Employment Rights Bill

Lord Ashcombe Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord Ashcombe (Con)]

My Lords, I declare my interest as an employee of a very large American insurance broker.

This Bill is deeply concerning, especially considering the recent legislative changes, such as the £25 billion raised through national insurance contributions and the 6.7% increase in the national living wage coming into effect next week. These developments are already creating significant challenges for businesses. Together with the regulations in this Bill, they highlight a troubling anti-business and anti-growth stance that risks undermining the foundations of the business community.

While the Bill aims to support workers and create a fairer society, it comes with substantial costs for many businesses, particularly small and medium-sized enterprises. These businesses will struggle to absorb these additional expenses without negative consequences. The key question is: how can businesses continue to grow and create jobs when burdened by such regulatory costs?

One of the many provisions in this enormous Bill is the introduction of a separate legal status for probation periods, alongside the removal of the qualifying period for unfair dismissal. This means businesses could face tribunal claims even during an employee’s probationary period. Although the Government have proposed a lighter-touch approach for probation, the details are yet to be fully determined and will depend on future consultations and secondary legislation. With tribunal waiting times already long—18 to 24 months—it is crucial to ensure that weak claims are dismissed promptly to avoid further strain on businesses. Whatever happens, it is more cost.

Moreover, the Bill introduces reforms to zero-hours contracts, including the right for workers on low-hours contracts to receive a contract reflecting the hours worked in the previous 12 weeks. However, the definition of low hours remains unclear and this uncertainty adds complexity for businesses in managing their workforce. Additionally, the Bill suggests allowing businesses to offer fixed-term contracts during high-demand periods instead of permanent contracts. If regulated effectively, this could help businesses better manage fluctuating demand. However, shifting the responsibility on to businesses to track when such rights are triggered and to offer contracts adds another layer of administrative burden. The Bill’s provisions on dismissal and re-engagement could also complicate restructuring efforts, potentially limiting a business’s ability to adapt to changing market conditions, such as office relocations or adjustments to working conditions.

I will only briefly mention the “Harassment by third parties” clause, which my new noble friend Lord Young of Acton has addressed so well. I believe it puts businesses in a near impossible position in trying to protect their colleagues and staff. It is essential that we find a balance between protecting workers’ rights and ensuring that businesses remain competitive, innovative, agile and responsive to the challenges of a rapidly changing domestic economy.

These changes, combined with the risks associated with permanent contracts, reduced flexibility in workforce restructuring and higher compliance costs, create a challenging environment for businesses. The Government must ensure these policies do not stifle the growth and job creation that the country needs. The anti-business and anti- growth narrative emerging from these legislative changes requires careful scrutiny. We must ensure that businesses are not overwhelmed by unnecessary bureaucracy and red tape. A thriving business environment is not only beneficial for businesses but also essential for the broader economy and the growth that this country desperately needs.

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

My Lords, I remind all noble Lords to stick to the time of four minutes. Thank you.

Employment Rights Bill

Lord Ashcombe Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Baroness Verma (Con)]

My Lords, I also support these amendments from my noble friend and other noble Lords. It would be really helpful if the Government took a hard look at this. I spoke to coffee shop owners over the weekend, and to a very small business that is trying to manufacture British products in this country. They are all very worried about how they are going to cope with the burdens that will be placed on them.

It may well be useful for the Government to go back and look at whether they can make an exception for small businesses up to a certain number of employees—maybe three, maybe five and at least for those that have no ability other than to reach out and pay for very expensive advice, which often they cannot afford. These small businesses are at the heart of our high streets in local communities. They add value and are familiar to customers. The very small business—the micro-business, but particularly businesses with 10 employees or less—should be exempt from this Bill.

[Lord Ashcombe (Con)]

My Lords, it a pleasure to support my noble friend Lady Noakes and the noble Lords, Lord Londesborough and Lord Vaux of Harrowden, on Amendment 5 and their other amendment.

