Employment Rights Bill

Baroness Lawlor Excerpts

Committee stage
Wednesday 18th June 2025 Lords Chamber

Finally, we must recognise that a new labour market enforcement body will not operate in a vacuum. It will have to co-ordinate with the Health and Safety Executive, ACAS, local authorities, employment tribunals and various devolved institutions. If the new agency is established without proper integration planning, it risks creating confusion over jurisdiction, further delays in enforcement and diminished accountability. All these factors point to the same conclusion. Before Parliament approves such a substantial structural reform, we must understand exactly what we are doing, how much it will cost, what outcomes it will produce and what risks it entails. The public deserve no less. The labour market is too important, too foundational to fairness and dignity in this country for us to legislate blindly. What assurances can the Government offer that smaller, compliant businesses will not face disproportionate scrutiny while those engaged in serious abuse slip through the net? How will the Government ensure that the agency has the right balance of investigative power and sector-specific knowledge, rather than becoming a generic enforcement agency? I beg to move.

[Baroness Lawlor (Con)]

I support the lead amendment in this group in the name of my noble friend Lord Sharpe of Epsom to exempt a new Government, for up to three years, from the labour market enforcement strategy of their predecessor for the reasons set out so ably by my noble friend Lord Hunt. I also support Amendments 274 and 278 for a new clause after Clause 140 to review the effectiveness of enforcement and compliance with relevant labour market requirements as in Part 1 of Schedule 7 before the new agency is set up and for the costing of such a new body before it is set up.

The new fair work agency proposed by the Bill to bring together existing functions of enforcement is unknown territory. Today, to enforce a limited number of employment rights, official powers are used by four different agencies: the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate, HMRC and the Health and Safety Executive. The proposed new fair work agency bundles these—and new responsibilities under the Bill—into a single, untried and untested body. In general employers are quite familiar with HMRC and HSE, which provide advice as well as having enforcement functions. At the moment, we have the benefit of experienced bodies with whom employers are familiar and an ability by each body to be precise and knowledgeable about the subject on which it is an enforcement officer. We also have the advantage of different horses for different courses. Now, the plan is to move to an unknown, inexperienced entity with all the start-up costs that entails and without the precision focus which the present bodies have, because what is proposed is a one-size-fits-all model.

The enforcement of the laws will be differently framed with different aims by the current bodies. GLAA will have a different focus to that of HMRC, although some of the functions may overlap. I therefore suggest, in the interest of the taxpayer, that there is a need for a costing of the new body before it is set up and for a review of the effectiveness of the outcomes of present arrangements for enforcement and compliance to see how they stack up. This should be done before any steps are taken to put in place a new body. For these reasons, I heartily support Amendments 274 and 278.

[Lord Jackson of Peterborough (Con)]

My Lords, I wish to speak on the issue of the labour market enforcement strategy in support of Amendment 274 to which I have appended my name and to build on the excellent remarks of my noble friend Lord Hunt of Wirral and the specific points raised by my noble friend Lady Lawlor. For transparency, I declare that I have been a member of the Chartered Institute of Personnel and Development for more than 20 years. The CIPD estimates that the People Skills HR support service which it has mooted, working with ACAS, would cost about £13 million under the new regime when this Bill becomes an Act. We already know, following on from my noble friend’s comments, that the cumulative cost of the existing bodies doing similar work, with analogous workstreams, is about £40 million.

Amendment 274 is important because in this country we have a strange anomaly. Unusually for an advanced country, we generally do not put the architecture of scrutiny and oversight in primary legislation. I want to know how this agency is going to be accountable in terms of the costs, who it employs, its policies et cetera. No doubt the Minister will say, “Well, once it becomes an Act, there will be what was the Business Select Committee, or there might be the National Audit Office, or there might be the Public Accounts Committee”. But we are being asked to sign a blank cheque for this without knowing how precisely this agency is going to operate and, most fundamentally, at what cost. We have not seen a detailed impact assessment focusing on the work of this body. On that basis, I ask the Minister specifically how he sees the process of accountability working and whether there will be any work by his department, and Ministers more generally, to work out what the costs are likely to be.

