Employment Rights Bill

Lord Hunt of Wirral Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

Moved by

[Lord Hunt of Wirral]

158A: Clause 149, page 149, line 32, at end insert “and provides for the early conciliation period to be extended from six weeks to three months”.
Member’s explanatory statement
This amendment will ensure that the early conciliation period is proportionate to the extended limitation period for tribunal claims. This is necessary to promote the early resolution of claims and to clearly convey that, from a policy standpoint, there is active support for avoiding litigation.

[Lord Hunt of Wirral (Con)]

My Lords, we now move to consider the employment tribunal system. I shall speak first to Amendments 158A and 158B. The Government are extending the time limit for individuals to bring claims to an employment tribunal, but if that is the case, and if, as the Government have repeatedly said, they value early conciliation and the vital role that ACAS plays in resolving disputes before they reach litigation, then surely the same principle must apply to the conciliation period itself. Extending the early conciliation period from six weeks to three months would provide claimants and employers alike with more breathing space to resolve matters amicably, reducing the burden on the tribunal system and promoting quicker, less adversarial outcomes.

I will also speak to Amendments 180 and 186. I will not repeat the arguments that I and many noble Lords across this House have already made about the state of the employment tribunal system, but let us be clear: the situation is now dire. We have spoken to a range of people involved in the system and hear the same message: employment tribunals are in disarray, with claimants waiting for up to two years for their cases to be heard. We believe that justice delayed is justice denied.

The Government say they are investing in tribunals, pledging to hire more judges and providing additional funding, so I hope the Minister will be able to answer these questions. First, how many new judges have been appointed? Secondly, what is the scale of the funding and how will it be allocated? Thirdly, will the Government also commit to hiring more administrative staff to ease the backlog? If so, how many? Until we have clear, credible answers to these questions, we believe it is simply irresponsible to bring forward clauses in this Bill that will place even greater strain on a system that is already buckling under pressure. I just hope that the Minister will have answers to these and other questions.

I will also refer to Amendments 186 to 188. We believe that there is this difficulty with the existing system and we have already seen the Government push back implementation of parts of this legislation to 2027. I do not know whether this is because they have at last had a moment of clarity and realised just how damaging some of these measures could be in practice. We now have an amendment asking to delay further until 2029. Frankly, this is not just reasonable; we believe it is necessary. A four-year delay might be the bare minimum to avoid the disasters which would otherwise be presented by this legislation.

Let us not pretend this delay is some kind of political foot-dragging on the part of the Government. To seek to delay implementation until 2027 of what was said to be a vital Bill is an admission that this legislation is deeply flawed and that rushing it through risks wreaking havoc on businesses, workers and the tribunal system alike. What is more, with the Government and the unions now seeming less like allies and more like wary rivals, this delay might be something the Government are willing to accept. I beg to move.

[Lord Katz (Lab)]

I am pleased to have a contrast in terms of debate length. It is good to hear from the noble Lord, Lord Hunt of Wirral. I will speak to this quite large group of amendments and, for the sake of brevity, try to cover as much ground as I can in time.

On Amendments 180 and 186. We recognise the concerns of the noble Lord, Lord Hunt of Wirral, over the employment tribunal system. I reassure noble Lords that we have heard the concerns of your Lordships’ House, the other place, and broader stakeholders representing employers and employees, and we are already acting. This includes recruiting more judges and legal caseworkers, and providing significant additional funding to ACAS for 2025-26. ACAS’s annual report shows that, of the approximately 125,000 early conciliation notifications received by it, approximately only 33% proceeded to employment tribunal claims.

I can try to answer some of the direct questions from the noble Lord, Lord Hunt, on the increased resources for the system. On new judges, 50 new fee-paid part-time employment judges were appointed in 2024-25 and a further three recruitment exercises to increase capacity are being undertaken in 2025 and 2026. I will reflect on Hansard and, if there are other questions on this I have not covered, I will of course write to the noble Lord.

As was pointed out earlier in the debate, we are also considering other areas such as the role the expanded fair work agency could play, where this would reduce the need for costly and lengthy tribunal claims. We are happy to receive further constructive suggestions from noble Lords on their ideas for reform, but we are of the view that it would be disproportionate to make the vital improvements to workers’ rights contained in this Bill dependent on the kind of review the Opposition propose.

Amendments 158A and 158B were also tabled by the noble Lord, Lord Hunt of Wirral. The suggestion about increasing the time for early conciliation is indeed constructive. As we have said previously on a number of occasions, we are engaging with businesses and unions to consider the ways to address growing demand and improve the efficiency of the employment tribunal system. Part of this work involves looking at how we can improve the already good work that ACAS is doing to help parties reach mutually agreed outcomes without the need for stressful and expensive litigation.