Small businesses and microbusinesses form a vital component of our national economy. These enterprises, while often agile and innovative, are particularly vulnerable to regulatory and financial pressures. Like all businesses—I should declare that I work for a very large American insurance broker—these enterprises have had to absorb the recent increases in the national minimum wage and adapt to the changes in national insurance contributions legislation. However, unlike larger businesses, they often lack the structural resilience and financial buffer to absorb such changes with ease. The impact on them is therefore disproportionate. This amendment proposes a sensible and measured opt-out for SMEs from additional obligations stemming from the proposed changes to zero-hours contracts—specifically, the move towards tightly prescribed guaranteed hours. As the Government’s own impact assessment acknowledges, these reforms are likely to have a disproportionate cost on small businesses and microbusinesses. I stress that this is not speculation but is drawn directly from the Government’s impact analysis.

Small businesses and microbusinesses span a wide range of sectors, but many are embedded within the UK as world-renowned creative industries that bring global acclaim and substantial economic benefit to this country. Many are driven by the energy, passion and commitment of individual entrepreneurs and small teams. I have had the privilege of speaking with several such business owners during the course of this Bill, and a recurring concern has emerged: the smaller the business, the harder it is to digest and manage such legislative change. Some have gone so far as to tell me that they are considering closing their operations altogether. That is a deeply troubling prospect. It is no exaggeration to say that measures such as these, if applied without nuance, risk undermining the very entrepreneurial spirit that we so often celebrate in this House.

There seems to be a regrettable habit forming on the Government Benches of legislating in ways that hinder rather than help the economic engines of this country. This approach is not conducive to national growth. It is not conducive to competitiveness. It is not conducive to job creation. It is certainly not conducive to easing the burden on the Exchequer—quite the opposite. Driving small businesses to closure will reduce tax receipts and increase demand for state support. We need to encourage investment, not chase it away.

Can the Minister explain clearly why this legislation must apply so rigidly to a critical sector of our economy? Why must we impose further burdens on the very businesses that we rely on so much for our innovation, employment and growth? Is there no room for proportionality and no scope for recognising the distinct challenges that are faced by the smallest enterprises? What I have said applies, to a great extent, to the middle-sized companies mentioned in Amendment 282, tabled by my noble friends Lord Sharpe and Lord Hunt of Wirral.

I leave your Lordships with a quote from the Spirit of Law by Montesquieu:

“Commerce … wanders across the earth, flees from where it is oppressed, and remains where it is left to breathe”.

[Baroness Lawlor (Con)]

My Lords, I support the amendments tabled by my noble friend Lady Noakes and the other amendments in this group. I do so as an employer, and my interests are declared in the register.

I am a very small employer, in a not-for-profit company. I am therefore one of the microbusinesses to which my noble friend Lady Noakes has referred—those which have zero to nine employees. I echo what the noble Lord, Lord Londesborough, said: smaller businesses will find it very difficult to afford the costs which this Bill will impose upon them.

Small businesses and the employers in them are not the adversaries of those we take on. Many small businesses, including a number in the digital sector, are start-ups—some started in that garage, about which Hermann Hauser once spoke. They build up their teams and develop by commitment. Each member of the team taken on is an asset—not just an expensive potential asset but a cost to begin with, in time and in the compliance of dealing with every member of the workforce. Such businesses do not have large HR teams or sometimes any HR teams. There is a cost in the salary and in trying to keep the employee by continuing to raise the salary as often as one can. There is also a cost in the investment of time.

--- Later in debate ---

[Lord Leong (Lab)]

I thank the noble Lord for that, but IKEA is pretty supportive of the overall intention of the Bill and of the national minimum wage, which is obviously outside the scope of the Bill, such as what we are doing on zero-hours contracts, other short-term contracts and all that. I will write to the noble Lord with further details on the various clauses that it supports.

Various noble Lords asked about the impact assessment. The benefits of the Bill that were published by the TUC show that even modest gains from reforms to workers’ rights will benefit the UK economy by some £13 billion. Opposing this, the impact assessment says that the costs to business would be some £5 billion or 0.4% of employment costs. The benefit is huge, and economists have done research on this.

I cannot agree more with the noble Lord, Lord Londesborough, who says that start-ups and scale-ups definitely generate employment. It is absolutely right that we have to support them and I strongly believe that the Bill does support them.

Various noble Lords mentioned day-one rights and difficulty in recruiting employees. Remember that, when you run a small business, yes, it is very competitive to employ your first employee: sometimes you have to compete with the big companies in matching salaries or even benefits. I believe passionately that the Bill puts SMEs on a level playing field with large companies, where they can offer the basic benefits in the Bill.