I accept at face value that this Government are committed to reducing the regulatory burden, particularly on small and medium-sized enterprises. I am sure the noble Lord, Lord Leong, will bend the Minister’s ear on that, having come from the background that he came from as a champion of small businesses from the Labour side. It is therefore not unreasonable for us to ask what the cost will be and how we will be able to hold this agency to account once it is established.

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[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I thank the noble Lords, Lord Sharpe of Epsom and—in absentia—Lord Fox, for tabling Amendments 271ZZA, 274, 277, 278 and 328. Before I go any further, I think we all join the noble Lord, Lord Goddard, certainly from our Benches, in wishing the noble Lord, Lord Fox, the very best and speediest of recoveries. We hope to see him back in his place at the earliest opportunity.

I will speak first to Amendment 271ZZA moved by the noble Lord, Lord Sharpe of Epsom. This amendment is unnecessary, as Clause 91(3) provides full discretion for the Secretary of State to revise the labour market enforcement strategy at any time, including following a general election. That means that a new Government are not locked in. They can act swiftly, decisively and in line with their mandate. Were the party opposite to win power again sometime in the distant future, however difficult that is to imagine, its hands would not be tied by these proposals.

Of course, businesses, workers and enforcement bodies all benefit from clarity, consistency and strategic continuity. Automatically scrapping an enforcement strategy, just as the Government are finding their feet, risks creating exactly the kind of disruption we should be avoiding. To reassure the noble Lord, Lord Hunt of Wirral, the Bill is about strengthening our ability to tackle non-compliance and exploitation in the labour market, including, in the very worst cases, the scourge of modern slavery. The intention and mandate of the fair work agency are to catch the bad actors, not to trip up the good guys. This amendment risks instability rather than accountability.

Turning to Amendments 274, 277, 278 and 328 tabled by the noble Lords, Lord Sharpe of Epsom and Lord Fox, I want to be absolutely clear that the Government are committed to effective, transparent enforcement of workers’ rights. The creation of the fair work agency is a major step forward and we want to get it right, but these amendments are wholly unnecessary, duplicating myriad reports and recommendations over several years. By our count, there have been 33 government reports and strategies about the effectiveness of labour market enforcement over the past nine years. One could argue that this subject has been reported and scrutinised to death. The Director of Labour Market Enforcement produces an annual report and strategy that reviews the effectiveness of the labour market enforcement system. These documents are available in the Library of the House.

Additionally, our impact assessment for establishing the fair work agency sets out the current running costs of the enforcement bodies and initial estimates of set-up costs for the agency. I also refer noble Lords to reviews published by previous Administrations, including the Taylor review, which assessed the labour market enforcement system and found it wanting.

Ongoing oversight of employment rights enforcement is provided for in Clauses 91 and 92. They require the Secretary of State to publish a three-year labour market enforcement strategy and annual reports, which must be laid before Parliament and the Northern Ireland Assembly. To address the question of the noble Lord, Lord Jackson of Peterborough, they will be subject to parliamentary scrutiny in the usual way, which could well involve scrutiny by a Select Committee in the other place.

While the Bill does not explicitly require that the enforcement strategy and annual report address the agency’s funding, I can confirm to the Committee—and to the noble Lord, Lord Jackson, in particular—that the annual report will indeed include an assessment of the fair work agency’s budget and how this has been spent.

Turning to Amendment 328, establishing the fair work agency is not and should not be contingent on its reporting. I remind all noble Lords, particularly the noble Baroness, Lady Lawlor, that this was not only a Labour Party manifesto commitment; it was the policy of all the major parties at the general election to introduce a single enforcement body in some shape or form.

[Baroness Lawlor (Con)]

Just because one side of the House or the other—or, indeed, both—brought it in does not necessarily mean it is the right policy. Does the Minister not agree that, if we have a chance to review some of the weaknesses in inherited policy, it is a very good time to do it? The 2017 Taylor review, on which some of the then Government’s policy was based, focused particularly on the most vulnerable workers and certain categories. It was not a very wide focus.

