Employment Rights Bill

Lord Sentamu Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 10th December 2025 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, I thank the Minister and the noble Lord, Lord Collins, for meeting with me earlier today. It allowed us to sort out some misunderstandings, for which I am very grateful.

I will speak only to Motions B and B1. I somewhat regret that this is not the speech that I had originally intended to make—in fact, I had written it. I had intended to make a very short speech thanking the Minister and the Government for listening to the House, almost every business group, the Resolution Foundation, the Tony Blair Institute and their own impact assessment, and reaching a sensible compromise based on what this House proposed.

I was very pleased that the Government held talks between the business groups and the unions, and that all had agreed that the compromise was workable. Contrary to some of the more irresponsible comments that we have seen in the press—some coming from the other place, sadly—this was not a case of out-of-touch Peers blocking a government Bill. It was a good example of this House doing its job of scrutinising legislation and asking the other place to think again. We do not block legislation; we seek to improve it. I do not underestimate how difficult it was for the Government to make the important concession on day-one unfair dismissal rights that they have made.

Sadly, though, I cannot end my speech there. The Government set out the compromise they reached in an announcement on 27 November. It said that agreement had been reached on a six-month qualifying period, which would be changeable only by primary legislation —so far, so good. It also very briefly mentioned the lifting of the compensation cap, something that has never been discussed during the passage of the Bill. Then I saw the actual amendment, which goes somewhat beyond lifting the compensation cap. The amendment abolishes it altogether so that compensation for unfair dismissal will be unlimited, which I suggest is different from lifting.

As we have heard from the noble Lord, Lord Fox, it is at best ambiguous. I note that the Minister is now referring to removing the cap, which I think is more accurate. As we have heard, this does not appear to have been equally understood by every party to the agreement between the employer organisations and trade unions. A number of employer organisations are still expressing concerns about it.

Does this late change matter? The amendment removes the current cap on what can be claimed in an unfair dismissal claim. Currently, it is the lower of 52 weeks’ pay or £118,223. While it might be true that few claims go over that, that may well be because higher-paid people will generally reach agreement, knowing that the cap exists, rather than taking the matter to the tribunal. This change may incentivise more higher-paid people to turn to the already overburdened tribunal system. There is no downside to them doing so with the hope of a higher payout, or at least a strengthening of their negotiating position. As we have heard, the irony of this is that the main beneficiaries are likely to be senior employees on high salaries who are moving towards the end of their careers, not the workers the Government claim to be helping.

The noble Lord, Lord Sharpe, gave the example of the water industry. I was trying to think of an example and one rather closer to this House occurred to me. When the noble Lord, Lord Mandelson, was fired from his position as ambassador to the United States, there was a lot of speculation in the press that he might be able to claim for unfair dismissal due to the summary nature of his dismissal. Obviously I do not know the details of his contract, what has been agreed or anything else—it would be interesting to know what was agreed—but is this really the sort of situation the Government want to give the possibility of unlimited compensation to? It would certainly strengthen the negotiating hand of the employee in any such situation.

The truth is that we do not know what the effect will be or whether this matters. It has been introduced without warning at the last possible moment in the Bill, with no consultation, no impact assessment and no scrutiny. Whatever one thinks about the merit of removing the cap on compensation, this is not the right way to do it. I would go as far as suggesting that it is testing our constitutional processes to the limit. Legislation should not be decided in—I do not think I am allowed to say “smoke-filled” any more—darkened rooms as a deal between a limited number of interested parties. It is not the way we do things. This is a material change, and it deserves to be properly consulted on, impact-assessed and debated. It should have been introduced much earlier.

The amendment proposed by the noble Lord, Lord Sharpe, is admirably constructive; I thought it would go further. Rather than remove this new clause altogether, it proposes a review of unfair dismissal compensation to take place within three months, and sets out that the review

“must include a consultation with … employers’ organisations … trade unions … employment law practitioners, and … such other persons as the Secretary of State considers appropriate”.

That is a fair and constructive approach.

However, we must be pragmatic. This is the third stage of ping-pong. Whatever we do at this stage is unlikely to move in the other place, and I am conscious that I do not want to see the key concession of a six-month qualifying period being unpicked as a result of our actions. As I said, I accept that that was a big step for the Government to make.

I thank the Minister for her confirmation that there will now be an impact assessment, which will be published as soon as possible. I did not hear clearly that there will be a full consultation with other parties. Currently, this has been consulted on by six organisations and I do not know how many unions. That is not a wide consultation on such a big change. Will there be a proper consultation process on this before it comes into effect?

Assuming the answer to that question is to the positive, reluctantly, and while protesting in the strongest possible terms that introducing such a significant change at such a late stage runs a coach and horses through the proper process of scrutiny of legislation, I am minded to bring this to an end and accept the Government’s amendment. But, as I said, I will listen to what the Minister says before I make that final decision.

I have one final request. This late insertion of a material change to legislation in the third stage of ping-pong must not become a precedent. Can the Minister confirm that the Government see this as a one-off, extraordinary case, and not something to be repeated?

[Lord Sentamu (CB)]

My Lords, I thank the Minister, who is new at the Dispatch Box, for explaining things quite clearly. I am thankful for the Government accepting that amendment, which has clearly enabled the country to feel, when people take on jobs, that there is a qualifying period, although not an indefinite one. I said in your Lordships’ House that I was like a gramophone playing a record that was stuck in a groove. The Government have given me a new needle and I am out of that groove, so I thank them very much.

[Lord Cromwell (CB)]

My Lords, I will speak fairly briefly in support of Motion D1 from the noble Lord, Lord Burns. This has become known as the hokey-cokey amendment—opt in, opt out, opt in, opt out, through the chain of amendments that have been put down. I support the vital role of trade unions, but I find it hard to understand why legislation should be used to steer—or, if you prefer, nudge—employees towards funding political causes.

The noble Lord, Lord Burns, has shifted a very long way from his original amendment. All the amendments now require is a checkbox at the start to allow employees to opt out if they so wish. This is surely the absolute minimum that should be available to them. I would have preferred asking trade union members if they wished to opt in, as a positive statement, rather than to opt out, which is a negative that would perhaps attract black marks in the membership list of their union. It does the Government no credit to seek to deny employees this opt-in choice. However, like the noble Lords, Lord Fox and Lord Vaux, I am reluctant to extend ping-pong, and I will be guided by the noble Lord whose amendment this is.