Sometimes we asked: why are we excluding SMEs because it is so difficult for employers to recruit, and why should employees in SMEs not get day-one rights? My answer is: why not? Why should they not get day-one rights? As I said, they are the people who work for the owners, for the owners to make the profit. Without them, the owners will not have a business, so it is very important that they are supported and I believe strongly that good businesses provide fantastic support to their employees.

[Lord Ashcombe (Con)]

My Lords, I am not sure that it is the difficulty in recruiting that is the real problem for small and micro businesses; I think it is the fear of recruiting. That is a really different point.

[Lord Leong (Lab)]

I thank the noble Lord for that. I might turn that around and say that, if I am looking for a job, I have a choice of big or small companies. I am taking a chance and a risk working for a very small company. I am not sure whether that company will last. That risk works two ways. I strongly believe that most people work for companies not because of what the company does but because they look at the owner or the founders and whether they want to work with such people. At the end of the day, the employees will also be taking a chance on the employer.

Employment Rights Bill

Lord Ashcombe Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Penn. I shall speak to Amendment 66 in the name of my noble friend Lord Watson, who is unable to be in his place today due to a long-standing family commitment.

Clause 9, on flexible working, will make a huge difference to working people, including those with caring responsibilities. Many of us know all too well and very personally the daily juggling-act miracle that working mums especially are expected to perform. Anything that makes their lives easier has to be welcome. Flexible working has the added benefit to business and for the wider economy of making it easier for carers to both enter the workforce and stay there. This will help close the gender pay gap, reduce child poverty and help keep mothers and babies healthier.

Amendment 66 seeks to address the concern that, to be effective, those new rights must have teeth. I know that my noble friend Lord Watson would want to acknowledge the support of Maternity Action and the National Education Union in preparing this amendment. Amendment 66 would require the Business and Trade Secretary to review and publish a statement on the adequacy of the maximum compensation which an employment tribunal can award where an employer has not followed its obligations in dealing with an employee’s flexible-working request.

Currently, employees have the right to request flexible working, but employers can refuse on a wide range of listed grounds. Clause 9 boosts employees’ rights by introducing a reasonableness requirement, meaning that employers will be permitted to refuse a statutory flexible-working request only if it is reasonable to do so on one or more of the listed grounds. This new requirement is a positive step towards making flexible working the default. The problem is about the maximum compensation which an employment tribunal can award when it upholds an employee’s complaint about how an employer has treated their flexible-working application.

Currently, the maximum compensation that an employment tribunal can award is eight weeks’ pay, capped at £719 per week, which is a total of £5,752. This low compensation cap does not reflect the devastating cost to a worker where that flexible working has been unreasonably refused. Maternity Action and trade unions have documented how unreasonable refusals effectively force employees—particularly many new mothers and other carers—out of their job, often into lower-paid and less secure work or out of work altogether.

Flexibility should be a two-way street for the employer and worker, but in the real world too often it is mothers who are paying a high price. Set against the expense of legal representation, the low level of compensation available deters mothers from pursuing a flexible-working complaint through an employment tribunal. Their only meaningful recourse may be an indirect sex-discrimination claim against their former employer for which compensation is not capped. However, such claims are often long, complicated and extremely stressful. It is much better to send a signal that the Government are serious about enforcing flexible working rights so that employers are encouraged to do the right thing in the first place.

In the Bill’s impact assessment, it is stated that an aim of the changes in Clause 9 is to allow an employment tribunal to scrutinise whether the decision to reject a flexible working request was reasonable. For that to be effective, penalties should be introduced that reflect a substantive failure to act in accordance with a new reasonableness requirement. The Government’s aim of making flexible working the default is very welcome, but I hope my noble friend the Minister will consider bringing forward an amendment on Report or provide reassurance that other routes will be taken to ensure that the new right to flexible working is one that will be enforced in practice and that workers who are unreasonably refused such arrangements get adequate compensation.

[Lord Ashcombe (Con)]

My Lords, I support my noble friend Lady Penn. I declare an interest that I work for Marsh, a very large insurance broker in this country and around the world. I run a team of between 30 and 40 people. Within that team, I have all sorts, sizes and cultures—you name it. Of that team, all the married women—I should say, the women with children—have some sort of flexible way that they work with us. I can tell noble Lords from my own experience that unhappy staff do not do good work; it is 101. Happy staff are very likely to do very good work. One of my main jobs is to keep my team happy, and I am given immense flexibility to do it. Without this amendment, it is less easy. I rest my case.

