Employment Rights Bill

Lord de Clifford Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 10th December 2025 Lords Chamber

[Lord Barber of Ainsdale (Lab)]

My Lords, the subjects covered by these amendments have been more than extensively debated already, so I do not need to rehearse all the arguments around each issue. Nor do I need, I hope, to remind the House that this whole Bill represents the fulfilment of a hugely important manifesto commitment and, by long-established convention, it must ultimately be recognised and accepted by this House.

As a former chair of ACAS, I will briefly focus on what is new since our previous debate on the Bill: the unprecedented agreement between the TUC and unions and the major employers’ organisations in this country. I say “unprecedented” because, although there have been agreements on some issues over the years between the TUC and the CBI—I think of the joint work that was excellently done developing the furlough scheme during the Covid crisis—I cannot recall such a grouping of the representative organisations of employers ever coming together to seek and to reach an understanding with the TUC. I do not need to list all those organisations on the employer side in this process; the noble Lord, Lord Fox, has done that for me already. This is a historic development and, to my mind, a very positive one. I warmly congratulate those on all sides who gave leadership, for the Government, the unions and the employers, to make this possible. All the parties needed to move from their original positions to make this possible.

As is clear, the centrepiece of this agreement is moving from a right to protection against unfair dismissal from day one of employment to after six months in the job. This proposal was championed by many noble Lords in our earlier debates, speaking up, as they have, for what they have seen as employers’ most important concern about the different provisions in the Bill. But, of course, this agreement is more ambitious than that, in also clearing the decks for the Bill to move swiftly to Royal Assent. As the joint statement by all the employers’ organisations makes clear:

“This change addresses the key problem that must be sorted in primary legislation”.


That statement acknowledges that other issues covered by the Bill, on which those organisations may have concerns, will be consulted on in due course after Royal Assent. This reflects a widely shared view that, rather than leaving continued uncertainty and dragging this debate out further, it is now better for all parties to get the Bill passed so that we can all move on to the next stage of bringing some key provisions into force, in line with the published timetable, and the planned consultations on other issues covered by the Bill.

My ACAS and TUC experience has taught me how difficult it can be to find intelligent compromise on issues that may have been hard fought. It has also taught me the vital importance of agreements being honoured when a deal is done. If the passing of this Bill is further delayed it would frustrate one of the key objectives of this agreement.

As the employers’ organisations said in their statement, this shows that dialogue works. I truly hope that the positive spirit that underpins the agreement continues to the next phase—I mean in the changes to be made across the workplaces of this country, not just the consultations on detailed aspects of the Bill. My ambition has always been for unions and employers to find constructive ways of working together in order to build successful organisations. In that spirit, I hope all noble Lords will now get on board and show—dare I say it—solidarity with the employers of our country in the compromise that they have reached. I hope noble Lords will not just support the changes in unfair dismissal arrangements but now pass the Bill through to Royal Assent without any further delay.

[Lord de Clifford (CB)]

My Lords, I will speak on Motions B and B1 and register that I speak on behalf of SMEs and as a small employer of 130 people. I thank the Government for listening to businesses and this Chamber with regard to the change to unfair dismissal. Six months is certainly enough time for businesses to assess employees.

I thank the Opposition, the Liberal Democrat Front Bench and my noble friend Lord Vaux of Harrowden for persisting in trying to change Clause 23. This change could have had the effect of allowing employers, especially SMEs and micro-businesses, to take a chance on a prospective employee who shows the skills and talents for a particular role when the employer, for whatever reason, may have doubts. This could be due to a lack of experience, the different ways in which some individuals need to work nowadays, or an employment gap. This change certainly would help that.

However, the Government’s introduction of the change to lift the compensation cap will potentially significantly dampen down employers’ enthusiasm to take this chance. This is especially true for micro-businesses. The regulatory burden and the risk of starting to take on employees is significant, and the removal of a cap will add to the real fear about starting to employ people. All those businesses hear is an unlimited cap, which is what the focus will be in their minds. They will not know about the average limit being just £7,000 or £8,000. The thought of an unlimited liability if you get the dismissal process wrong will either stop businesses taking on employees or mean that some employee issues are not tackled for fear of the possible amounts. This will have a negative impact on productivity and, possibly, the culture that people work in.

I have listened to the Minister and welcome the impact assessment and consideration, but I ask the Government to reconsider this change and put some limit on the compensation, so that small businesses can assess the liability and not have the fear, even if unfounded, of paying a large fine that could put those businesses or business owners at risk.

[Lord Hendy (Lab)]

My Lords, I will make two points. The first relates to Motion B and the removal of the arbitrary statutory limit on compensation. My noble friend the Minister mentioned the tribunal statistics for 2023-24, published by the Government, and the fact that the median award for unfair dismissal was £6,746. That is the median award, not, as the noble Lord, Lord Fox, mentioned, the average award. It means that 50% of all awards for unfair dismissal are less than £6,746.

But those statistics reveal something that I found even more startling: in that year, 2023-24, the tribunals disposed of 31,000 single-claim cases and 2,000 multiple-claim cases; of those, only 646 awards were made in respect of compensation for unfair dismissal. Of course, one accepts that many cases were settled through ACAS or between the parties and then approved by the tribunal, and that would count as a disposal. But 646 cases out of 33,000 means that this jurisdiction of unfair dismissal is little used.

Of those awarded compensation, the latest government survey, which dates from 2013 and has never been updated, found that only 49% of claimants had been paid in full, a further 16% had been paid in part and 35% of successful claimants receiving a tribunal award had never received a penny of their awards. In 2016, the then Government sought to address this lamentable state of affairs by establishing the employment tribunal penalty enforcement and naming scheme to penalise companies that do not pay within 28 days of the tribunal order and, since 2018, by publicly naming them.

However, the BBC and the Bureau of Investigative Journalism published research two months ago showing that of the 7,000 unpaid claimants using the scheme, no less than 5,000 had failed to obtain any recovery. Some 4,800 penalty notices had been issued, with a combined value of £9 million of unpaid awards, but government records show that only 109 of those notices were actually paid, and none of the employers in question was named, despite nearly 4,000 requests for naming as well as compensation. These are the issues that the Government need to confront, not whether highly paid executives and others who are found to have been unfairly dismissed are entitled to the full measure of compensation for their losses.

My second and final point relates to Motion D, the amendment to it from the noble Lord, Lord Burns, and the discussion there has been, on this occasion and on the previous one, which my noble friend Lord Barber was involved in, about the compromise that was reached in 2016. I will go back a little further in the history of trade union political funds. In 1871, the Trade Union Act gave unions, for the first time in British history, legitimacy under the law. A trade union was materially defined as

“such combination, whether temporary or permanent, for regulating the relations between workmen and masters”.

The Act protected such organisations from illegality, in particular for restraint of trade, what is now called anti-competitive activities, of which collective bargaining as the means of regulating relations was the paradigm example. With various tweaks, the essential element of regulating relations between workers and employers remains the essential element in the current legislation for the definition of trade unions.

The point I want to make is that before the 1871 Act and for 40 years afterwards, trade unions continued to spend money promoting parliamentary Bills for the benefit of working people, such as on health and safety, national insurance, restoration of the right to strike after the Taff Vale judgment of 1901, and so on. At the end of the century, they came to the conclusion that they needed representation in Parliament. The Labour Representation Committee was founded by the TUC in 1900 and became the Labour Party in 1906. All this was largely financed by the unions from their general funds, just as employers financed the Tories and the Liberals. But in December 1909—