Employment Rights Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

[Lord Swire (Con)]

My Lords, as somebody who does business from time to time and tries to encourage business, not least through my deputy chairmanship of the Commonwealth Enterprise and Investment Council, which is trying to grow business right across the Commonwealth, it strikes me that the Bill comes at an unfortunate time. Of course, we should always look at regulation, and there will always be an argument about what is over-regulation and what is under-regulation. But at a time when so many jobs are threatened by AI, we should surely be looking at a low regulatory framework. I urge the Government to take this into consideration during any impact assessment.

The Minister knows about business. He is a businessman and has a successful business, and I too suspect that he identifies with many of the points we are raising, although he cannot say it. But it strikes me that, just at a time when people are very fearful about their future and the uncertainty of having a job at all, let alone when they get older, so they can raise a family, have a mortgage and so forth, we should be looking at ways to encourage businesses to employ more people. The noble Lord, Lord Deben, said that he saw every good reason not to employ more people. That is really bad news. If businesses are now saying it is simply not worth the candle, that will contribute to the unemployment that will surely follow as many of these jobs are replaced by AI anyway. So I urge the Government to look at that.

Equally, at a time when many countries around the world, not least in Asia, are spending much more money, time and effort on advanced mathematics and the other things you need nowadays for coding and so forth, we in this country seem to be lowering the standards, particularly in mathematics—dumbing down at a time when we should be raising up. So by all means, let us properly protect our workers, but let us not overregulate to the extent that we do not have any workers to look after or to regulate.

[Lord Palmer of Childs Hill (LD)]

My Lords, I will address Amendments 310, 311, 312 and 319, which collectively seek greater transparency on the economic consequences of this legislation.

Although I am afraid that I take no firm view on the amendments themselves, which were explained in great detail by the noble Lord, Lord Hunt, and spoken to by other noble Lords, who expressed reservations—obviously, there are reservations—I welcome the principle that they reflect: that we must remain vigilant as to how new laws affect businesses, wages and productivity. No one else has said this, but I appreciate that the Government are already undertaking much of this work, and I would welcome an update from the Minister on how that work is progressing and informing policy development.

Amendment 310 raises a valuable and timely question about how new and small businesses might fare under the Bill. As the noble Lord knows, and as I know from a working lifetime as a chartered accountant, these enterprises often lack the resources, legal support and regulatory expertise of larger firms. It is only right that we ask whether the framework we are putting in place enables them to enter the market, grow and succeed on fair terms.

If the Government are serious about delivering long-term economic growth, they must pay close attention to the conditions facing new business entrants and small start-ups. These businesses, as I hope the noble Lord will agree, are not only a vital source of innovation and competition but key to job creation, skills development and regional regeneration. The barriers they face—and there are increasing barriers—whether through opaque processes or disproportionate compliance costs, can limit their contribution to the economy. By reducing unnecessary administrative burdens and ensuring a fair and accessible regulatory environment, we can help unlock their potential.

Growth will not come from productivity targets or ministerial ambition alone; it will depend on everyday decisions, as the noble Lord, Lord Deben, mentioned, made by entrepreneurs and small business owners around the country. We should support them accordingly. As mentioned previously, I do not readily back these amendments themselves—I do not think I agree with them—but I hope the Government will take careful note of the arguments they raise, particularly the point made in Amendment 310 about the effect on new and small businesses, which deserves further attention and consideration.

There are going to be economic consequences of this part of the Bill, and the Government should tell us how they view the impact of those. Noble Lords have spoken about increased costs. We all know—anyone who has been involved with business knows—that there will obviously be increased costs. Laws that we have put in over the years have added to those costs, but most businesses have managed to increase efficiency to try and mitigate them and make more profits. You have to adjust to what is happening in the world.

These amendments, and this part of the Bill, are about impact assessments and regulatory burdens. Are we putting too many burdens on people, or are those regulatory burdens helpful to the economics of this country? We must do things which increase productivity, and that is part of what the amendments are about. The noble Lord, Lord Deben, said that he had run businesses, and many of us in this Chamber have run businesses or advised them. I hope that he is going to be proved wrong—he asked to be proved wrong. I await the Government’s answer to the comments that he made in this debate.

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Moved by

[Lord Palmer of Childs Hill]

317: After Clause 150, insert the following new Clause—
“Guidance for small businesses(1) The Secretary of State must publish a document containing statutory guidance for businesses with fewer than 50 employees on their employment and legal obligations under this Act.(2) The document must include, in particular— (a) an overview of the relevant legal duties placed on employers under this Act, (b) a practical framework outlining how such businesses can meet those duties, and(c) guidance on best practice suitable to businesses of this size.”Member’s explanatory statement
This amendment requires the Secretary of State to publish statutory guidance for small businesses in adhering to the employment and legal requirements of this Act.