[Lord Jackson of Peterborough (Con)]

My Lords, I rise to oppose the amendment in the name of the noble Lord, Lord Watson of Invergowrie, which was so ably enunciated by the noble Baroness, Lady O’Grady. I think that the amendment is neither fish nor fowl really. It is perfectly possible, as I understand it, for the Government to have already addressed this issue and, by statutory instrument, to set differential rates for compensation at employment tribunal. It seems rather a waste of time, and not necessarily a good use of ministerial time, to put in primary legislation another review.

My substantial issue is also that this, again, tips the balance are much more towards the worker, unreasonably, and away from the employer. I think that is to be deprecated, because that is what we have seen in so many aspects of this Bill. This leads me to conclude something else as well. On a risk-based assessment of whether you would wish to employ a person, an employer may very well conclude—it may, unfortunately, be an encumbrance of being a female employee or potential employee—that “We do not wish to employ that person because she may apply for flexible working, and it is better to employ someone else”. This is particularly because of the risk that, in going to an employment tribunal, after already having believed they had behaved in a reasonable way, they would be subject to a potential substantial monetary fine, which will impact on their bottom line. That is not good for those workers. It is not for the women who wish to work and have flexibility.

I broadly agree with the idea of reasonableness in applying for flexible working. That is how our jobs market and employment regime works now. Many women do want flexible working, and it is absolutely right that employers reasonably consider that. But I think this amendment is a step too far, because it will have the unintended consequence of making it more likely that women will not be employed because they may ask for flexible working. I think it is otiose: it is unnecessary, and it will not add to the efficacy of the Bill.

Employment Rights Bill

Lord Ashcombe Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

[Baroness Smith of Llanfaes (PC)]

My Lords, it is a pleasure to follow the noble Lord, Lord Harlech, who made a compelling case for these amendments. I rise to speak in strong support of Amendments 139 and 76, tabled respectively by the noble Baronesses, Lady Penn and Lady Lister.

The UK’s statutory paternity leave—just two weeks, paid at £187.18 per week—is the most limited in Europe. In many OECD countries, six weeks’ leave at the equivalent of full pay is standard. By comparison, our offer is inadequate and outdated.

Eligibility for paternity leave is also restricted. It requires continuous employment with the same employer for 26 weeks before the 15th week prior to the due date. That excludes many fathers, especially those in insecure work, the self-employed, or those working in gig economy roles. Many are forced to take unpaid leave or use holiday just to be present at the start of their child’s life.

The impact is significant. The TUC reports that over half of families struggle financially when a parent takes paternity leave, and one in five do not take the leave they are entitled to, mostly for financial reasons. Research from Pregnant Then Screwed found that 70% of fathers who did not take their full leave had to cut it short due to cost.

This is not just about finances; it affects bonding with the child and support for the mother or birthing partner, and it reinforces gender inequality in unpaid care. The lack of accessible leave for fathers limits shared parenting and is a contributor to the gender pay gap and future pension pot inequality.

The Employment Rights Bill includes provisions to address some of these issues. Clauses 15 and 16 remove the qualifying periods for unpaid parental and paternity leave. Clause 17 removes the requirement to take paternity or adoption leave before parental leave, allowing paternity and adoption leave to be taken following shared parental leave. However, these clauses fail to tackle the low level of statutory paternity pay, or to extend fathers’ and second parents’ leave entitlement past two weeks.

While the Labour Party committed in its manifesto to review the parental leave system more broadly, the Employment Rights Bill provides an opportunity in the here and now to implement changes that would make a real difference to families and people considering having children. The noble Lord, Lord Bailey, mentioned the lower birth rate—an important context that we must take into account in considering in these amendments.

Amendment 139 from the noble Baroness, Lady Penn, offers a practical and immediate step forward. It would require statutory paternity pay to be a day one right, removing unnecessary barriers for thousands of working parents.

Amendment 76 from the noble Baroness, Lady Lister, backed by the noble Baroness, Lady Penn, would mandate a comprehensive review of paid parental leave within six months of the Bill becoming law. Importantly, it sets the terms of that review: to consider a statutory, non-transferable period of paid leave for second parents, to raise pay levels, and to include the self-employed.

