Employment Rights Bill

Lord Londesborough Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I promise to be very brief. I support all the amendments in this group.

The arguments are building for the establishment of an independent freelance commissioner, mainly because the number of freelancers is growing and will continue to do so in the face of increasingly adverse conditions for both employers and employees. The current 2 million freelancers could easily grow to 3 million within the next 10 years, as employers continue to shed staff from payroll because they are weighed down by increased NICs, national minimum wages in excess of inflation, and some of the onerous new rules and regulations coming along in this very Bill.

I have argued that we could broaden out the need for an independent commissioner for the self-employed—who total about 4.5 million in this country, and the number is growing—but I will leave that issue to the next group, as it is addressed by my noble friend Lord Freyberg’s Amendment 167.

In conclusion, freelancers offer a great diversity of skill sets and flexibility in an economy that is suffering from stagnation and rigidity. They deserve greater recognition, and I implore the Government to take the proposal for a commissioner seriously. I absolutely agree with the noble Lord, Lord Clement-Jones, that we do not want a toothless, woolly token champion; we need an advocate with teeth—let us hope that that is what we will see.

[Lord Hendy (Lab)]

My Lords, no one hearing the speeches of the noble Lords who have spoken could be other than sympathetic to the objects of the amendments in this group.

However, although it may seem churlish, I have a point on the definition of freelancers in Amendment 161. It is not a technical point; it is about the fact that another categorisation of workers would be added to the already complex pattern of the status of workers. I know that the Government intend to conduct a comprehensive review of the status of workers later, and the issue of freelancers will no doubt be addressed in that.

One issue affecting freelancers, as defined in the amendment, is the use of substitution clauses in workers’ contracts. Two points arise here; my noble friend Lord Berkeley will say a few words about one, and I will deal with the other. The issue is that the insertion of substitution clauses by employers can be used to deny self-employed workers, such as freelancers, all employment rights. The particular value to some employers of this device was established in the Deliveroo case in the Supreme Court in 2023, in which I had the honour, or perhaps the misfortune, of representing the union representing the workers.

The issue is that self-employed workers are by definition not employees, and so they do not have the rights of employees. But they could be what lawyers call limb (b) workers, with limited employment rights. In order to fall into that definition, such workers must undertake

“to do or perform personally any work or services”.

The delivery companies have realised that this condition could be defeated by the inclusion of a right to substitute on the part of the worker. Clearly, a legal provision that such a clause should not be a factor in the determination of personal service is needed, but doubtless that will be a matter for consideration in the Government’s review.

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[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.