The six-week early conciliation period takes place prior to a claim being brought to the employment tribunal and provides an opportunity for employers and employees to try to reach an agreement without having to go to a tribunal. Increasing the time for early conciliation could provide some benefits to parties, but we need more time to consider how this would interact with other reforms and identify potential unintended consequences. Changes to the period of early conciliation can be made using secondary legislation and therefore it is not necessary to use primary legislation for this purpose. Perhaps the compromise I might suggest is that we will be happy to reflect on the suggestion that has been made as part of our wider work, and I thank the noble Lords and other colleagues for their amendments.

I turn next to Amendment 185, which was tabled by the noble Lord, Lord Sharpe of Epsom. The Strikes (Minimum Service Levels) Act 2023 unduly restricts the right to strike and undermines good industrial relations. It has proven to be ineffective and has contributed, one might argue, to industrial unrest. It is worth pointing out again, as we have already heard this evening, that no employer has ever issued a work notice under the Act and not a single day of strike action has been prevented since it was introduced. Indeed, reflecting on Questions earlier today, I repeat that we lost a record number of days to strike action in 2022 and 2023—the highest number since 1989, if I recall correctly. That Act definitely did not prevent more industrial action taking place.

Rather, we believe negotiation and co-operation are better ways to ensure that essential services continue during strikes, while respecting workers’ rights. For these reasons, we are committed to removing this legislation as soon as possible. Our commitment to repeal the legislation has been trailed for over a year. We made the commitment to make work pay, it was reiterated in our manifesto, and we announced it again in August last year, so it will not come as a surprise to any employer. As I said, in any event, employers are not using the legislation anyway.

Amendments 187, 189, 190 and 191 were tabled by the noble Lord, Lord Leigh of Hurley—he is not in his place—and the noble Lord, Lord Sharpe of Epsom. We have always said that we would engage and consult comprehensively on implementation to ensure that strengthened rights, protections and entitlements work for all. We want employers, workers, trade unions and others to have the time and space to work through the details of each measure with us.

On Amendments 187 and 189, I remind noble Lords that our road map, which the noble Lord, Lord Hunt of Wirral, referred to, sets out our plans for consulting on key provisions in Part 1 and Part 4 this autumn and into early 2026. We will then publish our response to each consultation, in line with published guidance. This will include a summary of responses received and a breakdown of the type of respondent. This reflects what we have already done in published consultation responses.

Through all these consultations, we will continue to engage with SMEs to ensure that their vital perspectives are fed into policy development, and we will provide sufficient support to prepare for these reforms. We value the constructive feedback and insights that such businesses and organisations give, and we will continue to prioritise engagement moving forward.

On Amendment 190, I remind noble Lords that, since 2016, there have been 33 reports and strategies on the effectiveness of labour market enforcement. I also remind noble Lords that the single enforcement body, regardless of the name, was a policy pursued by both the Opposition and the Liberal Democrats. Indeed, I believe that the proposal, under different titles, was in all three manifestos at the general election. So, whereas previous Governments have dithered and delayed in taking action, we are taking action to tackle the fragmented and ineffective enforcement system by bringing it all under one roof in the fair work agency.

Lastly, I turn to Amendments 188 and 192, tabled by the noble Lord, Lord Sharpe of Epsom, which concern commencement. We have always said that the Bill must work in practice, not just on paper. That is why we are committed to consultation and taking a staggered approach to implementation, as per our road map. These timelines have been carefully considered to ensure that implementation works for employees and businesses of all sizes, in all sectors. We are taking a measured and phased approach to implementation to ensure that the reforms are practical, workable and sustainable. I therefore ask the noble Lord, Lord Hunt of Wirral, to withdraw Amendment 158A on behalf of the noble Lord, Lord Sharpe of Epsom.

[Lord Hunt of Wirral (Con)]

My Lords, I am very grateful to the Minister for his response. I believe that he accepts that there is grave concern across the board about the state of our employment tribunal system today. That concern is among workers, employers and, especially, employment lawyers.

I welcome the fact that the Minister accepts that there is a need to extend the early conciliation period. He said that it could be done by secondary legislation; well, let us reflect on that. It would certainly help to reduce the pressure on the system, which is already under immense strain, but we lack clarity on some basic questions. How will employment tribunals be funded? There are so many question marks about how many further judges are needed and how many administrators will be appointed. What is the plan to bring the backlog under control? It is very serious at the present time. If rights cannot be enforced in court, they effectively do not exist. I urge the Government to take these concerns seriously and bring forward proper solutions. In the meantime, I beg leave to withdraw the amendment.