[Lord Katz (Lab)]

We have had a fair amount of scrutiny of the wider proposal, rather than the Bill’s specific fair work agency proposals. As I said, over the past nine years since 2016, there have been 33 different strategies and reports, including—but certainly not limited to—the Taylor report. This is not an area that has not been considered and scrutinised to some degree. I also say to the noble Baroness that the Single Enforcement Body—as it was called by the previous Administration—was the policy of successive Conservative- led and Conservative Administrations. I am not going to intrude on the great policy disagreements on that side of the House. We feel it important to establish the fair work agency and to ensure that we have strong enforcement of labour market regulations. I therefore ask the noble Lord to withdraw Amendment 271ZZA.

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[Lord Sharpe of Epsom (Con)]

My Lords, in moving Amendment 271ZB I will speak also to Amendments 271ZBA, 271ZD and 273LA in my name. Amendment 271ZB ensures that the powers being granted to enforcement officers under this part of the Bill are used proportionately and only in response to the most serious breaches of labour market law. Without this amendment or something very much like it, we risk handing enforcement officers sweeping powers to enter business premises with very little constraint.

As currently drafted, Clause 94(1)(a) grants enforcement officers the authority to “enter any premises” for “any enforcement purpose”. That is an extraordinarily broad power. This amendment would limit such warrantless powers of entry to those paragraphs of Schedule 7 that deal with the most serious forms of labour market abuse, namely child labour offences, the failure to pay the minimum wage, unlawful deductions from wages and exploitation through forced labour. These are the areas where strong enforcement action is absolutely justified.

However, is it appropriate that the same powers—entry without warrant or consent—could be used to check whether someone forgot to keep a copy of an employment agency contract on file or perhaps miscalculated a payslip by a few pounds? We must not lose sight of the bigger picture. The vast majority of employers want to comply with the law; they invest time and money in doing so. However, if we allow overly broad enforcement powers, we risk creating an atmosphere of distrust, regulatory overreach and disproportionate intrusion, particularly into smaller businesses which may not have the resources to constantly defend themselves against investigatory overkill. The Government say they want better enforcement, and so do we, but good enforcement is not the same as unchecked enforcement.

Turning to Amendment 271ZBA, as currently drafted, Clause 95 restricts the power to enter dwellings to those occasions where a warrant is issued by a justice. This is a well-established and necessary safeguard, reflecting the heightened privacy interests we attach to a person’s home, but there is a conspicuous gap in the safeguards applying to entry into non-dwelling premises, such as business premises, offices or other places of work.

Clause 94 grants enforcement officers wide powers to enter any premises for enforcement purposes, without the same explicit requirement for a warrant or judicial authorisation, unless it is a dwelling covered by Clause 95. This gap means that, unlike the protections for residential premises, business premises can be entered and searched by enforcement officers without prior judicial approval. This is a significant and unwarranted imbalance. The intrusion into a business, especially a small or medium enterprise, is a serious matter. Entry and seizure powers can disrupt operations, damage reputations and create an atmosphere of suspicion.

That is all quite apart from the rather sinister nature of this power. For many small businesses, their premises are their livelihoods. The difference between a home and a business may be one of degree, but the right to protection from arbitrary state intrusion should be similarly robust. Judicial oversight ensures that these powers are used only when there is a legitimate and evidenced basis for entry, and it prevents abuse or overreach.

The requirement for a magistrate to authorise a warrant is a safeguard that protects due process, proportionality and the rule of law, and is of course very well established. It requires that enforcement officers demonstrate reasonable grounds and the necessity for the warrant. That is not a bureaucratic hurdle; it is just a check that balances the state’s legitimate enforcement interests with individual and business rights.

On Amendment 271ZD, as it stands, the appeal process focuses primarily on the accuracy of the sums claimed or the penalties imposed. It is essential that underpayments and penalties are correctly calculated and justified, but this narrow scope overlooks a critical element: the manner in which enforcement powers are exercised.

Enforcement officers hold significant authority when issuing notices, including entry, inspection and seizure powers. However, these powers must be exercised lawfully, proportionately and with respect for those affected. This amendment allows tribunals to consider whether enforcement officers have acted beyond their legal authority or used their powers excessively or unfairly. It further empowers tribunals to cancel or vary notices where misconduct or disproportionate enforcement is found and to award compensation as appropriate. This is not only a matter of protecting businesses and individuals from overreach but is vital to maintain public confidence in the enforcement regime. When enforcement is perceived as fair, transparent and accountable, compliance will improve and the number of disputes will reduce.

