Employment Rights Bill

Graham Stuart Excerpts

Consideration of Lords message
Monday 15th December 2025 Commons Chamber

[Andrew Griffith]

Well no, I cannot, because there is a cap—the very cap that the hon. Member’s party is seeking to remove. I try not to be uncharitable about the complete absence of business experience in the Cabinet, but that level of question, together with that impact, is just embarrassing.

The Minister in her remarks—there was not much of an argument; it was really just a critique—blamed peers in the other place for the Government’s own failures. Notwithstanding how peers are doing the constitutional job we ask them to do, Lyndon B. Johnson said that the first rule of politics is to learn how to count. The Government lost the vote on its unemployment Bill last week by 24 votes, but 65 of their own peers did not want anything to do with the Bill—they did not turn up and did not vote. During the passage of the Bill, one Labour peer has even resigned his peerage and joined the exodus of wealth creators to the United Arab Emirates because of what he sees. The Resolution Foundation and the Tony Blair Institute have both criticised the Bill.

By removing that £118,000 compensation cap, the Government are not protecting the vulnerable. If that is what they wish to do, there are other ways to do that, but ordinary workers will never benefit from that. It is a genuinely mad world; I do not understand why we are having this debate.

This time last week, the Liberal Democrats agreed with me on this. The hon. Member for Tunbridge Wells (Mike Martin) has been campaigning for the boss of South East Water to be fired, but without a cap his payout could be millions. Is that really what they want? What changed, other than the appearance of five new Liberal Democrat peers?

[Graham Stuart (Beverley and Holderness) (Con)]

Will my hon. Friend give way?

[Andrew Griffith]

I will do so briefly. After that, I want to conclude.

[Graham Stuart]

I am extremely grateful. My hon. Friend is setting out a powerful case. We are puzzled, because a system designed for ordinary workers that has a sensible cap is now being opened up to the very CEOs who, as has been highlighted, would not have previously used it. We have a Labour party in hock to the unions yet strangely proposing a measure that was not included their manifesto which can only help the rich. What happened to the Labour party?

[Andrew Griffith]

I thank my right hon. Friend for that intervention. I will leave that hanging there and hope that Labour Members will address it.

In conclusion, I ask the Government at this eleventh hour to pull back from the brink and introduce a financial cap so that we can get this business done this week. They have no consent from business, and they sought no support for it in their manifesto. I have talked about youth unemployment and the level of redundancies. We Conservatives will get Britain working again. We will end the attacks on employers and repeal the job-killing measures in the Bill. For the sake of businesses, for the sake of the backlog and for the sake of Britain, the Government should accept the Lords amendment and drop their motion.

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[Justin Madders (Ellesmere Port and Bromborough) (Lab)]

May I first declare my entry in the Register of Members’ Financial Interests and donations from the Union of Shop, Distributive and Allied Workers trade union, as well as my membership of the GMB and Unite trade unions? I am not sure if we are on a ping or a pong now, but there is a whiff of stubbornness about the fact that we are back here again.

Last week, I called for the Government to make this place sit every day until Christmas to ensure we got the Bill through—it is a shame that the other place took that as an invitation rather than the contingency plan it was intended to be, but, if that is what it takes, that is what we should do. We are ready. It is wrong that an unelected house, where jobs are given for life, can dig in and push back on something that will give millions of workers rights that we promised long ahead of an election, and for which we have a decisive mandate.

I commend the Government and the Minister for not backing down. A deal was reached with the relevant stakeholders. It is a pragmatic compromise, and a deal they are publicly saying needs to go through. That is how mature, effective industrial relations are supposed to work.

I do not think that the Lords’ arguments are particularly substantial; they are certainly not reasons to delay the Bill again. Their point that we should not agree with the lifting of the cap because it fell outside the scope of manifesto commitments in this area does not really take us very far, given that the original concession made on qualifying periods was also outside the scope of the manifesto, and of course, that is all part of the same package. It feels to me that this is more about the Lords wanting to have the final word rather than having to deal with the substance.

