Employment Rights Bill

Lord Sharpe of Epsom Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I join in thanking the Minister for her introduction, and, of course, in praising and commending the speeches of the four maiden speakers today: the noble Baronesses, Lady Berger and Lady Gray of Tottenham, and my noble friends Lady Cash and Lord Young of Acton. This has been a very interesting debate. Before I start, I should declare my interest as a minority shareholder in two businesses that employ people. It is a pleasure to follow the noble Lord, Lord Fox. I found myself nodding in agreement with much of what he said, and I will do my best not to repeat all of it.

Others have commented on the fact that this, overall, is a troubling Bill, and for numerous reasons—not least, as my noble friend Lord Hunt of Wirral articulated so expertly, its excessive reliance on secondary powers. I will not expand on that now, as the case has been made—and, indeed, reinforced just now by the noble Lord, Lord Fox—but I will focus my remarks on two areas where, to use a phrase coined by my noble friend Lady Penn, the balance is seriously wrong. They are the inevitable and disproportionate impact on SMEs, acknowledged in the Government’s own impact assessment, and the day-one rights and their inevitable impact on hiring.

I begin by turning to the bigger picture and quoting from the Government’s own impact assessment. It states:

“Many of the policies within the Bill could help support the Government’s Growth Mission … we conclude the direct impact on growth could be positive, but small”.


The word “could” appears 132 times in the assessment. That is the language not of confidence but of uncertainty and hesitation, and it shows a fundamental lack of conviction in the very legislation before us.

While the Government dither, businesses are suffering. Indeed, as we saw only yesterday, the OBR downgraded growth forecasts from 2% to 1%. A particularly telling phrase in the explanatory note—as already referenced by my noble friend Lord Moynihan—said

“we have not incorporated any impact of the Government’s Plan to Make Work Pay as there is not yet sufficient detail or clarity about the final policy parameters.”

It goes on to say:

“Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material, and probably net negative, economic impacts on employment, prices, and productivity”.


That is an explicit acknowledgement of the uncertainty generated by this Bill, and an admission that implies that more downgrades are to come. Let us look at the facts. The business confidence index for the United Kingdom stood at 97.4 in December 2024, a sharp decline from the previous month and the lowest reading since July 2020. That, of course, was a time of extraordinary crisis, global shutdowns and economic freefall. Yet today, with no pandemic to blame, we find ourselves again teetering on the brink.

The Institute of Chartered Accountants in England and Wales’s Business Confidence Monitor, which is the most comprehensive measure of sentiment in our business community, plummeted from 14.4 to a mere 0.2 in Q4 2024. The Institute of Directors confirms this: its Economic Confidence Index dropped to minus 64 in February, close to the lows reached during Covid. Regarding this Bill specifically, the Institute of Directors’ survey suggests that 57% of business leaders will be less likely to hire.

ICAEW members across the UK have raised concerns about the Bill’s impact on costs, labour flexibility and business dynamism. According to a poll of its members, 73% expect the Bill to increase employment costs for new and existing employees. One said, “It is like rushing down a hill towards a lake and pressing the accelerator.” The OBR has told us how this ends: in unemployment, and it will be unemployment of the Government’s own making. On that subject, that is one statistic that noble Lords opposite failed to cite when making their international comparisons. For the record, it is currently 7.3% in France, 6.2% in Germany and only 4.4% here.

What is driving this collapse in confidence? It is the suffocating weight of excessive taxation and crippling uncertainty about the future, as many others have noted. Small and medium-sized enterprises, which concern those of us on these Benches considerably, are rightly hailed as the backbone of the British economy, and for very good reason. SMEs account for 60% of UK employment and 48% of business turnover. Their confidence has turned negative for the first time since Q4 2022, falling from 12.8 to minus 4.7. That figure is not just a dry statistic. It represents thousands of business owners lying awake at night, wondering whether they can afford to keep the lights on, let alone hire new staff or invest in their future.

We should be under no illusion: the cost of this uncertainty is devastating. The Federation of Small Businesses reported that a staggering 33% of small employers now expect to reduce staff. That number has doubled in just one quarter. Meanwhile, only 10% of small firms plan to take on new employees. The result will be a shrinking economy, a contracting workforce, reduced opportunities for young people and those seeking to move from welfare to employment, increased costs and bureaucracy, and a country that is clearly retreating from ambition rather than embracing it.

If more confirmation is needed of this picture, the Government’s own impact assessment for the recent SI, the National Minimum Wage (Amendment) Regulations 2025, confirms the difficulties facing small business. It states that

“there is some evidence of challenging business conditions for SMEs specifically. Around 42.7% and 36.8% of micro and small businesses, respectively reported having less than three months of cash reserves in September 2024 (compared to 19.2% for large businesses). Around 15.6% and 33.9% of micro and small businesses, respectively, reported the cost of labour as a challenge to business turnover in November 2024.”

