Employment Rights Bill

Lord Moynihan of Chelsea Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Lord Evans of Rainow (Con)]

My Lords, I will speak briefly to Amendment 1 from the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt. Paragraph (c) would

“make provisions about pay and conditions in certain sectors”.

My noble friend Lady Stowell of Beeston made some very good points about the tech sector—those entrepreneurs and businesses of the future. It was very important to hear what she had to say. However, I wish to stand up for the hospitality sector. Do any of the Members opposite know what it is like to run a hospitality sector business and the challenges of employing people to cater and serve in that sector?

UKHospitality recently launched the social productivity index, which shows that the hospitality sector is also a key driver in socially productive growth, not only contributing to economic expansion but fostering social mobility and regional development. With 57% of the workforce working 30 hours or fewer per week, the sector offers flexible employment options that make it particularly accessible to students, carers and parents—I do not know how many noble Lords in this Chamber today at some stage in their career worked in hospitality, but it is an excellent first opportunity to get into the world of work.

Unfortunately, in broad terms, the proposed changes in the latest set of amendments to the Bill seem destined to result in a framework of requirements that are more likely to hinder than to promote growth in the hospitality sector. In particular, without further addressing the concerns of businesses and considering alternative options, it is felt that the Bill is likely to lead to reductions in staff recruitment, the rate of wage growth and the level of investment. The Bill looks likely to hinder hospitality businesses and restrict growth. It seems to assume that all employers are bad actors with regards to their dealings with their staff. This is patently not the case for the majority of businesses, which recognise the need to recruit and retain staff and ensure they are supported and secure at work.

There still appears to be a disregard for seasonal business models and unpredictable trading in sectors such as pubs and wider hospitality businesses, which are required to adapt quickly to changes in trade patterns determined, for example, by weather or other events outside their control. A reduction in businesses’ ability to respond quickly and proactively to changing demand will undoubtedly result in higher operating costs. That will naturally need to be met by either increasing prices, reducing other staff costs or reducing investment.

These impacts are compounded by the Budget announcements on employer NICs and national living wage rates. Spiralling employment costs will be exacerbated by the additional cost and administrative burdens that the Bill will layer on top, all impacting investment and growth. The unintended consequences of this Bill are slower wage growth and recruitment. I am sure the Minister does not intend that to be the case. Can she reassure the Committee that it will not be the case if the Bill goes ahead as it is?

[Lord Moynihan of Chelsea (Con)]

My Lords, I support this important amendment and endorse the serious concerns just now expressed by the noble Lord, Lord Fox, and my noble friend Lord Hunt of Wirral. I declare my interests as a businessman, an entrepreneur and an investor.

The noble Baroness, Lady O’Grady of Upper Holloway, questioned the need for a stated purpose for the Bill. I am not sure what the logic is there: the most likely reason for a Bill having no purpose is a lack of clarity by its sponsors as to what they are trying to achieve. The noble Baroness, Lady Carberry of Muswell Hill, complains that the list stated in the amendment is non-exhaustive, which I agree with, and then somehow jumps to the conclusion that no list at all would be preferable. Again, I am afraid the logic of that escapes me.

I am far less experienced than my noble friend Lady Neville-Rolfe, but I feel that there is always an obvious advantage in having a purpose clause. In the case of this Bill, I am sure the Government must agree that those who will face the task of interpreting the meaning of the Bill in the future should be given as much clarity as possible, through a purpose clause, as to why the Bill was passed and what its purpose was. Courts in the future will far prefer to have a lucid statement of what the new law sets out to accomplish, rather than being given too wide latitude and freedom to interpret the Bill in this way or that. So I commend the overall objective of the noble Lord, Lord Fox, and hope that the amendment, or similar, will form part of the eventual Bill.

This very lengthy Bill will, if passed without a purposes section, be more open to abuses of the extensive powers it contains. This amendment would put a few appropriate, albeit modest, restraints on the ability of a Government to go too far in applying these powers. To be clear, this proposed purpose clause from the noble Lord, Lord Fox, is just a start and, for me, not completely satisfactory by any means. The list is indeed not exhaustive. In addition, the additional amendments would burden companies with yet another compliance code of conduct, which will serve to send sensible non-executives screaming from the room and possibly off to Dubai. We have to let boards focus on managing their businesses, serving their customers and making sure it is a well-run business, not having to implement new compliance code after new compliance code that will only ever be observed with lip service.

