Employment Rights Bill

Lord Fox Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

Moved by

[Lord Fox]

1: Before Clause 1, insert the following new Clause—
“PurposeThe purpose of this Act is to—(a) improve the fairness and security of employment;(b) facilitate cooperative arrangements between employers and workers, including the protection of workers’ rights and wellbeing;(c) make provisions about pay and conditions in certain sectors; (d) facilitate constructive workplace relations between employers and workers representatives, including trade unions;(e) make provisions about the enforcement of labour market legislation.”Member’s explanatory statement
This amendment inserts a new Clause at the beginning of the Bill to set out its overarching purpose and provides a framework for understanding the aims of the legislation.

[Lord Fox (LD)]

My Lords, in moving Amendment 1, I will also speak to Amendments 283 and 327.

In February 2023, Keir Starmer launched Labour’s five missions. The first is to get the UK’s economic growth to the highest sustained level in the G7 by the end of Labour’s first term. I need hardly remind your Lordships that it is with that mission, and the four others, that the Labour Party went on to win the general election with a majority. Since then, the Government have unwisely raised employers’ NICs and introduced this Bill. It is through those lenses that business views the Government’s attitude towards it.

Amendment 1 is an attempt to set this legislation in context, and I thank the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for also signing it. It was quite difficult to come up with wording that the PBO would let past its eagle eyes, but I am sure that the Minister will not find much of this objectionable. For example, proposed new paragraph (a) sets out the need for “fairness and security” as drivers for the Bill; I am sure the Minister will agree with that. Proposed new paragraph (c) is well represented in this Bill, as large parts of it set out new rules around trade unions.

However, I will spend some time discussing proposed new paragraphs (b) and (d). I cannot read this Bill without the feeling that it envisions just two states of employment—happy workers represented by unions and abject employees working in non-unionised concerns—but, of course, that is not true. Even in the very welcome conversations with the Minister, there seems to have been little recognition that the vast majority of people in this country are in employment where the facilitation of co-operation agreements between employers and workers is not automatically dependent on their union status. Let us remind ourselves that, for most people, those co-operative arrangements work pretty well, and that the proportion of UK employees who are trade union members is around 22% in this country. Constructive workplace relations can be forged in many ways other than via direct representation of employees by their unions.

When the Minister generously gave her time to meet with me on this Bill, she explained that discussions between government, employers’ organisations and the unions had been constructive and amicable. I am sure they were, but those selfsame employers’ organisations have also raised serious alarm over this Bill. The British Chambers of Commerce, the CBI, the IoD, the FSB and Make UK all sent a joint letter, which I am sure all noble Lords have received and read. The B5, as it is known, is not alone: all manner of industries—including hospitality, food and drink, and employment agencies—have raised serious concerns about the Bill. The telling phrase in the B5 letter is:

“For us the challenge has never been what the government wants to achieve, but the unintended consequences of how they implement it. Unfortunately, the Bill locks in several irreversible policy directions that will force business to make difficult choices between jobs, investment and growth”.


The Minister may well say that she is getting equally forceful lobbying from the unions. Indeed, I believe that the noble Lord, Lord Hendy, will provide ample evidence of that with his later amendments. She may say that the Government are pitching this Bill in the middle of these respective positions—and she may claim, on that basis, that the Bill is in the right place. However, Governments are elected not to work out the average position of policy but to make the right decisions. I ask the Minister to take on board the concerns of business and, importantly, to recognise that there are issues in this Bill, which, if not addressed, will impede the Government’s chances of delivering their mission of economic growth.

Small and medium-sized enterprises are the backbone of the UK economy, accounting for a huge proportion of the business population and employing approximately 16.7 million people—around 61% of private sector employment, according to data from the Federation of Small Businesses. In that regard, the Minister should recognise that the impact of many of the measures in the Bill will disproportionately affect small and medium-sized businesses. These smaller businesses have neither the administrative horsepower nor the reservoir of human energy required to meet the collection of tasks that the Bill will introduce. Given their economic footprint and vital role in local communities, SMEs must be central to the purpose of the Employment Rights Bill. Placing SMEs at the heart of the Bill’s purpose offers an opportunity to foster better employment relations while supporting enterprise, resilience and long-term growth.