[Lord Palmer of Childs Hill (LD)]

My Lords, in speaking to this group of amendments I note the sorry absence of my noble friend Lord Fox, whose contributions on these matters have always been thoughtful and constructive. Unfortunately, the Committee has me instead. I will focus in particular on Amendments 317 and 329, both tabled by my noble friend Lord Fox, which aim to provide much-needed clarity and certainty to small businesses as they seek to understand and comply with the provisions of the Bill.

Amendment 317 would require the Secretary of State to publish statutory guidance to support small businesses in meeting the employment and legal obligations introduced by this legislation. This is a modest and reasonable ask that would have a significant practical benefit. For many small businesses, compliance is a question not of good will but capacity. Unlike larger firms, they do not have in-house legal departments or external consultants on retainer. They need clear, accessible, authoritative guidance that they can rely on from day one. This amendment is not about watering down the law, nor is it about shielding firms from responsibility. It is about enabling small businesses to do the right thing without having to second-guess the detail or bear disproportionate cost in trying to interpret it.

Amendment 329 would build on that principle by making the commencement of the Act contingent on the publication and parliamentary approval of such guidance. It is important to say that we on these Benches understand the mandate that the Government won at the last election, and we have no intention of delaying the Bill beyond our duty to scrutinise it. However, this amendment reflects a deep concern about the real-world impact that the legislation may have on small businesses if clarity is not in place from the outset.

It is not necessarily about the measures in the Bill itself but about how they are communicated and implemented. Without clear guidance, there is a risk that well-intentioned businesses will fall foul of the law through no fault of their own. These amendments offer the Government a constructive route to avoid that outcome. I hope that Ministers will engage with them in that spirit. We are just trying to make it so that businesses, like the Minister, would know what they have to do. They need it to be set out. I hope that the Government will feel this is a possibility that they will consider before Report. I beg to move.

[Lord Carter of Haslemere (CB)]

My Lords, I will speak to Amendment 326 in this group. I begin by saying again how gracious it was of the Minister to meet me to discuss my amendments in advance a couple of weeks or so ago. My Amendment 326 is on the same theme of the need for impact assessments before provisions are brought into force. It provides that:

“Regulations which would amend primary legislation may not be laid … unless an assessment of the impact … has been laid before Parliament and three months has elapsed”


from that date.

Delegated powers that can amend primary legislation are, of course, known as Henry VIII powers. This derives from the Statute of Proclamations in 1539 when Henry VIII persuaded the Commons to include a provision in a Bill that would permit him to issue decrees having the same effect as an Act of Parliament and thereby bypass the normal parliamentary process.

Henry VIII powers can be draconian and raise real questions as regards compliance with the rule of law. This is not just my view. In his much-lauded Bingham lecture on 14 October 2024, entitled “The Rule of Law in an Age of Populism”, the noble and learned Lord, Lord Hermer, the Attorney-General, was obviously right when he said that excessive reliance on delegated powers, including Henry VIII clauses

“upsets the proper balance between Parliament and the Executive. This not only strikes at the rule of law ... but also at the cardinal principles of accessibility and legal certainty”—

issues that

“raise real questions about how we are governed”.

These are wise words indeed and very welcome, but I find it difficult to reconcile them with our Bill. As the noble Lord, Lord Hunt, pointed out at Second Reading, there are around 163 delegated powers in our Bill and 12 Henry VIII powers. As he powerfully put it:

“Ministers are, in effect, asking Parliament today to empower them to do whatever they decide to do, whenever they decide to do it”.—[Official Report, 27/3/25; col. 1845.]


The Delegated Powers and Regulatory Reform Committee, in its report of 24 April, described various Henry VIII powers in the Bill as, “overly broad”, “inadequately justified”, and an

“inappropriate use of the … affirmative process”.

As it said, Henry VIII powers are subject to far less scrutiny than primary legislation.

And this is the heart of the problem. Much of the legislation needed is yet to come, but it will not be capable of being scrutinised as it should be because of the reliance on Henry VIII clauses. It is a symptom of a rushed agenda but also, more worryingly, of a growing acceptance that Henry VIII powers are okay. They are becoming the default option.

The Select Committee on the Constitution, in its report, points out that Clause 24, “Dismissal during pregnancy”, and Clause 25, “Dismissal following period of statutory family leave”, both

“contain and extend Henry VIII powers that … act as placeholders while the Government consults further on the specifics of the measures to be implemented”.

This can mean only that

“substantive policy decisions have not yet been taken”

on those issues. But it also means a lack of certainty about how the provisions will operate in practice, which the Select Committee-considered to be “particularly concerning”, given that the provisions enable primary legislation to be modified.

