Employment Rights Bill

Lord Londesborough Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I broadly support this group of amendments and, in particular, Amendment 49 in the names of the noble Lords, Lord Sharpe and Lord Hunt. My noble friend Lord Vaux’s more straightforward Amendment 50 would reduce the length of the qualifying period from two years to a minimum of six months, during which an employee may not claim unfair dismissal.

I am happy to agree with the Government that the current two-year period for effective probation, from my experience as an employer, is excessively long and merits revision. Like others, I understand that the Government are consulting on the length of the IPE, the initial period of employment, and that nine months is being suggested. However, given that most permanent employees have a formal annual review at 12 months, during which their remuneration and performance are reviewed, I think it is fair and transparent that the 12-month review also represents the end of the probationary or qualifying period. That provides clarity to both sides and, I believe, is sufficient time for the employer to assess the employee’s performance, competence and cultural fit.

I accept that, in the majority of cases, performance issues during probation surface within the first six months. A proactive employer should then step in to either articulate a performance improvement plan for the next six months, with clear markers and milestones, or come to an early conclusion that this is not going to work out and move on to dismissal. But if we overly squeeze the probationary period, we will deter employers, particularly entrepreneurs, from the creation of new jobs by reducing their appetite to take a risk on new recruits, as we have heard, which is surely not what the Government intend.

Clause 23 and Schedule 3 threaten to be a real menace for two groups of employer in particular. The first, as we have heard, is those sectors with naturally high staff attrition rates given the nature of their business, such as retail and hospitality. The second, perhaps less obviously, is those businesses that rely on particular job functions that carry higher risk and performance requirements, in particular sales, marketing and business development jobs that run across so many of our economy’s key sectors: everything from sales on the floor, in the park or in the kiosk, and, yes, telesales—which we all try to avoid—to those involved in B2B business development and client account management. I know from personal experience in advising start-ups and scale-ups that these are critical, revenue-generating roles with strong personal performance criteria where much of the remuneration comes—quite correctly—in the form of performance-related pay. We will do real damage to productivity and economic growth if we do not allow fair and proper time for assessment of these types of roles without the threat of unfair dismissal hanging over employers’ heads prematurely. That said, I will support Amendment 49 if it is put to the vote.

[Lord Ashcombe (Con)]

My Lords, I support the amendments tabled by my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral, as well as those proposed by the noble Lord, Lord Vaux of Harrowden. Throughout our debates, one thing has become clear: Clause 23 is one of the more troubling areas for the business community and therefore potential employees. That concern is reflected not just in what we have heard in this Chamber but in the Government’s own impact assessment.

When a company hires someone new, it takes a risk. No matter how impressive someone’s CV may be or how well they come across in interview, things do not always work out, as we have heard. That is why probation periods exist. They give both the employer and the employee a chance to assess whether it is the right fit. I have seen this at first hand in my own company, Marsh Ltd. For small businesses in particular, hiring someone new, especially during a period of growth, can be a major financial and operational commitment. When things do not work out, the company should not be left to carry all the burden because of a mismatch that is no one’s fault. Introducing a day-one right to claim unfair dismissal outside the already established exceptions places a heavy weight on employers. It could discourage them from hiring altogether. Worse still, it may lead to pressure being placed on existing staff, who are asked to do more because their employers are hesitant to take on new people.

In the Financial Times, the Chancellor said an excessive safety-first approach was not seen in any of Britain’s global competitors, adding:

“It is bad for businesses, bad for growth and bad for working people”—


a description of this Bill and Clause 23 in particular. These amendments offer a sensible middle ground. They would reduce the current qualifying period for unfair dismissal protection from two years to six months. That strikes me as fair and proportionate. It matches the length of the probation period used in many companies, and certainly in the one I work for. Six months should be enough time to determine whether someone is right for the role. These amendments would make it better for business, better for growth and better for working people. That is why I support them.

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[Baroness Noakes (Con)]

My Lords, Amendment 94 seeks to give the Secretary of State power to introduce exemptions from Part 1 of this Bill. I thank the noble Lord, Lord Londesborough, for adding his name to the amendment. In Committee and on Report, noble Lords have warned about the impact that this Bill could have on businesses. The right to guaranteed hours, the statutory sick pay changes and the day-one rights which we debated earlier all create problems for businesses, especially small businesses and micro-businesses. The Government are ignoring these concerns.

These provisions directly affect businesses, but noble Lords opposite should share our concerns that the real effect of these new rights will be fewer job opportunities. As we have heard, employees with risk factors, from the employer’s perspective, will find it harder to get work because of day-one rights and the statutory sick pay changes. These include young people, people with incomplete job histories, people with a history of illness and ex-offenders. People who value part-time flexible work—this particularly affects women and students—might find fewer opportunities because employers fear triggering the guaranteed-hours requirements.

