Employment Rights Bill

Lord Hunt of Wirral Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

At first sight, Amendment 283 might seem like a long list but, in fact, it is not half of how this Bill will reach into working life. The amendment would require the Secretary of State to publish a code of practice that provides employers with guidance on complying with the Act. The code should set out best practice, compliance monitoring and enforcement procedures. It should ensure necessary consultation with stakeholders and would enshrine a review every five years. We need to see a draft of this code before this Bill progresses to its final stage; I would be happy to discuss with the Government how to make this happen. I beg to move Amendment 1.

[Lord Hunt of Wirral (Con)]

My Lords, briefly, I thank the noble Lord, Lord Fox, for bringing forward this important purpose clause amendment, which I must tell him—I know he is always surprised when I praise him—is a very cleverly worded amendment to which my noble friend Lord Sharpe of Epsom and I were very happy to add our support.

I do not know why this Bill has had to be rushed through within 100 days. Given the significance of this legislation, surely it would have been better if the Government had committed themselves to ensuring thorough and proper scrutiny. However, we have seen the introduction of 160 amendments on Report in the House of Commons—amendments which, in many cases, received no or little meaningful examination.

Even more concerning is the fact that the Government have tabled 27 amendments for Committee in this House. We have received a letter from the Minister warning us that there are more amendments in the pipeline on fire and rehire, the fair work agency, employment Bill time limits, trade union reform and maritime employment. What on earth is going on? Why was not this Bill properly prepared? This has meant that the letter to which the noble Lord, Lord Fox, referred is virtually saying to the House of Lords, “Please, on behalf of all the employers—and, indeed, all the businesses in the UK—we rely on you in the House of Lords to scrutinise this Bill properly”. I just do not think that this is the right way to treat Parliament. We owe it to the legislative process and to the public we serve to ensure that our scrutiny is neither rushed nor compromised.

No doubt the Minister will argue that a purpose clause is completely unnecessary. However, we respectfully disagree, and not only for the reasons raised by the noble Lord, Lord Fox. It is vital for the Bill clearly to articulate its overarching aims: not simply to modernise employment rights in name but to set out a clear ambition to create a fairer, more secure labour market; to encourage genuine co-operation between employers and workers; to protect rights and well-being in the workplace; to ensure proper standards for pay and conditions across sectors; and to guarantee robust enforcement of labour protections. I have to say that, without a purpose clause, this Bill risks being directionless and, worse, risks unintended consequences that neither workers nor businesses can possibly afford.

I think also—and I hope the noble Lord, Lord Fox, will agree—that a purpose clause is particularly important where there are a large number of delegated powers to make regulations within it. In effect, the Government are saying, “Please give us the power to do whatever we would like to do whenever we would like to do it”. The committees of this House have, time and again, urged Governments to turn their back on these Henry VIII clauses and present Parliament with clear cases to amend primary law, not do it through secondary legislation.

Well, there is growing concern about this Bill, which is why the British Chambers of Commerce, the Confederation of British Industry, Make UK, the Institute of Directors and, in particular, the Federation of Small Businesses, which between them represent thousands of businesses across the country, have published this open letter to the House of Lords, asking for urgent changes to the Bill. They did so because they are deeply concerned that, as drafted, the Bill will make it harder, not easier to create fair, secure and co-operative workplaces. They warn that the Bill will increase risk and uncertainty for businesses precisely at the moment when we need businesses to invest, to hire and support in particular those who are at the margins of the labour market.

I do not think that the substantive concerns of all the businesses quoted by the noble Lord, Lord Fox, have been listened to. I just hope that the Minister can respond when she winds up this debate. I look forward to the speeches from all sides of the House. I will not quote in detail from the letter, but it does remind me of the words of Milton Friedman. If I am ever to find myself quoting Milton Friedman, I suppose that this is the moment. He said:

“One of the great mistakes is to judge policies and programmes by their intentions rather than their results”.