[Graham Stuart]

We did not hear it from the Minister, so could the hon. Member please explain the case for removing the cap?

[Justin Madders]

I am glad that there are some Conservative Back Benchers here. Last week they were all somewhere else, but now we are hearing some contributions. I was not in the room when the negotiations took place, but I understand that that was the deal. I am afraid that there have been some wilful misunderstandings on the Conservative Benches about what lifting the compensation cap actually means. Compensation for unfair dismissal is calculated by defined heads of loss under the law, so lifting the cap will not change that one bit. If the claims are still necessary, they will be there. It just means that some workers—particularly older workers who might not be able to get another job and who may have substantial pension losses—will benefit, not the fat-cat bosses that have been talked about. It is important that we stress that point.

Also, I do not remember the Conservatives’ manifesto in 2010 promising to double the period for qualification on unfair dismissal. Neither do I remember a pledge in either the Tory or the Liberal Democrat manifesto to put a cap on compensation. None the less, the coalition Government pushed both those policies through. Those who claim that the lifting of the cap will see an avalanche of claims ignore the fact that the rationale used for introducing the cap in the first place was to deal with perceptions about levels of compensation people might recover—in other words, legislating on perceptions rather than on facts—and I have to say, we have heard plenty of those perceptions repeated again tonight.

The Opposition can complain about a two-year wait for tribunal claims, but I am grateful to the shadow Secretary of State for recognising his party’s culpability in that. It is important that this Government are working with the trade unions, businesses, the judiciary and ACAS to find ways of improving our system, so that we get justice more quickly, instead of just ignoring it as the previous Government did. This Government have shown flexibility and strength to negotiate a change in order to get a deal over the line. Workers in this country should not be made to wait any longer for these important rights.

It is worth reminding the House that the road map we agreed earlier this year shows that the following laws should be in place by April 2026: doubling the maximum period of the protective award; day one paternity leave and unpaid parental leave; whistleblowing protections; establishing the Fair Work Agency; day one statutory sick pay and entitlements for the first time for millions of people who have been denied them to date; and simplifying the trade union recognition process. These are not minor or trivial measures. They are substantial changes that will improve the working lives of millions of people. We should be proud that it is a Labour Government who are delivering them, and we should be determined to deliver them by April 2026.

Of course, that is just the beginning. Genuine flexible working, ending zero-hours contracts, banning fire and rehire—there is much more in this Bill that really matters to working people. And there is much more beyond the Bill: the reform of TUPE and parental leave and dealing with the epidemic of bogus self-employment are of huge importance. These are the sorts of things that a radical, reforming Labour Government need to tackle, because the world of work is changing. It is changing far faster than we can legislate for, but we can insulate our constituents against the worst excesses and unintended consequences of the tech revolution by putting security and fairness at the heart of every employment relationship, and we need to do that now. If we do not, we will have failed not only to deliver on the promises we made but to stand up for the very people we were elected to represent, so I call on the other place to agree with the will of the democratically elected Chamber and to deliver finally on our promise to make work pay.

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[Sarah Olney]

I am glad that the hon. Member has raised that. I was coming to that in my speech. Perhaps he could listen with a little more attention.

Employers have finally been given the necessary clarity to make hiring decisions with confidence, and we have avoided the danger of unnecessarily slowing down the labour market even further, which would have deprived so many people of vital employment opportunities. That is exactly what the progressive Resolution Foundation think-tank warned of when it said there was a risk that

“employers would be nervous about hiring new workers or offering shifts, and this would make life harder for job seekers.”