On Amendment 273LA, at this stage, the Bill does not define who enforcement officers are in any detail—we started this discussion on Monday—nor does it set any clear limits on the powers they may exercise when carrying out their functions. This lack of clarity is deeply concerning, especially given the serious nature of the enforcement powers being proposed, which include entry, inspection and seizure of documents and property. It is vital to establish unequivocally that enforcement officers, who are not police offices and do not have the training or mandate of the police, must not be allowed to use physical force or authorise others to do so. The use of force is an extreme measure that can be justified only in very specific and regulated circumstances, and generally only by trained law enforcement personnel. The amendment simply ensures that enforcement officers cannot resort to physical coercion, which is not appropriate for officials tasked with regulatory enforcement in the labour market. That is a matter of basic human rights and dignity. It is also a safeguard for businesses and individuals who may otherwise be subject to intimidation or physical harm.

I have absolutely no doubt that Ministers on the Government Front Bench have no interest in physical coercion being a part of these powers. In that case, they should accept this amendment because, if they do not, the implication is clear: they accept that physical coercion is acceptable. I do not believe that is what they want and I beg to move.

[Baroness Lawlor (Con)]

My Lords, I support the amendments in the name of my noble friend Lord Sharpe. I declare an interest as a director of a very small business—a think tank.

As an employer, the idea that we have no warrant or judicial oversight of an enforcement officer’s intrusive visit to a business to seize or take copies of documents and to check up is intrusive on the time and output of the business. It is also an infringement of a business freedom to conduct the business to the best ability of those in the office or the business.

Both clauses in fact contain very intrusive proposals. As my noble friend pointed out, one of the things that is deeply worrying about them is we do not know who the enforcement officers will be or exactly what their powers will be. We have seen, even with the best trained police force in the world, the Metropolitan Police and local police forces, a certain amount of over-zealousness in pursuing certain types of crime. Therefore, with an untrained and unknown quantity and with such powers, we need very clear limitations, and we need to focus on the most serious crimes and those outlined in these amendments. For those reasons, I support both the amendments in the name of my noble friend.

[Lord Katz (Lab)]

My Lords, I thank the noble Lord, Lord Sharpe of Epsom, for tabling amendments relating to the fair work agency’s powers. Clause 94 introduces a single power to enter business premises and inspect workplaces. The noble Lord’s Amendment 271ZB would limit this power to such an extent that effective enforcement of the legislation, including the national minimum wage, would be extremely difficult. We are not amalgamating labour market enforcement into one single agency to diminish its effectiveness. This amendment would, in effect, prohibit the site visits that most minimum wage investigations rely on and bring an end to a system of state enforcement that has worked well for 25 years. The result would likely be an increase in claims to the employment tribunal. Given the noble Lord’s concern about employment tribunal capacity, I urge him to withdraw his amendment.

I turn to Amendment 271ZBA. While powers of entry are generally exercised on a consensual basis, in some situations it is critical that officers are able to carry out their duties quickly, particularly if they suspect that giving advance notice could give rogue employers time to destroy or tamper with evidence. None the less, in response to the concerns raised by both the noble Lord, Lord Sharpe, and the noble Baroness, Lady Lawlor, an officer will not enter a premises if a person is not present but will instead notify the person to rearrange a time to enter the premises. As the noble Lord, Lord Sharpe, mentioned, a warrant could be issued by a justice only if they are satisfied that there are reasonable grounds for entry, and judicial oversight ensures that warrants are granted only when appropriate, protecting businesses from unwarranted inspections while enabling legitimate investigations.

Clause 128 and Schedule 8 were added to the Bill to put in place appropriate safeguards relating to the execution of warrants. As I said, this approach will continue under Part 5 of the Bill, but with additional safeguards, such as needing a warrant before exercising powers to enter a dwelling. Extending this warrant requirement further to include all business premises would be a disproportionate and retrograde step in enforcement terms. It would introduce additional powers and bureaucracy, and create an unnecessary burden on the warrant system.

Amendment 271ZD is unnecessary. There are already extensive safeguards in the Bill around the use of investigatory and enforcement powers. These safeguards are designed to ensure that the use of enforcement powers is lawful and proportionate. In addition, enforcement officers are highly trained and carry out investigations under a strict code of conduct.