Well, fine phrases about modernising employment rights and updating legislation are no substitute for carefully considered, properly scrutinised measures that deliver real-world improvement. So that letter from all those businesses is not a warning but a plea to this House. It is a recognition that we as the revising Chamber have a unique and critical responsibility to ensure that this Bill works. They are not closing the door on the Government but offering, at the end of the letter, to work with us all and with Ministers to help improve legislation.

In conclusion, if we are to get all these amendments, can we hear from the Minister how many more amendments we are going to get and when? The Government Chief Whip is constantly referring us to the Companion. I have never quoted from the Companion before, but it has pretty severe words for a Government who choose to table amendments at the last moment, without proper notice. So could we hear from the Minister what further amendments are planned, when we will receive them, and which parts of the Bill will be fundamentally altered? Here we are, at the start of Committee, still not knowing what the Government are proposing.

In an unguarded moment, the Minister disclosed to me that she has an implementation plan, which I understood from her was in draft. This House ought to see the draft implementation plan. Why can we not see it? Perhaps we could help the Minister produce the final draft. We should not get an implementation plan half way through Committee. Could we hear from the Minister on when we will see the implementation plan? A lot of businesses up and down the length and breadth of this country are totally uncertain about what the detail of this Bill will be. It is about time that we heard from the Minister about what the Bill seeks to do, what its purpose is and whether we can see it in its full form before we go any further with Committee.

[Lord Monks (Lab)]

My Lords, I will speak to Amendment 1 and avoid the temptation to engage in a mini-debate across the whole width. So far, I feel I have been sitting in a Second Reading debate. I have given speeches in this House before, reflecting similar sentiments to those in this amendment about fairness and co-operation. These are the words used in the amendment from the noble Lord, Lord Fox. I gave them in the context of the debates on Conservative anti-union laws, which we have addressed in this House in my time. Sadly, no one on the Conservative Benches, except for the noble Lord, Lord Balfe, who is in his place, paid any heed. The laws then proceeded to the statute book and the result was an imbalance in British employment law very much in favour of employers.

The Bill goes some way towards correcting that. Once it has been implemented, I hope we can look again at a system of mature collective bargaining of which we all can be proud. But first, we must replace the imbalance, and do so speedily, because it is glaring. Change is desperately needed; our labour market is characterised by high inequality—only two OECD countries have a bigger gap between rich and poor and between top earners and the very low-paid.

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[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I thank the noble Lord, Lord Fox, for his detailed engagement with our Bill and for Amendments 1, 283 and 327. I thank all noble Lords who have contributed to this wide-ranging debate, which has revisited many of the debates that we had at Second Reading.

Amendment 1 seeks to insert a new clause of the beginning of the Bill to set out the overarching purpose and to provide a framework for understanding the aims of the legislation. I thank the noble Lord, Lord Fox, for his challenge on this issue, but it is important to reflect on why we are bringing the Bill forward and what we hope to achieve through it.

The plan to make work pay sets out a significant and ambitious agenda to ensure that workplace rights are fit for the modern economy, to empower working people and, importantly, to contribute to economic growth. Delivery of that plan was, as we have heard, a manifesto commitment and part of the mandate on which the Labour Government were elected. On 10 October, the Government fulfilled their manifesto commitment to bring forward legislation within 100 days of entering office by introducing the Employment Rights Bill.

The noble Lords, Lord Fox and Lord Hunt, and others have asked about the later amendments that have been tabled. I reassure noble Lords that these are technical amendments and that the Committee will have adequate opportunity to scrutinise them all properly. The noble Lord, Lord Hunt, and others asked about an implementation plan. I reassure noble Lords that that will be shared as soon as it is available. We agree that businesses need guidance on the timescale and implementation of the measures in this Bill. We are working at pace to ensure that they have that information.

There is strong support for the measures included in the Bill. The Institute for Public Policy Research found that every constituency in the UK has a majority or plurality of people who believe that workers’ rights should be strengthened. My noble friend Lady O’Grady mentioned the latest poll. In addition, the TUC’s polling and that of HOPE not hate of over 21,000 people across the political spectrum has found strong support for key policies in the Bill. More than seven in 10 of UK voters—72%—support a ban on zero-hours contracts. Three-quarters of voters support giving all workers the right to statutory sick pay and ensuring that it is paid from the first day. Three-quarters of voters support giving all workers protection from unfair dismissal from the first day in their job.