On this point of a non-exhaustive list, I wish to add to the list of purposes of the Bill, in addition to the wording that my noble friend Lady Neville-Rolfe suggested, an additional purpose of supporting, improving and not reducing flexibility in employment relationships. We will move on to the issue of flexibility in the next group of amendments, so I will not expand on that point here, but I recommend the addition of that purpose, as well as the wording proposed by my noble friend Lady Neville-Rolfe, to the list in Amendment 1.

[Baroness Noakes (Con)]

My Lords, I have never been much enamoured with purpose clauses, although they are a convenient way of having an early debate on the principles of a Bill before we get stuck into the detail. Indeed, we can see that the opportunity and attraction of another Second Reading debate is irresistible to noble Lords. Part of the reason is probably that when we have Second Readings nowadays, at most about four minutes are allowed, but when we get into Committee we have 10 minutes, which is a wonderful way of proceeding.

The noble Lord, Lord Fox, has tried to encompass the Government’s aims for the Bill in his wording of Amendment 1, but in doing so he has not covered the whole content of the Bill. I agree with the noble Baroness, Lady Carberry, on that, although we probably will not agree on much else during the passage of the Bill. For example, Clause 75 repeals the Strikes (Minimum Service Levels) Act 2023, which we knew the party opposite hated when we enacted it. That Act empowered employers to set minimum service levels in a few defined public services so that service users, such as NHS patients and commuters, did not have to suffer the massive disruption that we have seen inflicted by the unions that are active in the public sector. Repeal of the 2023 Act takes away the power to protect public service users, and does nothing that fits within the purposes put forward by the noble Lord, Lord Fox, in his Amendment 1. Does that mean that Clause 75 should not be in the Bill? If not, what is the purpose of a purpose clause? Perhaps the noble Lord can answer that.

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Moved by

[Lord Moynihan of Chelsea]

2: Clause 1, page 2, line 8, leave out from beginning to end of line 11 on page 4

[Lord Moynihan of Chelsea (Con)]

My Lords, I rise to move Amendment 2. I apologise to noble Lords if anything in my moving of this amendment is maladroit or otherwise at fault: it is the first time I have moved an amendment, let alone a group of amendments.

Why am I suggesting that new Section 27BA be removed in its entirety? The primary reason is the onerous inflexibility that it imposes on employers, the creators of jobs. The Bill as it stands, in theory, works even for those key groups who, as has been reported widely, much prefer flexibility in their employment arrangements—to take just a few examples: students, working mothers, part-time creatives and casual workers of all stripes. It is acceptable to them because they do not have to accept the guaranteed hours that the employer is required to offer them. To them and other groups of workers, some of whom may indeed prefer to be offered guaranteed hours, the employers will be required to offer those guarantees, but, once the offer is made, the employees can accept them or not. Thus, this new section creates considerable additional flexibility on the demand side. Many people looking for jobs will find those jobs more attractive.

On the supply side, however, flexibility is enormously reduced, to be replaced by stark uncertainty for all employers, particularly for sectors such as the NHS, hospitality, retail, care work, the gig economy, delivery driving, Christmas work, warehouse work and so many more. The absolute importance of flexibility to the employer can hardly be better illustrated than in the reports on the Guido Fawkes website as to how unions and the Labour Party itself have happily offered zero-hour contracts in the past.

At Second Reading, I stated that this Bill in general will kill business across the country, serving to shrink rather than grow the economy. This unfortunate section is just one part of that but an important one. In general, as I have just discussed, on the demand side, the removal of significant elements of flexibility creates distortions in the employment market, leading to employers, in many cases, being far more reluctant to offer employment. In consequence, the level of employment will fall, not increase. For smaller businesses, just creating the offers required by this section in the first place will involve onerous costs in time and money, making the employer highly reluctant even to start the process of seeking new employees. Some of the subsections in the new section raise the likelihood, in real life, of employers doing their level best to covertly figure out which employees will be flexible and which will seek inflexible, guaranteed arrangements, and, having come to a conclusion, hiring the one who wants flexibility and not the one who does not. That destroys the whole intent of this clause. The Government might denigrate such behaviour by a small business employer, but few in the Government have ever run a business.