As I pointed out last week, it is really disappointing that the Government decided to muddy this improvement by simultaneously abolishing the cap on compensation for unfair dismissal. Employers were not in favour of scrapping the £118,000 cap, and I once again point out that bringing in a change like this at the last minute is not how we build trust between Government and business. However, I note that employers and business groups have been equally clear that this last-minute change must not stand in the way of the far more important changes secured with regard to the six-month qualifying period. Above all else, business values pragmatism, and that is exactly why it wants to see this breakthrough protected and enshrined in law. That is what has guided our approach throughout.

Will the Minister confirm on the Floor of the House that the Government will conduct an assessment of the impact of the removal of the compensation cap, actively seeking views from businesses, as was indicated to the Liberal Democrats in the other place? On a broader level, will she give a cast-iron commitment that the Government will hold regular debates in both Houses to ensure that Parliament can scrutinise what work is being done to consult businesses and workers on all relevant implementation aspects of this Bill? How are the Government planning to support employers in order to ensure that they have robust policies and practices in place to navigate these changes to the unfair dismissal regime?

Lastly, to those in the Conservative party who have been trying to sabotage this crucial compromise on the six-month qualifying period, I simply say that they are acting not in the interest of British businesses but only in their own narrow party political self-interest.

[Graham Stuart]

On that very point, does the hon. Member believe that it is totally pragmatic to have disregarded her objections to the removal of the cap in return for additional places for the Liberal Democrats in the House of Lords?

[Sarah Olney]

It is so revealing of Conservative Members’ mindset that they cannot believe what I am actually saying is the reason for our change, and that they assume instead that we must have sought some benefit for ourselves. It is so revealing that that is what the Tories think. It beggars belief that the Conservatives, having hammered businesses while in government, are now doing everything in their power to undermine UK plc from the Opposition Benches.

I note that the Government have taken steps to improve the clarity of the legislation with regard to seasonal work, introducing measures that will ensure that businesses relying on seasonal work and bodies representing seasonal workers will be properly consulted when secondary legislation is drawn up. Many businesses, such as those in the farming and agricultural sector, as well as thousands of pubs, cafés and restaurants, depend on seasonal workers, and any obstacles to hiring them could have a significant impact, exacerbating the long list of challenges they already face, so we must ensure that they are supported as much as possible. Small businesses in our local towns and communities are struggling with the Government’s unfair national insurance rise, high export costs due to Brexit red tape and a business rates system that is not fit for purpose. Struggling businesses mean fewer jobs and lower pay, so it is vital that we take steps to support high street businesses and all those who rely on them.

It is time that we listened to the business community, which is telling us that the best way forward is to look for balanced solutions through secondary legislation and to put an end to the uncertainty and avoid losing the six-month qualifying period, which we were happy to have helped secure. Continuing to delay the passage of the Bill at this late and protracted stage would risk further uncertainty for businesses, particularly small and medium-sized enterprises, and would jeopardise significant changes that will benefit workers, such as expanded protections against workplace harassment and improved paternity leave rights.

I urge Members to be pragmatic and to provide clarity to businesses and workers alike regarding an implementation timeline. That is critical for providing a stable operating framework so that businesses can plan ahead. We should now work together to ensure that this legislation can be implemented to benefit businesses and workers alike.

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[Bradley Thomas]

I will make progress.

The idea that removing the cap will lead to anything other than a surge in cases is pure fantasy. This lack of understanding shows why the Government must listen to those who know how business works and recognise the devastating consequences that the Bill will have for companies and, crucially, for workers, rather than branding themselves champions of working people while advancing policies that benefit only high-fliers.

[Graham Stuart]

Labour colleagues shake their heads as my hon. Friend lays out the blindingly obvious. That goes to show why introducing a measure at the last minute during ping-pong is inappropriate and precisely why the House of Lords is right to say that we must consider this fully. It is quite obvious that Labour Members do not want to understand it; they obviously do not understand the implications.

[Bradley Thomas]

I thank my right hon. Friend, who makes his point eloquently, as usual.

The Government must abandon the measure. If they are really on the side of workers, the best thing they can do is abandon this measure—and abandon the Bill in its entirety.