The Government are introducing these changes at a time of great economic uncertainty. While the employment numbers continue to edge upwards, there are warning signs in a rising unemployment rate, falling job vacancies and falling average hours worked. Business surveys are consistently flagging a reluctance to hire among businesses and increased expectations of workforce reductions. Even the Governor of the Bank of England, not a man to be careless with words, has flagged a slowdown in the jobs market. Growth is virtually non-existent and our inflation rate is now the highest in the G7. This economic background increases the likelihood that this Bill will create real pain for some businesses, and that pain will inevitably end up being felt in the workforce.

In Committee, I argued for exemptions from Part 1 being hardwired into the Bill for small and micro-businesses. My noble friend Lord Sharpe of Epsom’s Amendment 159 in this group is similar. His Amendment 107 would exempt farm businesses of all sizes from some of the provisions. These are both great amendments, but my guess is that the Government are not yet psychologically ready to admit that some sorts of businesses would be so hard hit by this Bill that they should be exempt from its scope. The Government have rejected exemptions, citing the need to avoid creating a two-tier workforce, despite the fact that in an open economy such as ours, workforce tiering occurs naturally and is certainly a feature of the current UK workplace.

My amendment is a simple one. It does not require the Government to do anything. It is a reserve power which the Government can use to assist the UK economy if things turn out as badly as we fear. It gives the Government power to create exemptions from all or any of the Part 1 provisions to categories of employer as defined by the Secretary of State. It thus allows very targeted interventions if the Government believe that it is necessary.

Some of the potential pain points in the Bill can be dealt with in the way that detailed regulations are framed. Amendment 105 in this group helpfully requires the Secretary of State to have regard to seasonal work when making regulations. However, regulations cannot deal with removing burdens from, for example, small and micro-businesses, which are the focus of several amendments in this group in the name of my noble friend Lord Leigh of Hurley. They cannot address whole sectors, such as hospitality or agriculture, nor home in on subsectors of those sectors, such as the pub sector, which could be massively impacted by Clause 20, or particular types of farm.

It would do no harm to the Government’s position if they accepted Amendment 94. They can press ahead with plan A and see what happens. If, however, they discover real problems of the kinds that many noble Lords from across this House have described, it would give the Government a backstop power if they, and they alone, think that it is necessary. On this basis, I commend Amendment 94 to the Government and I beg to move.

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 94, tabled by the noble Baroness, Lady Noakes, and Amendment 159, tabled by the noble Lords, Lord Sharpe and Lord Hunt, both of which I have signed. I also support the amendment in this group tabled by the noble Lord, Lord Leigh, which calls for some scientific and statistical significance in polling a representative group of SMEs on the impact of certain provisions in the Bill. This Government’s consultation with SMEs is, to put it politely, curious and opaque, lacking, so far, any meaningful numbers or quantified response, and with barely any names. Consultation carries little weight if it lacks statistical credibility.

The entirely sensible and pragmatic amendment tabled by the noble Baroness, Lady Noakes, seeks to hand the Secretary of State regulatory tools to bring in exemptions to Part 1 for certain groups or sectors, for specified periods of time, should he or she decide that these are appropriate.

Noble Lords may remember that the Government were offered similar powers of exemption by amendment in the NICs Bill earlier this year, voted through enthusiastically by Conservatives, Liberal Democrats and the majority of Cross-Benchers, only to receive the custard pie treatment in the other place under the cloak of financial privilege, which was a great pity. The noble Baroness has, very generously in my view, made the same offer again, and I hope it gets a more constructive response this time.

For there is broad consensus across business that Part 1 of the Bill will have a significant impact on the jobs market, especially for SMEs, but let us be frank: the degree or level of impact is highly unpredictable. If we see the sorts of outcomes suggested by membership surveys from such bodies as the ICAEW and the FSB, then the Secretary of State would be well advised to grab the option of these exemption tools with both hands rather than doggedly sticking to a one-size-fits-all mantra.

Turning briefly to Amendment 159, seeking the disapplication of certain provisions for small and micro-businesses with fewer than 50 employees, this gets my wholehearted support. I will spare the House a repeat of my arguments in Committee. But for the Government to argue, as I am sure they will, against this amendment, because they do not want to create a two-tier workforce, simply does not reflect economic reality or indeed the jobs market or the structure of businesses.

SMBs cannot compete with large businesses when it comes to pay scales, training, promotion opportunities, pensions and a whole range of other benefits. That is a reflection of their size, their culture and their stage of development, yet they succeed in delivering strong employee loyalty and identification. This is true of family businesses, start-ups and scale-ups. To apply all the provisions in this Bill, and specifically those listed in this amendment for disapplication, to a micro-business employing five staff as it does to a multinational employing 10,000 is wilfully indiscriminate and, I suggest, economically illiterate. That is why I put my name to the amendment.

[Lord Leigh of Hurley (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Londesborough, and, of course, my noble friend Lady Noakes. I shall speak to my Amendments 106, 153, 155 and 184. The main thrust of the first amendments is to force the Government to listen to real concerns of the SME community who, frankly, even at this late stage, are unaware of the effects of this Bill. They are too busy trying to keep afloat in a difficult economic environment, where the painful costs of NICs and other tax rises are kicking in.

