare, and we are engaging with them already. These provisions will not commence before autumn 2026, which will give time to prepare. I hope that this reassures the noble Lord, Lord Goddard.

I move on to address Amendments 103 and 123, from the noble Lords, Lord Sharpe and Lord Hunt, in respect of their mandates for further impact assessments. The Government have already produced a comprehensive set of impact assessments, published alongside Second Reading, and based on the best available evidence of the potential impact on businesses, employees and the wider economy. Our analysis includes an illustrative assessment of the impact on employment tribunal cases, which we intend to refine over time by working closely with the Ministry of Justice, His Majesty’s Courts & Tribunals Service, ACAS and wider stakeholders. I am grateful to my noble friend Lord Hendy for setting the record straight about the impact of tribunals, and the thorough ways in which they conduct their proceedings. Many cases settle in advance, and we want to encourage more cases to reach a settlement with proper advice and support. I am also grateful to my noble friend Lord Barber for putting the scale of the problem in perspective, with only 5,000 cases referred to ACAS in 2023-24.

We will publish an enactment impact assessment once the Bill receives Royal Assent, in line with the requirements of the Better Regulation Framework. This will account for ways in which the Bill has been amended in its passage through Parliament, to the extent that those changes significantly change the impact of the policy on the enforcement system. This impact assessment will then be published alongside the enacted legislation.

To follow up on the impact of this, we acknowledge that the policy is expected to benefit close to 9 million employees, driven by well-being benefits arising from increased job security for those with under two years of tenure. There will be costs to businesses, including familiarisation and compliance costs, from this change. However, businesses could benefit through improving their people management and hiring practices, which could deliver medium to long-term benefits, such as higher labour productivity. In addition, increasing employee well-being could increase worker productivity. These benefits will be tested further during consultation.

The Government have also pledged to conduct a consultation on unfair dismissal policy, to collect feedback from employers and employees. Specifically, the Government have outlined that we will consult on the length of the statutory probationary period, and the potential cap on compensatory awards for unfair dismissal occurring during the statutory probationary period. I can reassure the House that there is no need for the Bill to require the Government to undertake further assessment of the impact on tribunals before commencement. We will be updating our impact assessments in any case, alongside the consultation on implementing the various provisions in the Bill.

I turn to Amendment 113, tabled by the noble Lord, Lord Sharpe of Epsom. The Government are not proposing to expand the five potentially fair reasons for dismissal that have been a central part of employment law for decades. An employer’s decision to dismiss an employee in the early stages of their employment or otherwise will have to be underpinned by a fair dismissal reason, such as capability or conduct. It stands to reason that these would be the most likely dismissal reasons when employees fail their probation.

I am grateful to all noble Lords for tabling these amendments but, for the reasons set out, the Government cannot support them. I therefore ask that Amendment 103 be withdrawn.

[Lord Sharpe of Epsom (Con)]

Again, we are being promised a blizzard of consultations, but can the Minister give me any idea when those consultations will take place? Can we also have some assurance that all the employer organisations will be consulted on this occasion? From our conversations with many of them, they do not feel particularly consulted up to now.

[Baroness Jones of Whitchurch (Lab)]

First, on the issue of consultation, I assure the noble Lord that there have been a considerable number of consultations, not only with the main employer organisations but in terms of working parties working on particular aspects of the Bill, and those will continue. That consultation will continue—and I have now forgotten his other question.

[Lord Sharpe of Epsom (Con)]

Will the Government consult with employer organisations?

[Baroness Jones of Whitchurch (Lab)]

Yes, I can confirm that that is the case.

[Baroness Coffey (Con)]

The Minister has not addressed the fact that there are already powers in existing legislation to modify the qualifying period. The Minister talks about going into consultation, but that consultation on the probationary period could start right now with the SI, and that element. I struggle to understand why we have to wait such a long time when, actually, the Government could get on with their policy a lot more quickly.

[Baroness Jones of Whitchurch (Lab)]

That has reminded me that that was the other question asked by the noble Lord, Lord Sharpe—so I thank the noble Baroness for raising it.