This is not merely a social issue; it is an economic one. Many noble Lords have mentioned the modelling by the Joseph Rowntree Foundation and the Centre for Progressive Policy, which suggests that increasing paternity leave to six weeks at 90% of earnings could contribute £2.68 billion to the UK economy by supporting more mothers to return to work and encouraging shared care from the outset.

Countries with more than six weeks’ paid paternity leave have significantly smaller gender pay and participation gaps, as we heard in the international examples shared by a number of noble Lords during this debate. The benefits are clear, and the public support reform—only 18% believe the current two-week offer is sufficient.

Other amendments in this group have been powerfully spoken to, such as Amendment 80 from the noble Lord, Lord Palmer, and Amendment 127 from the noble Baroness, Lady Penn, which both propose extended leave and fairer pay.

The case for reform has been compellingly made in this group. The Employment Rights Bill offers a real opportunity to modernise paternity leave, benefiting families, the economy and gender equality at work. I urge the Minister to consider the strength of the arguments presented today and to respond with the action that it deserves.

[Lord Ashcombe (Con)]

My Lords, I rise to speak in support of Amendments 127, 128 and 139 in the name in my noble friend Lady Penn.

I would like to think that the birth of any child is an important day in the eyes of the father as well as the mother; yet, when it comes to the parental leave granted by companies, they are treated very differently: up to 52 weeks for the mother and two weeks for the father. On this basis, as we have heard, the United Kingdom compares very unfavourably with other European nations. In addition, 22 OECD nations offer more than six weeks, paid at the equivalent of 100% of salary.

The Government’s weekly rate of statutory pay, for the two weeks that it is paid to fathers in this country, is currently the lesser of £187.18 or 90% of average weekly earnings. This is a modest amount by any measure, given that the average full-time working man is paid just under £700 per week.

We have heard from other noble Lords of the benefits to fathers themselves, as well as mothers and children, when fathers are permitted to spend longer with the family in the early period of a child’s life.

I wish to draw on my personal experience. As I have said before, the company that I work for—Marsh, a very large insurance broker—now has a mature policy on paternity leave. Fathers are allowed to take up to 16 weeks’ leave, and the company ensures that they continue to be paid the equivalent of 100% of their salary during their time away from the workplace. Importantly, their job remains open for this period to facilitate their return. This benefit was not available to me when my sons were born in the 1990s—unlike the noble Lord, Lord Russell of Liverpool, I have not yet reached grandfatherhood.

The time allowed must be taken within 52 weeks of the birth of the child, or children in the event of a multiple birth. I am sure that our competitors offer something similar, as competition for staff is an ongoing issue, and benefits count enormously in any discussion should a member of staff wish to change employer. Such a policy helps to define the culture of a company that cares not only for itself but also for the lives of its colleagues.

I do not believe that Amendment 128, which asks for parental leave policies to be published by large companies, is making an onerous request; indeed, publishing them would enable meaningful comparisons, inform jobseekers and encourage best practice across industry. I support it.

As I mentioned in an earlier group, happy staff tend to do good work. This is certainly a stressful time in any family’s life, and the mental health of staff is important, as we have heard today from my noble friend Lord Bailey of Paddington and others. It is one thing for a large company with the ability to cover a colleague’s workload to offer such a period of paternity leave, but this is obviously more challenging for smaller companies.

I am not suggesting for one moment that all companies should offer such generous periods of paternity leave as my own, much as I would have enjoyed it in my time. The birth of any child is, I hope, an exciting experience. It is also, in my experience, a somewhat nerve-wracking one, which can be ameliorated by parents being able to spend more time together during this period.

Two weeks of paternity leave is simply not enough. I encourage the Government to extend the statutory period for paternity leave to six weeks, as suggested in Amendment 127, and to provide a more generous level of salary. I hope that this will encourage fathers to take off this period, which, as I have demonstrated, is exceeded in some workplaces.

Finally, I will look briefly at Amendment 139, again in the name of my noble friend Lady Penn, on which I have changed my opinion during this debate. I believe that companies of all sizes feel that day one paternity leave is a step too far when the new employee has not even walked through the door. However, if the Government insist on this, it seems only right that fathers should receive statutory pay as a minimum. Companies obviously still have the opportunity to decide whether to go further, as would be the case for employees who have been part of the workforce for a certain period of time.