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[Lord Fox (LD)]

My Lords, I thank all noble Lords for their contributions to this debate. The noble Baroness, Lady Carberry, may be relatively new to this House, but she is not wrong that purpose amendments are often the source of great opprobrium across your Lordships’ House—and I am afraid I am something of a serial offender in that regard. But the aim of this amendment has certainly partially been achieved, in that I think we have started the process of flushing out some of the issues.

I have a great deal of respect for the noble Baroness, Lady O’Grady, and I think she gave a very spirited speech, but I think that she gave a spirited speech to the speeches that came after hers and not to mine. If she reads, in tomorrow’s publications, the words of what I said, I think she will find that at no point did I speak against the Bill. I was seeking through this process to achieve two things from the Benches opposite. First was a recognition that there is much work to be done to bring employers into this process, and I did not hear that empathy from the Benches opposite or from the Minister. The second point on which I was seeking recognition is that a lot of this legislation is arriving late. The Minister said she would give this House an adequate time to consider it; it is already too late for it to be adequate time, because this stuff is arriving well past due date. We are not getting adequate time on the programme that we are currently getting, and there needs to be a recognition of that. If the Government want to reach across the House and support all the good things in the Bill, then they have to have some empathy about the things that are wrong with it and with the process of the delivery. That was my main purpose in this purpose amendment, and it has not achieved that purpose to date. I hope that, going forward, we can get some recognition of what is required.

On Amendments 283 and 327, I thank the noble Baroness, Lady Coffey, who I think got my point: we need an operator’s manual for the Bill. The Minister absolutely cemented the reason why we need one, because she then went on a journey across several different bits of legislation and all sorts of codes and practices and stuff. If I am sitting in the HR department of one person in a business of 12 people, I need a guidebook that takes me to the right guides and the right legislation. The information may already exist, but I do not need to go on a website trawl to find it; I need a signpost that takes me to the places that I need to know to operate this legislation when it becomes an Act. That is what Amendment 283 is seeking to achieve. If this stuff already exists, then it will not hold up the process; it is merely a question of bringing it together and saying, “You get this bit there and that bit there”. The more that can be done within a code of practice to deal with that, the easier it will be for businesses to comply, and the easier it will be to avoid a proliferation of tribunals, which I am sure no one in this House is seeking to achieve. With that, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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I urge the Minister, if not to accept this amendment, at least to commit in Committee to including a clear definition of low-hours contracts on Report. If the low-hours threshold is set at the right level, the Bill will indeed succeed in addressing potentially exploitative practices—which, as noble Lords on the other side of the Committee have rightly pointed out, good employers want to be addressed as much as they do. The Bill can do so without dismantling the legitimate employment practices that work—for our economy, for our service industries, and, most importantly, for millions of working people across the UK. In that spirit, I commend Amendment 8 to your Lordships.

[Lord Fox (LD)]

My Lords, it is with some trepidation but some pleasure that I follow that speech. I rise to speak to Amendment 4, which is in my name, and to offer support to Amendments 7 and 15 in the name of my noble friend Lord Goddard, although he will speak to those on his own account.

Speaking on the previous group, I said that there should be a change in the polarity of the guaranteed hours offer from an obligation to offer to a more streamlined right to request. We have heard in the previous two speeches that the aim is for this offer to be made to people who want it rather than there being an obligation to make it to everybody, when we know for a fact that a large number of people who will get the offer will not want to take it up. It is unnecessary activity when there is plenty to do in business. It is a very simple principle, and I genuinely do not think it subverts the intention of the Bill, in the same way as I think the noble Lord, Lord Wolfson, was trying not to subvert the purpose of the Bill but to help it succeed while helping business at the same time. In a sense, that reflects the point I made before withdrawing Amendment 1. It is really asking the Government to have some understanding of how these things will be delivered on the ground, in the workplace. That is why the previous speech was so helpfully revealing.