It is not clear whether, by the “cost of labour”, it was talking about the workforce or the party opposite. SMEs will need many exemptions from the provisions of the Bill. Yet the picture I have just painted is about to be made worse, as the Bill chooses to add yet another burden: disastrous day one rights for unfair dismissals and statutory sick pay.

So I ask a simple question: who truly understands what a business needs to thrive and survive? Is it the entrepreneur who has built something from nothing, the employer who fights every day to keep their company afloat, or an employment tribunal that is removed from the realities of running a business yet is now empowered to make decisions that could determine its fate? As the data reported last year by His Majesty’s Courts & Tribunals Service makes clear, employment tribunals are currently not able to make any speedy judgments. The Law Society described the backlog as “spiralling” and a very well-known legal firm described the tribunals to us as

“a bit of a laughing stock”,

“creaking” and “hugely unreliable”. That firm might be expected to support the Bill out of self-interest, but it does not.

The Bill makes it harder for businesses to prove that redundancies are genuine. It creates a scenario where every decision could be second-guessed by tribunals that the legal profession thinks are a bit of a laughing stock. Every restructuring might have to be questioned and every difficult choice turned into an expensive legal battle. Why would a business fire for no reason? Businesses need motivated, skilled employees, and they need time to assess the likelihood of an employee acquiring those skills and demonstrating that motivation. The noble Lord, Lord Vaux, put this very well and comprehensively explained it. However, to quote one of his Cross-Bench colleagues—the noble Lord, Lord Moore of Etchingham—in a newspaper column the other day, this clause is,

“as if children, once admitted to a school, were immediately deemed to have passed all the ensuing exams”.

As my noble friend Lady Cash noted, this is not an us-and-them perspective. Even if there were no other reason, retention is cheaper than firing and rehiring. Yet the Bill assumes, without evidence, that businesses are acting in bad faith, that they need tribunals to intervene and that they do not already have a strong incentive to retain talent.

The cost of all this will be staggering. The impact assessment suggests £5 billion, which will inevitably prove to be optimistic and which will inevitably fall disproportionately, as the Government admit, on the very SMEs we need to power growth—SMEs that the facts say are already struggling as a result of this Government’s other misguided policies. Instead of managing their businesses and seeking new markets and customers, they will be bogged down in human resources. If they get it wrong, they will be bogged down in litigation, endless documentation and the endless hiring of legal experts to justify every strategic decision. This is not just bureaucratic overreach but an outright violation of business autonomy.

A business should be able to shape its own workforce in response to market demands, competition and innovation, yet under the Bill it seems that businesses can only make such decisions when faced with an existential crisis. What recourse would a company struggling with stagnation and trying to bring in fresh talent and stay ahead in a fiercely competitive world have? We must ask ourselves: do we want a thriving economy and businesses that grow, invest and create jobs, or do we want a system that strangles them in red tape, drags them into courtrooms and forces them into stagnation? The Bill, as it stands, will not boost our declining growth, restore business confidence or create jobs. Instead, it will leave many businesses trapped: unable to adapt, unable to compete and, ultimately, unable to survive.

So I ask the Minister: have the Government considered the likely impact of the measures in the Bill on their recently stated aim to move people off long-term welfare? Can they speculate as to the likely effect of day 1 unfair dismissal rights and statutory sick pay rights on that ambition? Can they answer why a prospective employer might take a risk on a potential employee who is recovering from a long-term medical condition? The obvious net effect of these measures will be to encourage employers to do more due diligence, be more risk averse and rely more on references and less on intuition. That will have a very damaging impact on social mobility and workforce diversity. How do society or the individuals and businesses affected benefit from that? How is that—to use the words of the noble Lord, Lord Livermore—either compassionate or fair?

Beyond the immediate damage to business confidence, we must consider the broader implications for the UK’s attractiveness as a destination for investment. Capital flow is where it is welcomed. Investment thrives where there is stability, flexibility and a regulatory framework that encourages and does not obstruct growth. The Bill sends precisely the wrong message to investors. It signals that the UK is becoming a more complex, risk-laden and bureaucratic place to do business. Why would international companies choose Britain when they can invest in economies with more business-friendly policies?

Ministers claim that employment protections will create a fairer economy, but they fail to acknowledge the reality: an economy that cannot attract investment is an economy that cannot create jobs at all, and surely that is the ultimate unfairness. Or, to put it another way, and to use the words of the noble Lord, Lord Watson, surely the greatest dignity of all is to have a job.