Amendment 158A withdrawn.

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[Lord Goddard of Stockport (LD)]

No, I give up.

[Lord Hunt of Wirral (Con)]

My Lords, I do not believe that for a moment.

This has been such an important debate. I thank the noble Earl, Lord Clancarty, the noble Lord, Lord Freyberg, the noble Viscount, Lord Colville of Culross, and my fellow lawyer—not solicitor—the noble Lord, Lord Clement-Jones, for what has certainly been a long-standing advocacy on behalf of freelance workers. As my noble friend Lord Parkinson of Whitley Bay said, with all his experience as a Minister, there is no doubt that freelancers play a vital role in our economy and their interests deserve proper attention.

We on these Benches have also made the case that this issue is likely to become more urgent after the passage of the Bill. We cannot avoid the suspicion that the Bill is going to drive more workers into at least considering turning freelance. Time will tell, but as the noble Lord, Lord Londesborough, pointed out, the number could rise towards 3 million freelance workers.

We are all very grateful indeed to the Minister for organising an important meeting on this subject, because it was most useful. We welcome the Government’s intention to create a freelance champion, announced last month as part of the creative industries sector plan. That may be half a loaf, but it is a welcome enough commitment. We recognise the intent behind the amendment to establish a freelance commissioner, but at the moment, in the light of the assurances given by the Minister, we feel that the Government should have the benefit of the doubt for now, not least because we are not totally persuaded that the creation of another public body is the only solution.

What freelancers certainly need is clarity, simplicity and proportionate support. If the new champion can deliver that, all well and good. But we remain of the opinion, as came across in some of the contributions we had in Committee and just now, that socialists despise the very concept of freelancing. “How dare workers choose to avoid our elaborate structures?”, some of them say. So we will be watching with a very keen eye to see how this proceeds, particularly in the light of the speeches we just heard from the noble Lords, Lord Hendy and Lord Berkeley.

As we salute the expertise of the noble Earl, Lord Clancarty, on the creative arts, I take this opportunity to assure him that if he is unsatisfied that the Government’s measures adequately address the issues that have been raised, we will certainly be on his side. So I encourage him to remain vigilant and to keep the Government’s feet to the fire. In the meantime, we look forward with great interest to what the Minister will say in response to the many questions that have been raised in this debate, in particular about the urgency of this problem.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I am very grateful to all noble Lords who have spoken in this debate. We have indeed had a very good debate, which once again has identified the significant contribution that the creative and cultural sector makes to our industries and our lives. The Government share your Lordships’ passion for supporting the creative and cultural sectors, and we previously spelled out in detail the significant work we are already doing in this area.

The creative industries and cultural sectors are a distinct part of the wider UK workforce. They have a significantly higher proportion of self-employed individuals, reflecting the sector’s entrepreneurial and freelance nature, which is one of the points that has been well made this evening. In the latest published data, as of 2023, there were 2.4 million filled jobs in the creative industries and 666,000 filled jobs in the cultural sector. Of these jobs, 49.6% in the cultural sector were self-employed, and 27.9% in the creative industries, compared with 14% of UK jobs overall. This reiterates the point that noble Lords have made about the significance of freelancers in the cultural and creative sectors. This flexibility not only drives innovation but supports the more project-driven nature of the creative industries. However, we also know that freelancers’ creative careers, while offering a more flexible and autonomous way of working, can also be precarious and come with lower job security.

--- Later in debate ---

[Lord Londesborough (CB)]

My Lords, I will briefly speak to Amendment 167 tabled by my noble friend Lord Freyberg, to which I have added my name. It is a thoughtful, pertinent and probing amendment which—dare I suggest at this late hour—the Government should embrace with enthusiasm.

I say this because we have often heard during what I think has been 13 days of debate on this Bill that the Government want equal workers’ rights to apply across the board, whatever the size of the business or sector and whether it is private or public. Whenever I and others have argued for exemptions, especially for small and micro businesses, there is a proverbial bucket of cold water thrown our way, accompanied by the message “We don’t want a two-tier workforce”. That view appears to be shared by the Liberal Democrats. I respect that, but I do not agree with it as it fails to recognise the multitude of tiers in the workforce that already exist.

This brings me to Amendment 167, which points out that we have several very important groups of workers that do not belong to this single tier, specifically freelancers, the self-employed and sole traders. There are key differences between freelancers and the self-employed, many of whom are sole traders or running their own businesses or partnerships with just one or two contractors. However, they are all treated by HMRC as self-employed and taxed the same way.