A further problem is that the new section envisages the employer having to go to all the lengths of creating the guaranteed-hours offer, and to present it to the candidate employee, without having any idea whether the candidate will take the offer. This imposes considerable friction and inefficiency on the economy and more unnecessary costs on the poor benighted employer.

Interestingly, I read through the several pages of this new section—quite possibly ineptly—but I cannot find anything about what happens in a hypothetical situation where an employer presents the required offer then says to the prospective employee, “Will you be wanting these guaranteed hours?” and, if the prospective employer says yes, the employer then does not make an offer of employment to them. It seems odd that I cannot find that; maybe it is there somewhere. In my view, if the ability of the employer to renege in that way after having been forced to make that offer is in fact there in the Bill, it would be a good thing. The Government may or may not agree, but, even if I were right in saying that this loophole existed in the current drafting and the Government, having been alerted to it, were to choose to close that loophole, it would just drive similar behaviour by employers underground.

The Bill is driven in great part by a belief in what is “fair” to employees, and so forth. I have seen in my short time here that “fairness” is often used in this Chamber; “outcomes” is not used so much. Whatever the Government’s view may be as to the crucial importance of fairness, with the best will in the world, the government drafters who focused on fairness will not have been able to bring to the issue anywhere near the level of seriousness as to outcomes with which a business owner facing survival or destruction for their business will view this matter.

This new section is just one component of an extensive and intrusive Bill that will, if implemented, see the UK’s economy further driven into the ground, with more and more parts of that economy and key players in it either becoming economically inactive or, as we are seeing on a daily basis, leaving the country. On Report, I imagine my party will oppose the entire Bill, but in the meantime, I state that it can be significantly enhanced by removing this new section in its entirety. I beg to move.

[Lord Wolfson of Aspley Guise (Con)]

My Lords, I rise in support of Amendment 8 in my name. I declare my interests as stated on the register, in particular my role as chief executive of Next plc, the job I have held for 24 years, which makes me the UK’s longest-serving FTSE 100 chief executive. I add that Next employs over 25,000 part-time employees—and, I hasten to add, it does not use zero-hours contracts.

I start by assuring the Minister that I have sympathy with the intentions behind this section of the Bill. Zero-hours contracts can leave employees feeling obligated to accept hours from employers, who can feel no obligation to provide work. I commend the Government’s intention to tackle this lack of reciprocity. In the Minister’s polling, I would have come out as one of those people not in favour of zero-hours contracts.

Amendment 8 would increase the Bill’s effectiveness by clarifying the distinction between zero-hours contracts and legitimate part-time contracts, because there is a world of difference between tackling potentially abusive zero-hours contracts and eliminating the flexibility that legitimate part-time contracts provide to those who need and want them. My concern is that the requirement to offer additional contract hours to those who voluntarily work extra hours will inadvertently prevent those additional hours being offered at all.

I am not exaggerating when I say that if the threshold for low-hours contracts is set too high, it will take a wrecking ball to the UK’s part-time economy. It will deprive millions of people of a valuable source of flexible income, and multiple industries of the flexibility they need to offer excellent services in sectors where demand is variable and volatile.

It is important to understand the nature of flexible part-time work. The vast majority of part-time workers provide an important supplement to their household income but are not the mainstay. They are people such as a parent whose childcare responsibilities mean they cannot work full time, students balancing their studies with their earnings, carers for elderly relatives, and those seeking to transition into retirement. What this diverse group of people has in common is that they value the guaranteed regular income their part-time contracts provide but also appreciate and value the ability, at their discretion, to add hours of work when they have more time available: for example, during university holidays, during term time for parents of school-age children, or at times when household costs rise—for example, in the run-up to Christmas.

These reciprocal arrangements benefit all involved. From a business perspective, sectors such as retail, hospitality, health and travel can maintain excellent services despite the intrinsically variable nature of demand in consumer-facing businesses. These flexible additional hours allow businesses to respond to seasonal peaks and unexpected surges in demand, and to do so in a way that offers voluntary additional hours to those who want them.

I hope this gives some sense of how important flexible part-time work is for the 8.5 million part-time employees in the UK. This flexible work will be under threat if the threshold for low-hour work is set too high in the Bill. My worry is that the Bill will make it almost impossible for businesses to offer additional voluntary hours to workers with contracts below the low-hour threshold. There are two reasons why: first, the complexity of trying to comply with the law, and secondly, the risk it creates for businesses that offer additional hours to part-time staff that they will end up with permanent and unaffordable overstaffing.

