Employment Rights Bill

Lord de Clifford Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Verma (Con)]

My Lords, as an employer who has employed people over the past 40-odd years, I know that the difficulty for an SME—any small business such as my own—is the ability to manage all the bureaucracy that is entailed with it.

For businesses in the social care sector, for example, unfortunately you cannot really understand how good or bad a care worker will be until they have worked a little while in the organisation, even with the training. However, if we are to give the rights from day one, the difficulty will be that we will end up with a sector already very short of workers needing to hire more workers in case any are not suitable for the role. We would have to release them, knowing that they may then apply workers’ rights on day one without proper probation periods and take us to tribunal. It is a difficult sector.

There are many sectors like the care sector, and it is particularly challenging for small businesses in the wider sector of delivering something that is so important. If the care worker is not the right fit, it does not really matter how big or small the organisation is—that person is just not suitable for the role. We need to have the ability to dismiss the person without having to go through the bureaucracy of all the Government’s intentions in this part of the Bill. I therefore support my noble friend and the noble Lord on these amendments.

It is time to have a strong rethink about how we can come to a good middle ground, where employers are not fearful of employing. I have been talking to a lot of SMEs over the past few months, and the difficulty that noble Lords across the House will have found, when they have talked to businesses in their own communities, is the worry around what will happen when the legislation in this Bill is enforced.

[Lord de Clifford (CB)]

My Lords, I will speak in support of this group of amendments. I refer the House to my entry in the register of interests as the proud employer of 140 employees.

The removal of the qualifying period for a right not to be unfairly dismissed is not, and should not be, feared by good employers. Good employers should have systems in place to ensure that new employees have regular reviews to enable them to feed back to the employer and, likewise, for the employers to feed back to the employees. As an employer, I am aware of the protection that employees are entitled to, and rightly so.

When dealing with any employment issue, the word that always comes to my mind is “reasonableness”. Is it reasonable to totally remove the qualifying period? I do not think so. Employees should be protected from just being dismissed without proper procedures, review and consultation. I support this group of amendments on the probationary period, which is described in the Bill as the “initial period of employment”. There is very little detail in the Bill on what length the probationary period will be.

This lack of detail and clarity creates real uncertainty for employers at present, including myself. The probationary period is an essential time for both employees and employers to get to know one another. For the employees, it ensures that the job meets their expectations, including about terms and conditions, that the culture within the workplace suits them and that they are respected. For employers, it is time to ensure that the employee has the skills and knowledge—or the potential to develop their skills and knowledge—to fulfil the tasks required by the role in question.

The employees in our business can give one week’s notice that the job is not right for them. Likewise, the employer needs flexibility, if they feel that the employee is not right for their business for conduct, personality or capacity reasons. Therefore, employers do not need to go through a long and detailed process to end the contract when the employee has just started that job. In some cases, the procedure to dismiss an employee could take longer than the time they have been employed by the company. I acknowledge that the reason for ending a contract in this probationary period, as has clearly been said by my noble friend, should never be for a protected characteristic under any circumstances, which I fully support.

The group of amendments tabled by the noble Baroness, Lady Neville-Rolfe, seek—as other Peers have clearly observed today—to enable the termination of a contract without fear of unfair dismissal claims being brought during a probationary period. It gives employers the confidence to employ individuals, and at times gives employers confidence to take on an individual who may not fully meet all the criteria of that role but shows potential, thereby giving that individual the opportunity of work. Nearly every noble Lord has discussed young people and people possibly with a disability.

However, further details are required. It is essential that a minimum length of probationary period is detailed in the Bill. For my business, that is three months, but it may be longer for others. The extension of the probation is required when things are not quite going to plan. In that case, the employer needs to go through a process of extending it, which is essential for both the employee and the employer.

I support my noble friend Lord Vaux of Harrowden’s Amendment 108, as it puts a minimum length to the probation period within the Bill and therefore gives employers confidence in the probation process. Nine months gives employers time to have an initial probation period and then extend it if need be. If then the employer wishes to terminate after that many months, they will still need to follow a detailed procedure, as the risk of unfair dismissal is still high if not followed. This is a benefit to the employee from the shortening of the qualifying period. Moreover, the probationary period cannot be renewed continuously, which is to the benefit of both the employee and the employer, as there is a time limit.