As my noble friend pointed out, the overall number we are talking about is 4.3 million and growing; that is approaching 14% of the workforce. Given the current dynamics of the jobs market, with falling vacancies in particular, an increasing number look set to join their ranks—whether or not they want to. That is why it is incumbent on the Government to fix the definitions, understand the numbers and assess how they are being impacted by the provisions in this Bill. The Secretary of State should think through how to recognise and treat freelancers, the self-employed and sole traders.

[Lord Hunt of Wirral (Con)]

My Lords, this has been a very important debate about employment status. I thank my noble friend Lord Moynihan of Chelsea for his important and thoughtful contribution to the debate. I also thank the noble Lords, Lord Freyberg, Lord Londesborough and Lord Clement-Jones, for their extremely important contributions.

As my noble friend Lord Moynihan rightly pointed out, the Government in their make work pay document have committed to consulting on a simpler employment framework—one that distinguishes clearly between workers and the genuinely self-employed. However, the reality is that platform workers and the innovative businesses that rely on them remain in the dark. There is no detail, no timeline and no clarity as to when or indeed whether these major reforms to employment status will materialise.

In the meantime, uncertainty reigns, and that uncertainty is not without cost. It risks holding back investment, stifling expansion and deterring new entrants into the UK market. We now hear so often from the Government about making the UK the best place in the world to do business, but a failure to provide clarity on the future of employment status, particularly in the growing platform economy, sends the opposite signal. The Government would therefore do well to heed my noble friend’s intervention. If they are serious about supporting flexibility, entrepreneurship and modern ways of working, then they have got to provide both the sector and the self-employed with confidence and clarity on what exactly lies ahead.

[Lord Katz (Lab)]

My Lords, I wish I had also brought my white hanky to the debate, but sadly I do not have that cop-out. This been a short but focused and interesting debate. I will begin with Amendments 177 and 179, tabled by the noble Lord, Lord Freyberg. The Government are well aware of the importance of accurate occupational categorisation, especially for those in culturally important occupations, and the noble Lord and I have separately discussed this issue and the complexities around it.

More specifically, we understand that some stakeholders feel the four-digit standard occupational classification—SOC—system is not detailed enough for their needs. To address this, in 2023 the ONS published an extended six-digit system that includes more accurate categories for groups like those mentioned by the noble Lord in his amendments. In addition to this, the ONS is now beginning work on the next update to the SOC system, which will be published in 2030.

I am afraid that I do not have some of the details on disaggregation, the levels of qualifications and so on that the noble Lord, Lord Freyberg, asked about, but I will undertake to write to him with more details. However, I would be very happy to facilitate contact between the noble Lord and the ONS team that is responsible for this work. He has demonstrated great interest and no little expertise in this subject area, and I am sure that they would appreciate his views and detailed analysis on the system, how it could be improved and how it could better reflect the complex ecosystem of craftspeople and other creative workers.

I turn to Amendment 167, again tabled by the noble Lord, Lord Freyberg, and supported by the noble Lord, Lord Londesborough, as well as Amendments 183 and 184A, tabled by the noble Lords, Lord Clement-Jones and Lord Moynihan, respectively. I hope that the noble Lords are reassured from the debate on the previous group that the Government take the commitment to tackling pressing issues with the existing employment status framework very seriously—and from the comments of the noble Lord, Lord Clement-Jones, I think that is the case.

As the noble Lords, Lord Moynihan and Lord Clement-Jones, said, consultation in the fullest sense is imperative on this issue. It will allow us to receive and consider the widest range of views and engage fully with relevant stakeholders, including those mentioned by the noble Lord, Lord Moynihan, in his amendment. Consulting on employment status was a commitment in the plan to make work pay, and as my noble friend Lady Jones outlined to your Lordships’ House in the debate on the previous group, today we are confirming that we will publish a consultation on this by the end of the year. As the noble Lord, Lord Moynihan, said, we will risk undermining the value of this work if we introduce new definitions without prior consultation.

The noble Lord also mentioned requiring an impact assessment of any legislative proposals brought forward as a result of this consultation. I can reassure your Lordships’ House that, in keeping with our better regulation requirements, we will produce impact assessments alongside any such legislation.

I hope this assures noble Lords that the Government are committed to consulting on employment status and are doing so with the care, focus and full engagement that this important issue requires. On this basis, I ask the noble Lord, Lord Freyberg, to withdraw Amendment 167.