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[Lord Moynihan of Chelsea (Con)]

My Lords, the debate on this group of amendments has been invigorating and useful. I thank all those noble Lords, in particular, the Minister, the noble Baroness, Lady Jones, who have contributed to it.

My noble friend Lord Wolfson of Aspley Guise commended the intention of the Bill to counter the ill effects of zero-hours contracts, which his company does not use. I honour his intent and indeed his extraordinary contributions to the nation’s employment and its economy in general. I note that he tended to agree with my proposal overall, in respect of the dysfunctionality of this clause. I would be happy if the wording of the clause, if it is incorporated into the Bill, incorporated his wording but removed the rest of the clause from the Bill.

The noble Lord, Lord Fox, who does not appear to be in his place, spoke to Amendment 4, which, in the case that Section 27BA is retained in the Bill, switches the origination of a flexible-hours discussion from employer to employee. Clearly, this is a more sound and flexible approach, although I of course cannot go along with his later statement that he meant there to be an obligation on the employer to provide what the employee demanded.

My noble friend Lady Lawlor spoke movingly on the many things this Government have already done to depress economic activity and said—better than I—how this clause would make things much worse. She added the crucial point that the ill that this clause purports to address is in fact a good, much preferred by the majority of those working flexible hours.

My noble friend Lady Verma spoke with the authority of one who has great experience as an employer. She implored the Government to get their nose out of what should be a more relaxed and less formal relationship between employers and employees. The Government should pay her heed. My noble friend Lady Coffey spoke forensically about the wreckage this clause would create in the hospitality industry and also, very worryingly, in the NHS. Over and again, we heard noble Lords speak about the need for flexibility; this clause creates the opposite.

My noble friend Lord Sharpe of Epsom pointed particularly to the appalling outcomes this clause will create on the numbers of youth unemployed. Earlier, my noble friend Lady Meyer mentioned French youth unemployment at 19.2%. Have the Government any clue how that occurred? They did not intend that to happen, obviously. They do not want one in five of their youth unemployed who are seeking work. It occurred from precisely the sort of legislation that the Government are proposing to introduce here. Do we really want our youth unemployment to be one in five of those wanting to be employed? That is what I mean by outcomes rather than this notional and very generic idea of fairness—because it is not fair, either.

The Minister confirmed that the reference period will be in the legislation. This is welcome news, but it would have been better were it in the draft legislation right now, so that we could debate it right now—the time that we are supposed to be debating it. The Minister showed an impressive ability to wade through the latest iteration of what is an extraordinarily complex proposed set of rules, but creating and explaining such rules misses the entire point. This Government believe that “We know best” and therefore that if we create this perfect machine, these wonderful processes, all will be well. They do not know best; the market knows best and the market should be left to itself to sort out most of these matters. I urge the Minister to heed the words of the noble Lord, Lord Wolfson, and the noble Baroness, Lady Verma, to provide clarity as soon as possible and to provide flexibility in the way that they have just urged her.

The Minister sought to provide clarity on agency workers. With respect, her words did not reflect reality. Let us take as one random example the interim management sector. These individuals take jobs to fill gaps that suddenly appear in a company, to fill the period before a permanent replacement can be found. The appointment of an interim manager may last a day or it may last a year, depending entirely on events that will only be happening in the future. To guarantee hours for these individuals is, quite frankly, entirely impossible. That is just one of many different sectors and different possible examples, as the noble Baronesses, Lady Neville-Rolfe and Lady Verma, made clear just now.

I remain convinced that the outcome of this clause, if passed into law, will be significantly fewer—not more—jobs. Having said which, there are of course other ways of improving this clause if it is not removed entirely. These are ways that my noble friends and the noble Lord, Lord Fox, have offered with their own amendments, the vast majority of which I have indicated that I agree with, not least after listening to the experienced voices of business from these Benches.

To conclude, the removal of flexibility from employers cannot possibly be a good thing. The more employment flexibility that is created in an economy, the more creative are the ways that entrepreneurial employers find to grow the economy, to create more jobs, to improve living standards and indeed to provide the Government with more tax revenues to meet the depressingly larger and larger commitments that this Government continue to take on. Having said all of which, I reserve the right to bring this amendment back on Report. In the meantime, I beg leave to withdraw it.

Amendment 2 withdrawn.