Employment Rights Bill

Lord Berkeley Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

Moved by

[Lord Berkeley]

323E: After Clause 150, insert the following new Clause—
“Substitution clauses and the definition of “worker” in app-based work(1) The Employment Rights Act 1996 is amended as follows.(2) After section 207B, insert— “Substitution
207C Prohibition of substitution clauses in platform-based logistics work(1) A relevant company must not include a clause in its contractor agreements that permits substitution in the performance of services, unless—(a) the company can demonstrate that such substitution is operationally viable and genuinely offered to all contractors, and(b) the identity of any substitute is subject to the same training, vetting and approval standards as a directly contracted individual.(2) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).(3) In this section—“dependent contractor” means a person who—(a) performs services arranged through the company’s platform;(b) is paid per task or service delivered;(c) is not classified as an employee or worker by the company;“relevant company” means a company that—(a) provides services in relation to food and beverage delivery, postal and courier operations, or private hire transport via a digital or app-based platform, and(b) engages more than 250 workers or dependent contractors globally.(4) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).”(3) In section 230 (employees and workers), after subsection (3), insert—“(3A) For the purposes of subsection (3)(b), a requirement to perform work personally shall be deemed to exist unless the right to substitute—(a) is genuine, exercised in practice, and not fettered by contractual or practical limitations imposed by the contracting entity,(b) is not subject to prior approval or vetting by the company, either directly or indirectly, and(c) forms a meaningful part of the way in which services are actually delivered.(3B) Where the work involves the use of a digital platform to allocate real-time, location-based tasks in sectors including—(a) food and beverage delivery,(b) postal and courier services, and(c) taxi and private hire operations,any contractual clause purporting to allow for substitution shall be treated as void and of no effect, unless the company can demonstrate that the right of substitution is genuine, practical, and routinely exercised.(3C) A substitution clause in a contract for services of the type described in subsection (3B) shall not, by itself, be sufficient to establish that an individual is not a worker.””

[Lord Berkeley (Lab)]

My Lords, the new clause proposed in Amendment 323E in my name has been given the rather surprising title “Substitution”, and one or two noble Lords may be wondering what that means, so I will try and explain. It refers to the substitution of people with the intention of avoiding paying tax, national insurance or anything else. It is a problem that has grown like Topsy over the last five years.

Noble Lords will remember how many times in the last year we have debated whether electric scooters should go on the road or the pavement and whether we should have electric bikes. More recently, we have been debating electric bicycles with big trailers behind them, usually pulling Deliveroo or something like that. While many of us think that it is a great idea to have green transport, when you start looking behind the way that this part of the industry is created, it does not look quite so good.

I am not going to go into the road safety element, because we are not in a road safety debate tonight, but there are other safety implications concerning the people who drive these vehicles. There are questions concerning, first, the extent to which they should be in the country at all and, secondly, whether they are paying the right amount of tax—and that is before we get into any other thing that might be driver related.

Noble Lords may have read a big spread in the Sun today, which I think is coincidental. It reads:

“Asylum seekers are cheating the taxpayer—with illicit Deliveroo and Just Eat accounts offered to them within ten minutes of asking”.


It goes on to explain that there are people selling Deliveroo driver accounts to migrants even while they are on the rubber dinghy coming across the channel from Calais. That makes it very nice for them, because they know they are being taken on and do not have to look for a job. That is one problem. I am not going to repeat the rest of the article as it will take all night, but it is well worth reading the reasons behind this.

The other issue is that these drivers riding the bicycles seem to be very adept at getting their friends to substitute for them. The friends may have no qualifications, driving licence, residence or anything else, and are probably not recognised, so they carry on driving these things, frankly, illegally. That is before we get to the questions of why there is no enforcement in relation to these people’s driving ability or whether they should be here at all. I am not going to go into any greater depth on what is wrong. As we all know, this is a serious problem in London, but it is also a problem elsewhere.

The amendment is quite complicated, but then employment law is complicated. My friends in the cycling and walking community, who are really fed up with this, look upon this amendment as a matter of safety, but they also are asking, “Why should people get away with doing this when they probably are not paying tax or anything else?”