Clause 107 largely carries over the existing appeal grounds from the notice of underpayment regime contained in the National Minimum Wage Act 1998, which, as I said, has been functioning successfully for over 25 years. In fact, I recall debates in previous days of Committee around the effectiveness of minimum wage enforcement and the fact that not enough rogue employers have been named and shamed. The process as it stands is well known and understood by businesses and individuals. Changes risk adding confusion and uncertainty, leading to additional complexity and litigation.

Amendment 273LA would constitute a drastic downgrade in labour exploitation enforcement. The Gangmasters and Labour Abuse Authority can and must occasionally use force under PACE powers to rescue victims of modern slavery and tackle serious labour exploitation. Indeed, it is through the use of those powers that we saw two modern slavery convictions and 13 slavery and trafficking risk and prevention orders in the last reporting year of 2023-24. To reassure the noble Lord, Lord Sharpe, as is currently the case, the use of PACE powers will be strictly limited to a small number of officers, as set out in their letters of appointment, and subject to stringent IOPC oversight functions and complaints and misconduct procedures.

I am sure the whole Committee will agree that we must tackle the scourge of modern slavery. The Bill is designed to strengthen employment rights in a clear, coherent and enforceable way. Unnecessary additions or alterations, however well-meaning, could compromise that aim. On that basis, I ask the noble Lord, Lord Sharpe of Epsom, to withdraw his amendment.

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[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble Lord, Lord Carter of Haslemere, for his intervention, because I was about to raise a similar point. It has been a long time since, as a policeman, I applied for a warrant, but we did not routinely notify the intended recipient of our visit that we were about to do it. I do not buy the argument that that would see an awful lot of documents destroyed or anything that they might have been pre-warned being removed from the premises—they would not know. I do not see why it should be different for enforcement officers and the police, who obviously are, in some cases, investigating much more serious crimes.

On the use of force arguments that the noble Lord, Lord Katz, deployed, surely the point is that these powers are being extended and, yet again, we are relying on future guidelines, comments or statements that will be written into their terms of employment. I simply do not believe that that is enough. The public deserve the reassurance of having this in the Bill or, at the very least, clarified in a Dispatch Box Statement.

As we bring this debate to a close—my noble friend Lady Lawlor, I think, homed in on this point—the fundamental concern that underpins all these amendments is that the Government have not yet provided a clear definition of who the enforcement officers will be, what precise powers they will hold, and what training or accountability measures will govern their conduct. The absence of clarity is not a minor oversight; it is a significant gap that leaves businesses and individuals vulnerable to potential overreach and misuse of authority. Enforcement officers will be vested with extraordinary powers of entry, inspection and seizure, but we have no clear picture of the safeguards that will be put in place to prevent abuse.

These amendments are not about obstructing enforcement or denying the Government the tools that they need to tackle serious breaches of labour market law; on the contrary, we recognise the importance of robust enforcement. However, enforcement must be lawful, proportionate and accompanied by proper oversight and accountability, or it will risk losing public trust.

We have sought to introduce reasonable limits on when and how enforcement—

[Baroness Lawlor (Con)]

Does my noble friend agree that, in addition to the problems he has raised, there is a very great danger of vexatious claims being made without evidence, and of disproportionate actions and intrusions taking place as a result?

[Lord Sharpe of Epsom (Con)]

I absolutely agree with my noble friend; that is one of the reasons that we are seeking more clarity in the Bill. As I said, without transparency, accountability and a clear definition of what the powers will be—they are unarguably vague —all those concerns remain. It is disappointing that the Government have not fully recognised the risks inherent in the broad powers envisaged by the Bill. We argue that the Government should, at a very minimum, provide clear guidance on these roles and responsibilities and on the limits of enforcement officers. This subject is so important that I think we will have to return to it. For now, I beg leave to withdraw my amendment.

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[Lord Murray of Blidworth (Con)]

My Lords, I support the amendments in this group in the name of my noble friend Lord Sharpe of Epsom. Looking at Clause 113, I am put in mind of the pre-exploration exhortation of Colonel Kurtz: “The horror! The horror!”. As an employment lawyer looking at this clause, I can say that it is a complete Horlicks. It is truly bizarre. Can the Minister say why this power is required? Who should decide whether the Secretary of State should intervene in a person’s right to bring proceedings? Why should that choice be taken away from them? If the Secretary of State decides to bring proceedings, how would the Secretary of State compel the person who did not want to bring proceedings to give evidence in their own claim that they are not bringing? Why would the judge decide that the claim should be allowed to succeed, in the absence of evidence from the person whose claim it is?