I declare an interest as an adviser to many SME businesses in my career at Cavendish plc and, to the extent that it is relevant in union matters, as a Conservative Party treasurer. We have not yet heard from any Labour Party Back-Benchers today, but I am sure that, if we do, they will declare their interests in respect of union membership.

Turning first to Amendment 106, which relates to Part 1 of the Bill, we are constantly told by the Labour Front Bench that they want to consult with business—indeed, they repeated that today. They want to consult with business, but they fail to disclose who exactly they are consulting with, let alone what they are being told by those businesses and their representative bodies. I suspect that is because they are embarrassed by the backlash against the severity of this Bill from SME and micro employers, who will make it clear to the Government that this Bill will mean they are less likely to employ more people and much more likely to let people go as the burden of employment is ratcheted up. I am grateful to the noble Lord, Lord Vaux of Harrowden, for reminding us of the Labour Party manifesto’s commitment to consultation.

If the Government are so confident of the benefits of this Bill for all businesses, why not agree to engage with them? This proposal is really very modest: just 500 companies out of some 5.5 million in the UK. It is not unreasonable to ask the Government to be honest with us and tell us what the reaction of the SME community is and what are its concerns, particularly as we know there has been a shocking lack of impact assessments for this Bill. We know that the recent CIPD survey revealed that 79% of organisations expect these legislative changes to increase employment costs.

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[Lord Ashcombe (Con)]

My Lords, I shall speak to these amendments, to which I have added by name. What we are dealing with here is a basic question of fairness. Currently, the law recognises the importance of accompaniment at disciplinary and grievance hearings, yet it narrowly limits who that companion can be. Unless an employee has a supportive colleague or is a trade union member, they face these often-daunting proceedings alone. This creates a two-tier system, as the noble Baroness, Lady Fox, mentioned. How can it be right that two workers in the same workplace facing the same process are given different statutory rights based solely on their union membership?

This is not a hypothetical issue. In reality, 78% of UK workers are not in a trade union, which means most cannot count on the support of a trained companion in these hearings. I have no objection to trade unions; I am not a trade unionist myself, but I reject the idea that statutory rights should be tied to union membership. I have yet to hear a convincing argument and defence of the current system. This is why I support these amendments. Both aim to fix this imbalance in different, practical ways.

Amendment 98 in the name of the noble Lord, Lord Palmer, would widen the scope of acceptable companions. It would empower the Secretary of State to propose certifying bodies—for example, Edapt in the education sector—to approve trained companions, with Parliament having final say through secondary legislation via the affirmative procedure. This approach ensures fairness. Amendment 99 in the name of the noble Baroness, Lady Fox, goes further, removing restrictions altogether and allowing the employee to choose their own companion. This gives power back to workers, who are best placed to decide who can support them.

We return to the core issue of fairness, which seems to have cropped up many times throughout this Bill—not only fairness for workers navigating difficult circumstances but fairness for employers, too, who would benefit from clearer, smoother processes and reduced risk of costly litigation. Ultimately, these are not radical proposals. The amendments are sensible adjustments that reflect the modern workplace and the real choices workers are making. As the Government’s document Next Steps to Make Work Pay rightly states,

“all workers should be able to enjoy fair rights and benefits”.

I hope that the House agrees.

[Lord Londesborough (CB)]

My Lords, I have added my name to Amendment 99 in the name of the noble Baroness, Lady Fox of Buckley, which, to me, smacks of common sense, while also acknowledging that Amendment 98, tabled by the noble Lord, Lord Palmer, is a step in the right direction.

For those of us who have conducted disciplinary and grievance hearings—as an employer, I have conducted my fair share over the years—these are often stressful, time-consuming and sometimes very divisive, not only for the employee but often for the employer, the manager and the other team members who are involved. An officious approach, in which only a trade union official may accompany the worker into the meeting, makes this situation, if anything, more adversarial, more us versus them and, in my view, less likely to lead to a sensible compromise that works for both parties. This is particularly the case for small and micro-businesses in which trade union representation is lower and the worker very often does not have that option. To widen it out to other members, colleagues, friends or even family members, as Amendment 99 states, seems to me a sensible move.

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, I want to take this opportunity to correct what I think has been a mischaracterisation of the TUC briefing, which makes it very clear that the right to be accompanied includes, yes, trade union reps but also workmates. I also want to correct what is a misunderstanding of the spirit of the right to be accompanied, which was very much about dealing with grievances, disciplinaries and procedures within a workplace. Hence, when a union is recognised by the employer and the worker is a member of the union and chooses their union rep to represent them, that is a good thing. Our experience is that that is about resolving issues at an early stage. Likewise, a worker may choose a workmate to represent them—somebody inside the organisation who can take a practical, common-sense view of dealing with a grievance and disciplinary procedure.

During the debates on the Bill, we have heard a lot about the worries of ending up in employment tribunals, disputes being protracted and lawyers and others who maybe want to make a pretty penny from representing workers in trouble. Noble Lords will find that many employers, like workers, want to keep resolution of those issues within the workplace because that is often the quickest, more effective and cheapest way that everybody concerned can sort out problems when they arise. Surely it is in resolving issues that we should all share an interest.