Employment Rights Bill

Lord Phillips of Worth Matravers Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I support Amendments 49 and 50 and Amendment 51, to which I have added my name. I agree with the case that my noble friend Lord Sharpe of Epsom has made, and with the arguments put forward by the noble Lord, Lord Vaux of Harrowden.

I point out that the detail of the arrangements for improving protection against unfair dismissal was one of the areas that provoked the widest debate in Committee. Some 21 noble Lords spoke, and nearly all were concerned about the perverse effects of completely removing the two-year qualifying period. When we discussed my concerns in Committee, the Minister said that when I saw the Government’s implementation plan I would be reassured. However, while it is generally helpful, all it says on this matter is that in summer/autumn 2025 they will consult on:

“Giving employees protection from unfair dismissal from ‘day 1’, including on the dismissal process in the statutory probation period”.


So we still do not know what the rules will be.

I believe that the approach the Government are taking of making up the vital detail of legislation after Bills have passed, so well exemplified here, as the noble Lord, Lord Vaux, has said, is profoundly undemocratic. This is giving too much power to the Executive. The Minister should be able to tell us categorically today that employers will be able to dismiss unsatisfactory staff without risking a tribunal during a probation period of six or nine months.

I will not repeat all I said in Committee from the historic perspective of a good employer like Tesco. We even had a unique partnership with the trade union USDAW, seemingly very different from some of the public sector unions dominating this Bill. My main current concern, as the Minister knows, is that day-one rights will make employers extremely nervous about taking on new employees, especially the young or those with a risky track record like the unemployed or the disabled. This will kill growth. My noble friend Lord Sharpe talked about the disincentive to hire. That sums it up perfectly.

There is government evidence to support this. DBT’s economic analysis of 21 October 2024 admits, in section 16, on unintended consequences, that:

“There is some evidence that employment reforms make employers less willing to hire workers including evidence specific to the strengthening of dismissal protections. For example, the OECD noted that more stringent dismissal and hiring policies involve an inherent trade-off between job security for workers who have a job, and firm adaptability to changes in demand conditions or technology”.


In other words, lower growth.

The provisions will require significant extra internal resource to ensure compliance. It will be necessary to implement cumbersome administrative procedures across all businesses for all employees from day one, and indeed in the public sector. It will make the introduction of Making Tax Digital look extremely easy in contrast. It is a looming tragedy for smaller businesses already drowned in regulation. Above all, it will increase costs, adding to the jobs tax in the last Budget, and at a time when the Chancellor is promising to reduce red tape. Another certainty, as we have heard, is that the changes will increase the traffic through employment tribunals. There is already a tremendous backlog of 50,000 cases in the system. I know someone whose case has been listed for 2027.

Because it is important, I am extremely keen to help the Government find a way out of this unfortunate set of circumstances. The fact is that sometimes, appointments do not work out, and it is no one’s fault. I accept that that should normally be clear within six or nine months, which I believe the Government are contemplating for their probation period, but we need certainty on this and probably a government amendment before the Bill becomes an Act. For me, this uncertainty, which is why I have chosen to speak from the Back Benches on an area outside my own responsibility, could prove to be the very worst aspect of this Bill. I hope that, even at this late hour, the Government will think again.

[Lord Phillips of Worth Matravers (CB)]

If there is not to be a sensible probation period, is any employer going to have the courage to take on an ex-offender?

[Baroness Lawlor (Con)]

My Lords I support the amendments in this group because they would mitigate the potential damage to employment from the perspective of both the employer and the employee, whether that employee is a jobseeker or someone recently appointed. The danger exists particularly in this clause. As your Lordships know, Clause 23 and the linked Schedule 3 repeal Section 108 of the Employment Rights Act 1996. They remove the qualifying period of employment and make further amendments to the Act in respect of the repeal.

Section 108 stipulates that the protection under Section 94 of the Act, which establishes the right not to be unfairly dismissed, subject to certain conditions, does not apply to the dismissal of an employee unless he has been continuously employed for two years. During this two-year extended training period—for that is what it is, and I speak as an employer—when you induct a new employee, you know that if they do not work out, and there are clear headings governing this under law, they can be let go without unfair dismissal claims.

Now, that is to be removed by Clause 23 and Schedule 3. We are repealing Section 108 of the 1996 Act, one of the basic building blocks of employment law in this country. This is one of the most familiar and important pieces of legislation for the labour market. As my noble friend Lord Sharpe and the noble Lord, Lord Vaux of Harrowden, have said, it helps offer protection to both parties. It makes for a fluid labour market and avoids the zombie businesses which do little for the wider economy and militate against growth.

I will not go through each of the amendments because noble Lords have heard about them already, but they would facilitate good working practices for both parties. Those looking for a job would be more likely, as we have heard, to be appointed. There will be more job vacancies, which, as we know, have sadly fallen and continued to fall over the last year. Those looking for a job would be more likely to find one and more likely to start their first job, as we have already heard today. The employer would be able to take a risk, as we have heard today—to take a chance on a new employee.

Taking on a new employee involves a great commitment. It involves the commitment not only of a salary, which is only a small fraction of the cost, but of time, training, patience, showing the ropes and bringing someone into the culture of the organisation, so that they can contribute as a happy, contented, productive and effective member of the team. With this clause, we will not have the protections of that. I cannot think of any small employer who will not think twice about taking on a new person, and this will have very bad effects on the economy and growth.

We know there are legal grounds already for unfair dismissal in respect of the job itself. They include conduct, capability, redundancy, legal restrictions on employment and other substantive reasons. Noble Lords have spoken about these today, but there are cast-iron reasons for not being unfairly dismissed. You cannot be dismissed as a whistleblower or for discrimination, and these do not require the two-year qualifying period. The law takes care of this.

Now, with the removal of the two-year period goes the protection for the employer and the opportunities for new employees particularly, but also for many employees who want to change jobs and start a new walk of life. They may find they are not so good at what they were doing and want to try their hand at a new job. They need time to settle in, just as the new person coming into their first job does.

I am not at all convinced that this initial period, which Ministers have told us will have a lighter touch in respect of unfair dismissal arrangements, will actually be very helpful. Some law firms fear that it will impose pretty much the same strictures on an employer. We really need to know from the Minister what exactly the period will be and what the arrangements for unfair dismissal during that period will be, because I cannot see how we can have a Bill setting all this out when we do not know what is intended.

Like other noble Lords, I would value some statement. I do not need to refer to the compliance cost, the impact assessment that estimates hundreds of millions of pounds, or the additional complexity in the recruitment process. Added to the other measures in the Bill, Clause 23 and Schedule 3 add a new dimension of insecurity.

If we are to have businesses, particularly small businesses, willing to grow, to raise productivity as the Government want and to hire the new employees needed to raise that productivity, the Government should welcome Amendment 49 and all the amendments in this group. They accept the spirit of the manifesto pledge and go some way in helping the Government to get out of the mess, which is of their own creation.