Then there is the question as to why the taxpayers of this country should bring proceedings in the name of somebody who does not want to bring them, possibly against a public sector employer who then has to pay to defend those proceedings to make an award of damages to a person who does not want to claim damages. All this is absolutely beyond belief.

Furthermore, I noticed that it is a discretion:

“the Secretary of State may, in place of the worker, bring proceedings about the matter in an employment tribunal under the enactment”,

which appears to relate to any enactment in the entire employment canon. There is no explanation as to the test the Secretary of State is going to apply in making that discretion. That exercise of discretion will plainly be subject to judicial review. If the Secretary of State chooses not to exercise their power, no doubt there will be satellite litigation in the High Court—brought by the unions, I suspect—as to why the Secretary of State has not chosen to bring a claim on behalf of somebody who they think should have had their claim brought by the Secretary of State. Applying the usual tests, I suppose it will be said that it was irrational not to bring the claim or it was in breach of some legitimate expectation that their claim would be brought. It seems to me that that whole delight now lies before the Committee as to whether there should be litigation on behalf of somebody who does not want to litigate.

This is simply an absurd and inverse world of mirrors that, frankly, Lewis Carroll in Through the Looking-Glass would not have believed was possible. The lunacy of it is notable in Clause 113(5), whereby a worker can appeal against the outcome in a claim when he did not even want to bring a claim. This is so badly thought out that it should clearly be withdrawn.

[Baroness Lawlor (Con)]

My Lords, I follow my noble friends by supporting the amendments tabled by my noble friend Lord Sharpe and voicing very strong opposition to Clause 113. I could not believe it when I read this clause. I could not believe that a third party—the Secretary of State—could bring proceedings on my behalf to a tribunal if I did not want proceedings brought. Nor did I think that subsection (6) was worthy of any government Bill. One could go through the whole of this clause and find something very wrong with it on many grounds.

There are many reasons why a worker may not want to proceed with a claim. He or she may not wish to bring proceedings because of the hassle involved, the delay, the stress to themselves and their family in waiting for the tribunal—which can never hear a claim quickly—the potential impact on his or her reputation, or a perfectly natural desire by an employee to settle things amicably with their employer. There are many individual reasons: family reasons, personal reasons and professional reasons. What right have we to give the Secretary of State powers to override that basic individual liberty in order to bring a case which someone may not want to be brought?

One can only wonder why such a clause is there—that the Secretary of State can bring proceedings, presumably, against a worker’s will or inclination. We can only assume that this may be due to workplace political pressures exercised by others in the workplace, perhaps by union members who want these cases brought as test cases and for the taxpayers to pay, or by others who have the ear of government.

This is a very sectional Bill in the interest of one vested interest group. I have said it before during proceedings, but it is not for the Government of this country in a parliamentary democracy to sectionalise the law in favour of one interest group or another. Clause 113 is particularly dangerous, and I support my noble friends’ amendments to it. I hope the Government will not proceed with it.

[Lord Carter of Haslemere (CB)]

My Lords, I support the comments made, particularly those of the noble Lord, Lord Murray. This is an extraordinary clause; I am not aware of anything else on the statute book like it.

My practical question to the Minister is: if the Secretary of State takes it upon himself or herself to go to court on a worker’s behalf, and the worker is strongly against that, what will that do to the relationship between the worker and the employer? It could absolutely devastate that relationship, because the employer will greatly resent the fact that the Secretary of State is taking proceedings on behalf of the worker, even if the worker has said that they do not want those proceedings brought. This is not good for industrial relations at all.

I really urge the Government to rethink this. What are its practical implications? How will it work in practice if the worker is against it? Will they be called as a witness by the Secretary of State, if necessary? Will they then be a hostile witness? It is all a complete and utter mess, I am afraid. I was not planning to speak on this, but this is an extraordinary clause and I urge Ministers to drop it completely.