Within secondary legislation, the Secretary of State can define the length of an initial probationary period, for, say, a maximum of six months. With this time limit, as proposed in Amendment 108, it would allow for one extension to nine months. The initial period of employment is an important part for all employers, whatever size, but for the SMEs and the micro-business, as previously stated, it allows flexibility. It avoids time-consuming and very costly processes to end the contract of an employee who is not working out in terms of conduct, capacity or personality. I ask the Minister to consider these amendments or refine them before Report to give all employers the confidence to employ new people, but especially in the SME sector and micro-businesses.

[Baroness Meyer (Con)]

My Lords, I, too, rise to support all the amendments in this group. I support the Government’s ambition to boost productivity, create good jobs and crack down on bad employers. However, as many noble Lords have highlighted before me, Clause 23 risks doing more harm than good. The letter from the UK’s five leading business organisations, cited repeatedly at Second Reading, sets out the long-term damage that this Bill, and this clause in particular, would do to business and the wider economy. Surely, they understand the risk better than anyone, and, if I may say so, better than most politicians. We really should listen to their concerns.

After Covid and all the additional costs, many small and larger businesses are struggling. This clause will hit them further, particularly small and medium-sized businesses. Are we really willing to push them out of business? I do not think that this is what the Government really intend to do.

Let me give noble Lords one example. A Ukrainian cabinetmaker whom I met 15 years ago—in fact, I was his first client—built a small business from scratch. He actually talked to me last week, and told me that rising costs and additional regulations are now threatening his business. He told me that, with this Bill, he might not be able to go any further and, especially, he will not be able to hire altogether.

Like many tradesmen, he cannot risk employing somebody based solely on their CV. He needs a clear period to assess whether this person can actually do the job and fit into the team, as noble Lords have highlighted before. Without a workable probation framework, he will not be able to take the risk. The Government have acknowledged this problem and proposed this nine-month statutory probation period with a “lighter touch” dismissal process. However, there is no detail, no definition and no guidance, and legal experts still question its compatibility with the ACAS code.

Worse still, this framework will not come into force until August 2026, leaving 18 months of legal uncertainty. How can employers plan or hire when they do not know what the rules are going to be? Therefore, if the Government accept these risks and have promised a solution, why is it not part of the Bill as it is? It risks killing job creation, driving away investments and weakening economic recovery. This is definitely not what this Government intend to do.

However, with that background, I add my voice to those of other noble Lords who say that this clause may need to be taken out altogether; otherwise, we will need to take into account all these amendments.

--- Later in debate ---

[Lord Lucas (Con)]

My Lords, I have Amendment 113A of this group, which is a very minimalist amendment designed to deal with circumstances in which, for instance, the company needs to change its registered address. That does not in any way affect the employee, but in the current wording of the Bill it would constitute a variation of the contract, and if the employee refused it—they do not have to be reasonable in doing so—we have found ourselves in difficulties for no good reason. I have a lot of sympathy with what my noble friend Lord Hunt has been saying, but my amendment is just to try to avoid creating difficulties where there should be none.

[Lord de Clifford (CB)]

My Lords, I will speak on Amendment 115 in my name, and I wish the Committee to note my entry in the register as set out in the previous group.

Employer businesses sometimes need to change, to adapt to the changes in the marketplace, to their customers’ needs, and sometimes to changes in society. Therefore, on occasions, employers need the ability to vary their employees’ contracts. This process should be done through consultation, negotiation and finally, agreement with their employees, at all times respecting the rights of those employees. I will quote from the Chartered Institute of Personnel and Development’s website, which refers to the current legislation:

“In exceptional circumstances, where there are genuine and pressing business needs and agreement cannot be reached, employers can sometimes be justified in unilaterally changing workers’ terms and conditions by terminating their contracts and re-hiring them on new terms and conditions”.


That comment and others that I have heard would suggest that the current legislation has been working, other than in exceptional circumstances and by some terrible employers. There will always be employers and people in society who will manipulate the law to their own advantage. This certainly was the case with the notorious P&O Ferries, which undertook an outrageous fire and replacement of their employees. Also, sometimes employers will certainly threaten employees with a fire and hire to gain advantage in negotiation. I recognise the value of unions and other employee organisations to assist and support employees when employers undertake varying contracts as a last resort.