This is a comprehensive Bill which delivers on a clear mandate from the British public. Once implemented, the Bill will represent the biggest upgrade of workers’ rights in a generation. Good employers support this package, because many of them are already delivering these standards. What they do not want is to be undercut on an uneven playing field.

I can give a few examples; I know the Opposition like to ask this question. Centrica, the Co-op, Richer Sounds, Nationwide, IVC Evidensia and IKEA UK and Ireland have all given their support to the measures in the Bill, and a lot of SMEs have done likewise, so it does have resonance with the business community.

Modernising the world of work will raise standards and tackle undercutting so that businesses are empowered to compete in a race to the top. I can reassure noble Lords that the Government, of course, recognise the concerns about the costs to business. The £5 billion figure from our impact assessment is a top-end estimate of the costs, which will largely represent a direct transfer to the lowest paid in society, with the bottom end of the range close to £1 billion.

The costs, therefore, are likely to be under 0.4% of our national wage bill and could even be as low as 0.1%. Furthermore, improving workers’ well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits worth billions of pounds per year. That is why delivering the benefits of the Bill would offset the costs.

I can reassure noble Lords that a number of these measures, as I have already said, have strong support from businesses, and we will of course carry on consulting them as we put these plans into practice to ensure that they are as effective as possible. The noble Baroness, Lady Stowell, mentioned the tech sector and will know that I am very minded of this. We will continue to engage with the tech sector on a regular basis to make sure that it contributes everything it can to the Government’s growth strategy.

The noble Lord, Lord Fox, and others have mentioned SMEs, and we will have the chance to debate this later in the Bill. In short, we do not agree that there should be two-tier employment rights: employment rights for all is a fundamental principle.

The noble Lord, Lord Empey, and the noble Baroness, Lady Stowell, talked about skills. We are absolutely committed to a new skills agenda, which is why Skills England is modernising our skills provision. It is an area where, traditionally, the unions and employers have made common cause to make sure that the upskilling of the workforce happens on a comprehensive basis.

This Bill shows the Government’s commitment to strengthening collective bargaining rights and trade union recognition. Our approach will foster a new partnership of co-operation between trade unions, employers and the Government. In response to the point made by the noble Lord, Lord Fox, our reforms remove hurdles that frustrate the voices of workers, but trade unions will still need to win a majority of workers’ votes in a ballot to be recognised by an employer. If workers do not want to be represented by a trade union, they will have the option to vote against recognition in that ballot.

On Clause 1 and the proposed list of priorities, I agree with my noble friends Lord Hendy and Lady Carberry that the purposes are already covered in the Bill. My noble friend Lord Hendy pointed out that the Long Title already addresses the purposes within the Bill, and as my noble friend Lady Carberry pointed out, the list is not exhaustive. If we are to have a list, it would need to be a whole lot longer than it is at the moment and cover a whole range of other aspirations already covered in Labour’s Plan to Make Work Pay.

The noble Baroness, Lady Neville-Rolfe, raised other issues that could be included in that list. Again, I assure her and others that all these issues have been consulted on extensively in the Bill. I would like to reassure noble Lords that there is no need for such a clause to be inserted to achieve this aim. The Explanatory Notes set out the purpose of the Bill clearly and provide further detail on the aims of the legislation. These notes were updated when the Bill transferred to this House and will be updated again when it receives Royal Assent. The Government have also published a series of fact sheets, which are available on GOV.UK and aid the understanding of the Bill’s aims.

Finally, from a legal perspective, inclusion of such a clause could risk producing unintended consequences on the interpretation of specific provisions within the Bill, which have been drafted to achieve the particular purposes concerned. While I understand what the noble Lord, Lord Fox, is trying to achieve, and I appreciate the debate that he has created, I hope I have persuaded him that it is not appropriate to include this in the Bill.

Amendment 283 seeks to require the Secretary of State

“to publish a code of practice providing employers with guidance on complying with the Act”.