I think that a large part of the early part of this Bill is designed to deal, in essence, with a number of employers who the Government have in the back of their mind as not doing the right thing and not achieving what we would all like to achieve. I understand that. Unfortunately, it is dragging the whole business programme, from microbusinesses right up to huge businesses, into a series of practices to crack those particular nuts. Later in Committee, my noble friend Lord Clement-Jones will introduce Amendment 318, which targets the sort of employer who I think the Government have in their mind as bad or exploitative. It would create, in essence, a new class of employee, the dependent contractor, which is in fact in many cases what we are starting to look at. It would sharpen the regulatory focus, particularly on some elements of gig economy employers, but avoid the heavy-handed approach that we are in danger of using with this Bill.

Amendment 4, and I think there are a couple of others that are very similar, would simply reverse that polarity to: if employees ask for it, the employer is obliged to deliver it. Some obligation on employers occasionally to remind their employees that they are entitled to ask for this would help the process.

As for the rest of the group, I will listen with interest to the noble Lord, Lord Sharpe, when he comes to his amendments. I think much of this will be addressed also when we get to the issue of freelancers and to the amendment tabled by my noble friend Lord Clement-Jones, so I imagine this is not the last time that we will have some elements of this discussion, but some sign from the Government Front Bench that they understand that something should and could be addressed in this area would be a good starting point.

[Baroness Lawlor (Con)]

My Lords, I rise to speak in support of Amendments 3, 6 and 9 in this group, tabled by my noble friend Lord Sharpe of Epsom and supported by my noble friend Lord Hunt of Wirral. I also support Amendment 8 tabled by my noble friend Lord Wolfson of Aspley Guise, but for different reasons. I will not speak on that, but I like the idea of a low-hours contract. I will speak about zero-hours contracts, because I do not believe they are getting a fair look in.

These amendments would give workers the right to request, rather than putting an obligation on employers to guarantee hours. I think they are worth while and worth supporting. In the labour market this year, there are 33.9 million people employed. Of them, 1.3 million are on zero-hours contracts. There has been an increase since 2000 of 805,000 people on this type of employment contract. This is 3.1% of employment in the UK. Most are young people in the 16 to 24 age group. This is a popular way of working; the figures speak to that. There has been far more significant an increase in this type of contract than in the overall type of working arrangements chosen by employees and their employers.

Much of the popularity lies in the flexibility on both sides. The evidence is that the majority of people on zero hours, 60%, do not want more hours, although some, 16%, do. Amendments that would allow an employee to request guaranteed hours as distinct from obliging the employer to guarantee certain hours seem more in tune with people’s wishes. Of those on zero-hours contracts, around 1 million are young people. However, 946,000 16 to 24 year-olds are not in employment, education or training; that is around 50%. Yes, people on these contracts may work fewer hours than other workers—I gather the average is around 21.8 hours a week compared with 36.5 hours for all people in employment—but is it not better that there are jobs which people want and can get, particularly young people who may not yet be in the labour market or who may have been thrown out of the labour market or left it for one of the many reasons we hear about it? I am afraid that it seems from the Government’s approach that they do not think so.

This Bill and Clause 1 must be seen in the overall context of the party opposite’s approach to labour market and economy reform. Not only is the NIC tax hike on the productive sector along with the decrease in the NIC threshold taking £24 billion out, affecting 800,000 businesses and their ability to employ people and offer opportunity to the 16 to 24 age group, but other costs have been piled high, one on top of the other, since the party opposite came to power. Of those employed in December 2024, 27.8 million were in the private sector and 6.14 million in the public sector. If employers are obliged to move to guaranteed hours, that will most likely serve to cut the number of people productively employed under these arrangements, with a corresponding decrease in output and growth. Surely these amendments speak for themselves, and a Government whose priority is to increase economic growth should accept them.