The wording of the amendment is designed to cover the most popular parts of the industry, such as food and beverage delivery, postal and courier delivery, and taxi and private hire operations, as well as probably many others. It is to make sure that, if people are hired by one of these companies to drive these vehicles and go on particular routes, they actually do it rather than subcontract the work to somebody else who has no qualifications at all. I have not yet seen any convictions for people found guilty of what you might call substitution, but I expect it will happen soon.

--- Later in debate ---

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

My Lords, I thank my noble friend Lord Berkeley for tabling Amendment 323E and everyone who contributed to this short but important debate on the issue of substitution clauses.

To be absolutely clear, the Government are very alert to the risks that my noble friends Lord Berkeley and Lord Hendy and the noble Lords, Lord Russell of Liverpool and Lord Palmer of Childs Hill, all raised on substitution. We recognise that substitution in the platform economy is an issue, and we share the concerns about the impact that it can have on working conditions and the prevalence of illegal working.

Some of the critiques that my noble friend Lord Berkeley made about e-bikes and e-scooters, and some of the comments made by the noble Baroness, Lady Neville-Rolfe, fall a little outside what we are talking about tonight. One only has to be in the Chamber at Oral Questions on a regular basis to understand that noble Lords across the whole House share concerns about the impact that e-bikes and e-scooters are having on general society, as well as their attitudes towards the noble pursuits of cycling, walking and sharing public spaces.

There is growing awareness of substitution clauses and their use to deny workers core protections, including the national minimum wage and holiday pay, as set out by many noble Lords this evening, particularly the noble Lord, Lord Russell of Liverpool. Clearly, in extremes this can lead to abusive and exploitative treatment of workers, and we are looking at it closely.

My noble friend Lord Berkeley raised the issue of illegal working as reported in today’s edition of the Sun. It is important in considering this issue to realise that the Government recently introduced an amendment to the Border Security, Asylum and Immigration Bill on Report in the other place to extend the scope of the requirement on employers to carry out right to work checks on limb (b) workers or individual subcontractors, such as those working in the platform economy.

We must remain in step with modern labour market models. The purpose of these changes is to require businesses that employ individuals in new labour markets to check that only those with a right to work in the UK are eligible to participate in these arrangements, and to enable Immigration Enforcement to issue penalties where they are not. This ensures that compliance is equivalent for traditional employers. That, as I understand it, is the core of the issue raised in the newspaper report described by my noble friend Lord Berkeley.

The links between substitution and employment status demonstrate how complex this area is. As my noble friend Lady Jones said earlier this evening in discussing Amendment 318, we are committed to consulting on a simpler employment status framework. My noble friend Lord Hendy said that we should look at this holistically. I am confident that this will provide an opportunity to hear views from a wide range of stakeholders on the use of substitution clauses and the interactions with employment status. This is an important issue, but I am also aware that there is a complex interplay with measures we are going to discuss shortly in Committee on the Border Security, Asylum and Immigration Bill. In that context, it might be useful for me to take this back to colleagues in the Home Office and see how best to pursue it further.

I therefore ask my noble friend Lord Berkeley to withdraw Amendment 323E. In so doing, as this will be my last opportunity to speak in Committee, I would like to take this opportunity to thank all noble Lords who have taken part in the wonderful 11 days in Committee on this Bill for their constructive engagement and, indeed, at times, stimulating debates—who would have thought we would get so many days in Committee? I take note of what the noble Lord, Lord Sharpe, said earlier about the pace of progress during immigration legislation. As I am going to be on the Front Bench for the Border Security, Asylum and Immigration Bill later this week, all I can say is: I simply cannot wait.

[Lord Berkeley (Lab)]

My Lords, I am really grateful to noble Lords who have taken part in this short debate and made many contributions, which indicate that it is a difficult subject and it would the better if the whole thing went away. But of course, it will not go away. When my noble friend the Minister said that this is his last appearance on the Bill, I thought, “Well, is it a sinking ship or is it going to the next stage?” I hope it is not a sinking ship, and that there is going to be another good stage.

[Lord Katz (Lab)]

To be clear, we are in Committee. Who knows what comes next?

[Lord Berkeley (Lab)]

We had a problem up in the Committee room last week with the mice eating through the electric cables. We have got a few problems here.