As we have said before, we are working on an implementation plan, which we hope to share with noble Lords as soon as we can. It is in my interests as well as noble Lords’ interests that they see it sooner rather than later, but there is no point in sharing something that is not complete. Noble Lords will see that—and it will set out exactly what we are planning to do and where the consultations will fit in with all of it. I hope that when noble Lords see it, it will reassure them.

To go back to the particular question from the noble Baroness, Lady Coffey, we see this as a wholesale package. It is right that it is introduced to employers as a package; it will have appropriate timescales in it. We do not want to do things on a piecemeal basis, we want to do them in the round. That is why we are attempting to address this in the way that we are proposing today.

[Baroness Neville-Rolfe (Con)]

Unfortunately, that is our concern—that we do not know what the detail is, and we are being asked to pass a Bill without all that detail, as I said in my speech.

There was a more technical point that I wanted to raise with the Minister, if she wants to come back to me. I set out how having to cover an extra 9 million employees is going to lead to huge amounts of extra compliance costs. She emphasised the benefits for the workers, but she did not at all address the monumental amount of paperwork. My noble friend Lord Sharpe raised a similar point. As he explained, all managers in all companies are going to have to prepare for this and work out how they treat their employees from day one and what paperwork is required. I am not convinced that there is any understanding of that.

When we had similar consultations on the minimum wage, when I was in business, which the noble Lord, Lord Monks, mentioned, there was a great deal of detailed consultation very early on on how it would work. I said in another debate how I was consulted about whether we could put it on the payslips—and I explained that it would cost us £2 million, so it would cost the whole economy an awful lot just to put the minimum wage on the payslip. That sort of detail is incredibly important, if you are bringing in regulation that affects all employers and potentially benefits all employees.

I urge the Minister to think about these things and not say that it is going into the long grass and that we will get an impact assessment ex post, but think about how employers will actually manage this.

[Baroness Jones of Whitchurch (Lab)]

I can assure the noble Baroness that not only have we thought about this but we are working very closely with the business sector to get this right. We understand that some of these things will take time. It takes time to change systems, and a lot of it is about changing computer systems for processing and so on. We are aware of this and, when the noble Baroness sees the implementation plan, it will reassure her that we have allowed space and time for it, as well as proper consultation with those who will be affected.

[Lord Vaux of Harrowden (CB)]

My Lords, it has been a long debate so I will try not to detain the Committee much longer. I thank the many noble Lords across the Committee who have contributed. It has been long because this is really important. I confess that I come out of the end of this debate feeling somewhat depressed. I still have not heard really why we are doing this, and what the real, tangible benefits are, to offset against the very real negative impacts, particularly on those who are looking for employment and are perhaps disadvantaged in one way or another: they have not worked before, they are young, they have a gap—we heard all the various examples. The Minister did not really address that point terribly clearly in her speech, and it is so important.

This may be, as the Government have regularly called it, a Bill for workers. However, as I said at Second Reading, it is not a Bill for people who want to work—the potential workers who were mentioned by the noble Lord, Lord Elliott. He stole my Charlie Mayfield quote, but I will not worry about that. It is true that Denmark has much easier hire and fire, and he was using that as a paragon of virtue because it allows people who are harder to hire to get into employment, which is so important.

In the interests of being constructive, I hope the Minister understands the real concerns about those people and the impact the Bill is going to have on them, and the negative impacts this section of the Bill will have. I hope that she will be prepared to spend a bit of time with us between now and Report to try to find solutions to those negative impacts, to minimise the problems and downsides that they will cause. I say to the noble Lord, Lord Monks: I am not making this up, or crying wolf, as with the national minimum wage, as the noble Lord suggested. This is what the Government say will be the impact. I cannot emphasise that enough. It is not me saying that; the Government say this will be impact. If we can try to work together before Report, to try to find ways of knocking the edges off this and reducing the negative impacts, that would be very helpful. With that, I will not oppose Clause 23 standing part of the Bill.