In addition, Schedule 7 contains a list of extensive legislative powers in connection with labour market enforcement, under Part 5, which are passing to the Secretary of State. Paragraph 35 confers on the Secretary of State a Henry VIII power to add by regulations any enactment which affects the rights of employees, trade unions and the duties of employers.

These extensive enforcement powers in Part 5 also need to be considered alongside Clauses 151 and 153. These clauses contain a power to make any consequential provision, which may amend, repeal, revoke or otherwise modify

“any provision made by or under primary legislation passed before, or in the same session as … this Act ... and may make different provision for different purposes or … areas”

or

“contain supplementary, incidental, consequential, transitional or saving provision”.

The Government may respond that the power to make consequential provision is confined to what is purely consequential. That is true, but what is purely consequential turns on the scope of the provisions they are said to be in consequence of. Combining these consequential powers with the wide powers in Part 5, for example, would seem to give the Secretary of State the power to confer on his enforcement officers even wider powers when entering offices to search and seize documents, if they are in some way connected with the operation. I think even Henry VIII would have been impressed. His 1539 Statute of Proclamations allowed him to amend legislation by decree, but even he was not permitted to prejudice

“any person’s offices, liberties, goods”

or “chattels”.

Then there is the power to make provision for different purposes or different areas. What is the need for that power? When I was in government as a lawyer, parliamentary counsel would probe closely as to why we needed this power, and we would have to justify it. My amendment is therefore designed to bring some transparency and due diligence to the use of these Henry VIII powers before they are laid and debated. It would simply provide that, before such regulations could be laid, there would need to be an impact assessment laid before Parliament for three months to enable a bit more parliamentary scrutiny. This would give time for reflection and, if the Government decided to proceed with laying the regulations, it would serve to enhance the level of parliamentary debates on the regulations that subsequently take place under the affirmative procedure.

I give the last word to the great Lord Judge, who spoke strongly against such clauses when he was Lord Chief Justice of England and Wales. He said:

“You can be sure that when these Henry VIII clauses are introduced they will always be said to be necessary. William Pitt warned us how to treat such a plea with disdain. ‘Necessity is the justification for every infringement of human liberty’”.

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[Lord Leong (Lab)]

It is tempting, but I can assure the noble Lord that it will be published very, very, very soon. How is that?

Like I said, this is the last time I will speak in this Committee. I want to take the opportunity to express my gratitude to all noble Lords for their extensive engagement and the robust way in which we have debated this stage of the Bill’s passage. I pay particular tribute to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, and to the noble Lords, Lord Goddard and Lord Palmer, for standing in so ably for him. Like the noble Lord, Lord Hunt, I wish the noble Lord, Lord Fox, well in his recovery and look forward to welcoming him back.

Let me be clear: this Government welcome scrutiny—that is the purpose of this House—but scrutiny must be grounded in the present and focus on the issues at hand, not lost in the echoes of decades-old political arguments. Some contributions, regretfully, seem to have been more intent on reviving grievances from the 1970s than addressing the needs of today’s Britain.

This Bill delivers on a clear manifesto promise. It is part of our plan for change, built not on rhetoric but on the practical need to provide security for working people and long-term renewal for the country. This is where our focus lies—not on refighting the past but on fixing the future. We continue to welcome serious challenge, and we expect debates to be robust, but we also expect them to be proportionate, honest and forward-looking.

As we approach the end of Committee this evening, we on this side look forward to constructive and collaborative meetings and engagement with all noble Lords ahead of Report. With that said, I respectfully ask the noble Lord to withdraw Amendment 317.

[Lord Palmer of Childs Hill (LD)]

On behalf of my noble friend Lord Fox, I thank the noble Lord, Lord Hunt, for his support, which was so eloquently put. I also thank the Minister for his detailed reply.

When the Minister started speaking, I thought he would use his valedictory remarks to say that he was actually going to agree with something. There was great promise that he would agree to the amendments—these reasonable amendments—as all they would do is give guidance to small businesses to show them what the legislation is. Then, I lost: he will step down without going out on a positive note, which is very sad. His argument was that all the amendment would do is delay things. Sometimes, delay is good. Delay can be good if you get it right. Too often things are done precipitately, and delay is the better alternative.

What is the answer from the Minister? We shall have more statutory instruments. I have dealt with statutory instruments in the 15 years I have been in this House. Quite honestly, we discuss them, but we never vote. There has been no vote that I can remember, and statutory instruments are a means for the Government to tell us what they are going to do, and we have to nod in agreement.

Where do small businesses stand in all this, without any real guidance? They are left in a morass. The Minister has gone off in a cloud of glory, but I still do not have an answer as to whether anything will be implemented. Sadly, I beg leave to withdraw the amendment of my noble friend Lord Fox.

Amendment 317 withdrawn.