More seriously, it is a big problem. We only covered probably a small fraction of it tonight, but I would be very grateful if the Minister agreed to meet those of us who are interested, sometime between now and Report, to see how we can take it forward in one way or another. I am not sure which way “forward” would be; but otherwise, it is very tempting to put another amendment down on Report and have another debate like this. It would be much better if we could all sit around a table for half an hour and hear what the Government want to do, and hopefully agree—or hopefully not. Is my noble friend about to say yes to that?

[Lord Katz (Lab)]

Over many years now, I have had lots of interesting discussions with my noble friend, in different guises. It is always a pleasure to meet with him—and indeed with any other noble Lords who wish to engage on this important issue.

[Lord Berkeley (Lab)]

I am most grateful to my noble friend. On that basis, I beg leave to withdraw the amendment.

Amendment 323E withdrawn.

Employment Rights Bill

Lord Berkeley Excerpts

Report stage
Monday 21st July 2025 Lords Chamber

[Lord Berkeley (Lab)]

I want to intervene very briefly to reflect on the difference between the debate this afternoon and the debate we had at the time of the P&O disaster—I call it a disaster for all the people who were basically sacked. It was very difficult to get information about what was right and what was wrong, and who was their employer. We were fed a load of, frankly, bad information from the company, and we got some good information from the trade unions.

Let us just reflect, however, on what my noble friends Lord Hendy and Lady O’Grady said about how things have changed. It would have been wonderful if we had heard their speeches before we debated P&O, because the problem is still just as bad and still needs resolving. I am very glad to welcome these two people in particular, and I hope we will hear much more from them.

[Baroness Lawlor (Con)]

Will noble Lords allow me to say a word in support? I was a little late coming in because I misread the screen; I thought we were on Amendment 122. I support my noble friend’s Amendment 125 because it would reinforce the individual freedom of the workplace and the freedom of contract, and it would protect access to statutory rights. I say this in response to some of the points made about what other arrangements could be in place. I will refer to one law firm commenting on the importance of freedom of contract in our laws. It reflected—

--- Later in debate ---

[Baroness Butler-Sloss (CB)]

My Lords, I have played no part in this Bill, but I have come in especially for this amendment—although I voted on an earlier one. However, my elder brother was a passionate railway supporter, and he would have been horrified if he had realised that any support that he could give would have been illegal. Respectfully, it is no use the Minister saying that guidance shows that they will not prosecute. The fact is that the law forbids it. Speaking as a former lawyer, if the law forbids it, no respectable organisation should allow it to go forward.

It does not matter that the advice is that you will not be prosecuted. If, in the future, a 13 year-old is a passionate supporter and a different member of the organisation who looks after this says, “We must prosecute”, the fact that they have been told they would not be prosecuted would not be the slightest defence in a court of law. This is the important thing. It is anachronistic, as has been said, and it is time it was changed. I hope the Minister is not going to offer the bromide that it does not matter because it will not happen. The law has to be obeyed, and we cannot have government departments saying that you can shut your eyes to a piece of law.

[Lord Berkeley (Lab)]

My Lords, I support this amendment wholeheartedly. I have attended many meetings of the heritage rail group, and I congratulate my noble friend on the way he has taken it forward.

One thing we have not mentioned is the quite regular reports from members who run the small railways about the fear of breaking the law and the effect it could have if there are legal cases and they run out of money. Most of them are very short of money, and they rely on as much voluntary work as they possibly can. The thought of being taken to court—whether it is by the regulator, which is unlikely, as my noble friend says, or others—really puts them off welcoming younger people. It is the fear of legal action against a voluntary organisation which is the most serious part of this debate.

[Lord Palmer of Childs Hill (LD)]

My Lords, the incredible thing about this amendment is that it has signatures and support from the Conservative Benches, the Labour Benches, the Liberal Democrat Benches and the Cross Benches. It is something the Government should take into account. It is not some weird idea from one part of this House, it is across the House. I applaud the initiative which started with my old friend, the noble Lord, Lord Faulkner—if he would allow me to say that. The principle here is to try to stop unintended consequences. The law is as it is, and it cannot be ignored. We have an opportunity to tweak the employment rights legislation to put that right.