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[Baroness Stowell of Beeston (Con)]

My Lords, I was not going to speak on this group but the noble Lord, Lord Barber, has painted a horrific picture of the impact of zero hours on some workers. For some people I know who have been on the receiving end of zero-hours contracts, sometimes it has been even worse. I know of people who have been required to turn up at work at 4 am for a shift and been sent home again at 5 am, so I know how bad this is. However, my noble friend Lady Verma makes a strong argument as to why just removing all the measures, which would happen by virtue of the Bill, would also have a detrimental effect.

So far, I have not heard from those on the other side a response to the argument put forward by my noble friend Lord Wolfson, which is that we have to find a way forward on this matter that addresses the employment rights issue, which the Minister has said is the purpose of this legislation, but also allows business to deliver the kind of economic growth that the Government are also saying is the purpose of the Bill.

The noble Lord, Lord Empey, is not in his place at the moment, but we have to take heed of the point that he made in the debate on the first group: we should not be in a situation where this is a stand-off. Hopefully, through some responsiveness and empathy from the Minister, we will find ourselves in a position where the Bill will not have a detrimental effect on business but will address the worst work practices, as described by the noble Lord, Lord Barber.

[Lord Fox (LD)]

My Lords, I think I am allowed to come back in Committee. I want to respond to the noble Baroness, Lady Carberry, because I probably did not articulate terribly well what I was proposing. I certainly was articulating a right to request, but I was also assuming there would be an obligation to meet that request, given certain thresholds that the noble Lord, Lord Wolfson, was talking about. It would not be an option for the employer as long as the request was within those thresholds. I suspect that is not what the noble Baroness thought I was proposing, and I just wanted to set the record straight.

[Baroness Coffey (Con)]

My Lords, I support Amendment 8. I commend my noble friend Lord Wolfson on his excellent speech, bringing the reality of employing so many people into the heart of this debate, along with the constraints and the concerns being raised, while still recognising that I understand why so many people consider casual work and zero-hour contracts to be particularly poor when people are trying to have certainty of employment over some time. I also support Amendments 7, 12 and 13—in essence, any amendment that refers to specifying the reference period in the Bill.

I say that because, when thinking of 26 weeks, I think in particular of the hospitality industry in coastal areas. There are a number of employers around the country who literally shut down their businesses, or move to a much lower level of needing people, at certain times of the year, and then, in the summer, are desperately trying to find people. We need to give flexibility. The 12 weeks simply does not recognise that, as has been referred to. It is perfectly usual for people to work at different points throughout the year, potentially in on annualised-hours contract, but varying the number of hours expected to match the demand of customers requiring a particular service. I fear that the 12 weeks does not address that sort of business.

Across the country, 2 million people work in the hospitality industry. It is one of our biggest industries, and for many families it is key to how they support their household income. For the flexibility that employers want, and—thinking of how many people lose their childcare at certain times of the year—for employees to have flexibility around their hours worked, bringing in casual staff is a key element in how employers keep those businesses going.

There is another element that needs thinking through. While I appreciate that the Government seek to reduce the number of agency and bank workers in the NHS, let us not get away from the fact that, unfortunately, many NHS trusts are actually terrible employers. A lot of people leave or reduce their permanent contracts because they simply cannot get the flexibility that they need working in the NHS. That could be for caring reasons, for all sorts of people—it does not matter whether it is men or women; people provide care to their families and to their friends. I am concerned, and I intend to discuss further with NHS Professionals how this will impact on the NHS fulfilling its expectations for people right across the country. I appreciate that it is not simply NHS Professionals; many individual trusts have their own bank. That is intended to provide flexibility based on need, and recognises that simply not everybody can work the NHS shifts expected.

Thinking of the 26 weeks or the 12 weeks, I am also concerned that, at the other end of the Corridor, 650 Members of Parliament are all individual employers. They have to sign contracts, which are provided, but when people are ill or go on maternity leave, MPs can and do take people on through certain term contracts. I am concerned that there will be unintended consequences for the provision of services. As a real example, if you had to guarantee hours beyond when the employee came back, you could end up in a situation that you simply could not manage.

It is for those reasons that we need to think very carefully about the reference period when we are considering the different employment situations that small employers find themselves in, as well as the large sectors, such as hospitality and retail, which have already been discussed.