This has had much less attention in the debate but, nevertheless, I will attempt to address the concerns that the noble Lord raised.

We have consulted and remain committed to consulting widely on the detail of implementation. The Government have also committed to ensuring that, where appropriate, guidance is published to ensure that all stakeholders have the information they need to make necessary adjustments. However, a Bill-wide code of practice, as suggested in the amendment, would be duplicative of the policy-specific guidance and codes of practice that the Government will already produce to support workers, employers and trade unions in implementing the reforms.

There is existing provision for the issue of guidance and codes of practice across employment law. Where relevant, the Bill amends those provisions to reflect that they will need to be updated to take account of the changes made by the Bill. This includes codes of practice issued by ACAS under the Trade Union and Labour Relations (Consolidation) Act. Such codes are subject to consultation requirements and must be laid in draft in both Houses for approval, and we are already working closely with ACAS to plan ahead for this work.

Where new statutory guidance is required, this is also provided for, such as in Clause 30, which inserts new Section 83D into the Procurement Act to make provision for the issue of codes of practice on relevant outsourcing contracts by appropriate authorities.

By requiring a single Bill-wide code of practice, this amendment would also risk delaying the Government in offering certainty on the details of policy and regulation on individual issues as they become available. I hope I have persuaded the noble Lord that this would therefore result in duplication and unnecessary delay.

Amendment 327 would prevent the implementation of measures in the Bill until the point at which the Government produce a Bill-wide code of practice. Some measures in the Bill will not require any further guidance before they are implemented—for example, the repeal of the Strikes (Minimum Service Levels) Act 2023. Delaying the date on which these measures can commence would unnecessarily delay the point at which workers can benefit from measures in the Bill.

Codes of practice are used to provide guidance to employers on how to comply with employment law. By nature they are detailed, building on and clarifying requirements set out in statute. There are several measures in the Bill where further consultation will be required to develop regulations setting out key details of reforms. Within six months, it would not be possible for all the outstanding policy details to be finalised to inform the content of a Bill-wide code of practice. Codes should bring clarity, but these timelines would risk patchy or unclear content if we were to go ahead on the basis of these amendments.

I agree with the need to ensure that workers, trade unions and employers are sufficiently supported for the implementation of the Bill, but this amendment is unnecessary and duplicative. I hope I have persuaded the noble Lord that the codes of practice that he envisages would not help to provide the detailed guidance that employers and workers require. I thank him for raising the issue, but I hope I have persuaded him not to press those amendments.

[Lord Hunt of Wirral (Con)]

The Minister has shared with the Committee that there is an implementation plan. As we are now moving to consider each clause, the first few in particular, it would be helpful for the Committee to be made aware of the part of the implementation plan that governs each and every clause. Is she able to share it with the Committee and, if so, by when? Might we at least see a draft of the implementation plan, so that businesses across the UK know what lies ahead?

[Baroness Jones of Whitchurch (Lab)]

I know the noble Lord has already raised this, and he tempts me, but there has to be further consultation. He will understand that. Part of the legislation obviously requires further consultation to take place. We are still looking at the timescales for all this, and we obviously understand the need to provide guidance as soon as we can, but what I can say that will be reassuring to everybody concerned is that this will be a phased process; this is not a day-one process. We just need to make sure that the phasing of all this makes sense for employers so that it can be done on a proper basis and with the appropriate guidelines behind it. We are working on it, we will share it as soon as we can, and we understand the need for it, but it is not available at this time.

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[Baroness Kramer (LD)]

My Lords, I am channelling the noble Lord, Lord Fox, who has been called away. He, on behalf of these Benches, cannot accept a two- tier workplace in regard to employment rights, which obviously form the content of this Bill, so we will not be supporting these amendments.

[Lord Hunt of Wirral (Con)]

My Lords, I am very grateful to the noble Baroness, Lady Kramer, for setting out the position so clearly, but I am particularly grateful to my noble friend Lady Noakes because, as a result of her moving the key Amendment 5, we have had a remarkably positive debate about what I believe is the lifeblood of the UK economy, namely the small and medium-sized business sector. The noble Lord, Lord Londesborough, of course, is a great authority on all this, and it was good to hear from the noble Lord, Lord de Clifford, as well.