As we have heard, there is plenty more in the Bill that we will be addressing in Committee. My noble friend Lord Young of Acton made a brilliant maiden speech, drawing heavily on his experience with the Free Speech Union and talking to the invidious Clause 20. We will support him. As a reminder, my noble friend pointed out that employers are already liable for the sexual harassment of third parties under the worker protection Act. On flexible working, we struggle to understand the problem this is trying to fix. As my noble friend Lord Hunt said earlier, a majority of workers on these contracts seem to like them. The Recruitment and Employment Confederation states that 79% of respondents to their recent survey like flexible working because of the flexibility. The Chancellor says she wants to tear down regulation to boost growth, but this Bill introduces a new quango with perhaps alarming, to use the word of the noble Lord, Lord Fox, or even Kafkaesque powers.

We have spoken to all the major business organisations and many employers with real-world experience, and we can find none that supports the Bill. We found unanimity that it will cause considerable damage. Can the Minister give any examples, apart from those four that she has already mentioned and which have been trotted out fairly frequently over the past few months, of actual, real employers that support all the Bill? Please name just one, as we would love to talk to them to see what we have missed. We will of course also be turning to the subject of trades unions, to which a number of noble Lords have spoken. In particular, I commend the contributions of the noble Lord, Lord Burns, the noble Baroness, Lady Fox, and indeed the noble Lord, Lord Fox, from the Liberal Democrat Benches, for their thoughtful interventions on this.

We believe that the UK stands at a crossroads. We understand the intent behind the Bill, and of course there are some things in it that we can support. But we can either embrace policies that made us a global leader in investment and innovation, or we can burden ourselves and businesses with regulations that drive them elsewhere. I believe that the Government are serious about growth, but I have no choice but to conclude that the choice here is straightforward: they can have this Bill or they can have growth, but they cannot have both.

Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to Amendments 283 and 327 in the name of the noble Lord, Lord Fox. I note that my noble friend Lord Hunt of Wirral has dealt with the purpose clause in Amendment 1 very comprehensively, so I will say no more on that. I remind the Government Front Bench that it was the noble Lord, Lord Monks, who opened the attacks on Margaret Thatcher. My noble friend is perfectly within her rights to defend the great lady’s record.

There is a growing troubling feeling in many of the businesses that we have spoken to, across sectors, regions and sizes, that the Government see them not as partners in growth or employers to be supported but, as my noble friend Lord Evans of Rainow, noted, as bad actors to be restrained. The sense is that the Government have concluded that virtually all businesses cannot be trusted to do the right thing, and so they are pressing ahead with a centrally planned, top-down approach to employment reform. It is an approach that prioritises control over co-operation, uniformity over flexibility and ideology over evidence. This approach does not benefit businesses: it burdens them with cost and complexity; it strips away the flexibility on which many sectors rely, especially those with seasonal, part-time or rapidly evolving workforces; and it will impede their functionality.

The noble Baroness, Lady O’Grady, said that this Bill is popular, but it is not popular with the Federation of Small Businesses, the British Chambers of Commerce, the CBI, the Institute of Directors, Make UK, nor the Recruitment and Employment Confederation—and, as we have learned from my noble friend Lady Stowell, it is not popular with techUK. They have all raised serious concerns and called for urgent changes.

If there is a groundswell of support out there, it is an incredibly well-kept secret. If there is a group of employers which believe that these changes will make them more confident to hire, invest and grow, we have yet to meet them. Judging by the open letters, briefings and consultations that have been submitted to Parliament, neither have the Ministers opposite. Let us not pretend that this Bill is being driven by the demands of business, because it is not.

I move on to the amendments. The Government claim that this Bill is about protecting workers, but it is time that we recognised that protection cannot come at the cost of opportunity. For many workers, the most important protection is the ability to get a foot on the ladder, gain experience, build skills and find stable, long-term employment.

In that regard, I commend the noble Lord, Lord Fox, on his Amendment 283. I agree with my noble friend Lady Noakes that, in some ways, it risks creating a monster, but I think that, in this case, and because of the nature of this Bill, it will be a friendly monster, because it will at least provide some certainty. As we know, and as anyone who has had a conversation with businesses will tell you, businesses crave certainty more than anything else. The fact that the code of practice is written as it is reflects the complexities in the Bill, the vast array of delegated powers that the Government are about to award themselves and, of course, the lack of certainty.

The noble Lord is entirely right to focus his attention on SMEs. It is worth reminding the Committee that 48% of business turnover and 60% of employment is accounted for by SMEs. In many cases, they will be the businesses without extensive HR departments to help them interpret the facts in this Bill. Therefore, the Government will have to do it for them. This is not perfect, but it deals with the main issues. We would prefer to see no need for this amendment, but, because of the other factors that I have mentioned—the delegated powers and so on—we have no choice.

We need a framework that recognises the diversity of business models, the pressures that employers face and the legitimate role that they play in building opportunity. This is not an employers versus workers situation. We are all committed to improving workers’ rights but we must do so in a way that is realistic, pragmatic and supportive of the broader economy. Without that, we risk achieving the opposite of what we intend: fewer jobs, more uncertainty, greater barriers for the people we are trying to help and, frankly, less equality.