We are dealing with young people who are doing voluntary work on the railways. There was an incredible programme on television recently—which I referred to in a previous speech—where the young people were doing all the jobs on this heritage railway, except running the engine, which was dangerous and they were not allowed to do; they were the porters, the inspectors, et cetera. We all gain from it: the young people gain from it and the community gains from it. However, there is a possibility that someone could be prosecuted because the law says what it does.

We are not talking about one small heritage railway. As the noble Lord, Lord Faulkner, said, there are many; he mentioned the Ffestiniog Railway—if I pronounced that correctly. There is also the North Yorkshire Moors Railway, the Bluebell Railway, the West Somerset Railway, the Middleton Railway, the Spa Valley Railway, and many others. There is a long list.

This is a very understated thing. People have asked me why I signed the amendment from the noble Lords, Lord Faulkner and Lord Parkinson; I told them it was because we are dealing with real matters of the moment in the employment rights legislation. This is an opportunity to put right a small error in history. I invite everybody, if we go to a vote, to support this.

Employment Rights Bill

Lord Berkeley Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

[Lord Hendy (Lab)]

My Lords, no one hearing the speeches of the noble Lords who have spoken could be other than sympathetic to the objects of the amendments in this group.

However, although it may seem churlish, I have a point on the definition of freelancers in Amendment 161. It is not a technical point; it is about the fact that another categorisation of workers would be added to the already complex pattern of the status of workers. I know that the Government intend to conduct a comprehensive review of the status of workers later, and the issue of freelancers will no doubt be addressed in that.

One issue affecting freelancers, as defined in the amendment, is the use of substitution clauses in workers’ contracts. Two points arise here; my noble friend Lord Berkeley will say a few words about one, and I will deal with the other. The issue is that the insertion of substitution clauses by employers can be used to deny self-employed workers, such as freelancers, all employment rights. The particular value to some employers of this device was established in the Deliveroo case in the Supreme Court in 2023, in which I had the honour, or perhaps the misfortune, of representing the union representing the workers.

The issue is that self-employed workers are by definition not employees, and so they do not have the rights of employees. But they could be what lawyers call limb (b) workers, with limited employment rights. In order to fall into that definition, such workers must undertake

“to do or perform personally any work or services”.

The delivery companies have realised that this condition could be defeated by the inclusion of a right to substitute on the part of the worker. Clearly, a legal provision that such a clause should not be a factor in the determination of personal service is needed, but doubtless that will be a matter for consideration in the Government’s review.

[Lord Berkeley (Lab)]

My Lords, I will just add a few words to my noble friend’s contribution. This little item that we are discussing came out of a debate we had in Committee when we established that there was a link between the small boats with what we might call illegal immigrants coming across the channel and the delivery vehicles, mostly bicycles with trailers and mostly in London, but in other places as well. There was strong evidence that the riders do not have permission to work in this country and have probably not passed any of the tests necessary for what they are doing. We all know what the problem is with these bicycles and trailers going around London: they seem to forget that there are things such as traffic lights and rules about keeping to the left.

Ministers were sympathetic, and we had a very useful meeting with the Ministers, for which I thank them. The real problem is that once one of these drivers has a job at one of the companies my noble friend mentioned, they can contact their brothers, sisters and cousins on the continent and say, “Why don’t you come across too? You can share the job”, which sounds fine. They spend the money and come across the channel, hopefully still safe and alive.

Once two of them are trying to do the same job as if one person, it gets very difficult. There is no easy solution to this, apart from—we had a very useful meeting with the Minister on this—adding the word “substitution” to many of the issues that noble Lords in the creative sector spoke about so well earlier. They are often substituting for their brothers and cousins but are still working without the necessary insurance, certification or anything else. I hope that when my noble friend the Minister comes to respond, she will look favourably on the idea of having a wider interpretation of the type of work we are talking about. Apart from people not paying their tax and everything else, hopefully there are not going be too many road accidents, but at the moment it is a little dubious.

I am grateful to other noble Lords who have listened to something that is 100 miles away from creative, but it is just as important. I look forward to the Minister’s response.

[Lord Leong (Lab)]

Front Bench.