When we reflect for a moment on the speeches that have been made in this debate—apart from that of the noble Baroness, Lady Kramer—we have not had any contributions from the Government Benches. But, as my noble friend Lord Leigh of Hurley pointed out, the most important contribution will be made by someone who really does understand. The noble Lord, Lord Leong, knows all about small businesses, and I am thrilled and delighted that he is summing up the debate because he understands what so many of my colleagues have tried to point out. The noble Baroness, Lady Neville-Rolfe, said that bureaucracy can get in the way of success. Look at the amount of rules and regulations and bureaucracy.

I agreed with all my noble friends, including my noble friend Lord Ashcombe when he pleaded for a sensible and measured response. We all want to see bereavement leave—all good employers allow for bereavement leave. We want to see rights established very clearly, but my noble friend Lady Verma pointed out that if we impose them on the small and medium-sized sector in the way that my noble friend Lady Noakes outlined, three, four or five employees will suddenly have to deal with all this legislation.

Let us remind ourselves of the importance of small businesses. As several of my colleagues pointed out, at the start of last year there were 5.45 million small businesses with up to 49 employees, making up a staggering 99.2% of the total business population in the UK. We are talking about a massive sector, and therefore we have to worry and concern ourselves about the effect of the Bill. As the Federation of Small Businesses put it, in its current form the Bill risks becoming nothing short of a disaster for small and micro-businesses.

The noble Baroness from the Liberal Democrat Benches spoke about a two-tier workforce system, which those Benches object to. But as my noble friend Lady Noakes pointed out, we do in fact have tiering alive and well throughout the UK economy. It is not trying to impose one size fits all; it is recognising that over 99% of businesses in this country are small and cannot possibly cope with the burden of this Bill.

It just so happens that I already have a quotation from the noble Lord, Lord Leong, which I readily move to. We have heard from the Government on multiple occasions that they are committed to supporting SMEs and ensuring that they are not burdened with excessive costs or red tape. The noble Lord, Lord Leong, made a very important point during the passage of the Product Regulation and Metrology Bill:

“we do not want to burden SMEs with additional regulatory or financial cost”.—[Official Report, 25/11/24; col. GC 138.]

What wise words: we would love to hear those words from him again tonight. He will realise that the reality of this Bill is starkly different. The only thing this Bill seems to do for SMEs is to burden them with additional regulatory and financial costs. It is incredibly difficult to reconcile the Government’s stated intentions with the actual impact this legislation will have on small and micro-businesses across the country.

I know that my noble friend Lord Sharpe of Epsom and I have Amendment 282 in this group, but I do not want to go into it. I was taking the old Companies Act definition, and I do not need to go into all the findings of the Bolton committee and all those who have sought to define this, because I think my noble friends have done a great deal to define small and medium-sized enterprises.

We just need to know what the Government intend to do to alleviate the burden on small and micro-businesses. The impact assessment has highlighted the significant challenges that these businesses will face in implementing these reforms, and at the moment there is no adequate plan to support them.

I would like to ask the Minister these questions. First, will he please outline what the three main expected benefits of this Bill will be for small and micro-businesses? Secondly, how will the Government support small businesses in complying with the provisions of this legislation? What kind of guidance, training and resources will be made available to ensure that these businesses can navigate the new regulations without inadvertently falling foul of the law? Finally, can the Minister provide an assessment of the risk of unintentional non-compliance by small businesses? What steps are the Government taking to mitigate this risk and ensure that these businesses are not unduly penalised as a result of a lack of guidance in the legislation?

The Government have not consulted the small and medium-sized sector. If they have, can we please have a great deal more detail on what their conclusions were? If they have not consulted, will they please do so now?

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

My Lords, I thank all noble Lords who contributed to this group of amendments with such passion. The noble Baroness, Lady Noakes, together with the noble Lords, Lord Sharpe and Lord Hunt, tabled several amendments—Amendments 5, 124 and 282—that seek to remove micro-businesses and small and medium-sized businesses from the scope of large sections of the Bill.