--- Later in debate ---

[Baroness Coffey (Con)]

My Lords, I support Amendment 8. I commend my noble friend Lord Wolfson on his excellent speech, bringing the reality of employing so many people into the heart of this debate, along with the constraints and the concerns being raised, while still recognising that I understand why so many people consider casual work and zero-hour contracts to be particularly poor when people are trying to have certainty of employment over some time. I also support Amendments 7, 12 and 13—in essence, any amendment that refers to specifying the reference period in the Bill.

I say that because, when thinking of 26 weeks, I think in particular of the hospitality industry in coastal areas. There are a number of employers around the country who literally shut down their businesses, or move to a much lower level of needing people, at certain times of the year, and then, in the summer, are desperately trying to find people. We need to give flexibility. The 12 weeks simply does not recognise that, as has been referred to. It is perfectly usual for people to work at different points throughout the year, potentially in on annualised-hours contract, but varying the number of hours expected to match the demand of customers requiring a particular service. I fear that the 12 weeks does not address that sort of business.

Across the country, 2 million people work in the hospitality industry. It is one of our biggest industries, and for many families it is key to how they support their household income. For the flexibility that employers want, and—thinking of how many people lose their childcare at certain times of the year—for employees to have flexibility around their hours worked, bringing in casual staff is a key element in how employers keep those businesses going.

There is another element that needs thinking through. While I appreciate that the Government seek to reduce the number of agency and bank workers in the NHS, let us not get away from the fact that, unfortunately, many NHS trusts are actually terrible employers. A lot of people leave or reduce their permanent contracts because they simply cannot get the flexibility that they need working in the NHS. That could be for caring reasons, for all sorts of people—it does not matter whether it is men or women; people provide care to their families and to their friends. I am concerned, and I intend to discuss further with NHS Professionals how this will impact on the NHS fulfilling its expectations for people right across the country. I appreciate that it is not simply NHS Professionals; many individual trusts have their own bank. That is intended to provide flexibility based on need, and recognises that simply not everybody can work the NHS shifts expected.

Thinking of the 26 weeks or the 12 weeks, I am also concerned that, at the other end of the Corridor, 650 Members of Parliament are all individual employers. They have to sign contracts, which are provided, but when people are ill or go on maternity leave, MPs can and do take people on through certain term contracts. I am concerned that there will be unintended consequences for the provision of services. As a real example, if you had to guarantee hours beyond when the employee came back, you could end up in a situation that you simply could not manage.

It is for those reasons that we need to think very carefully about the reference period when we are considering the different employment situations that small employers find themselves in, as well as the large sectors, such as hospitality and retail, which have already been discussed.

[Lord Sharpe of Epsom (Con)]

My Lords, Amendments 3, 6 and 17 stand in my name and that of my noble friend Lord Hunt. Before turning to the detail, I would like to frame the debate in its proper context.

At the heart of this issue lies the question of incentives. Much of the discussion around zero-hours contracts rightly concerns the security and well-being of workers. We must not lose sight of the fact that only a relatively small proportion of the workforce is employed on such contracts, or in other forms of temporary work. Many of these individuals are young people—as my noble friend Lady Lawlor illustrated in her very detailed speech—who are starting out in their careers. Others are disabled people, who may be able to work only a limited number of hours due to their personal circumstances. If we make the regulatory environment too rigid, we inadvertently create a disincentive to hire precisely these groups. We reduce the number of vacancies, reduce opportunities and end up harming those we most wish to support. Good intentions do not alone lead to good results. It is the incentives that lead to results.

I thank my noble friend Lord Moynihan and the noble Lords, Lord Fox and Lord Goddard, for their contributions in this group, and I will come on to others. My noble friend Lord Moynihan made a compelling argument to leave out this part of the clause altogether, because it is simply unworkable in its current form. I look forward to hearing what the Minister has to say in response.

I turn to the specifics of my amendments. Job security is vital, and there can be no disagreement on that point, but we have to recognise that guaranteed-hours contracts are not always practical or appropriate across all sectors of the economy. The principle that we wish to uphold is simple: autonomy. Workers themselves are best placed to judge their own circumstances and to decide whether a guaranteed-hours contract would suit their needs.

Research from the Chartered Institute of Personnel and Development, published in its report on zero-hours contracts, found that workers on such contracts often report a better work-life balance and higher well-being compared with other workers. This is an important reminder that flexibility, when genuinely chosen, can be empowering rather than exploitative.

Not every worker wants a rigid schedule. Young people, parents with caring responsibilities and disabled people may actively prefer the flexibility that variable hours allow. A one-size-fits-all approach simply does not reflect the realities of the modern labour market. Sectors such as retail, hospitality and tourism, and other seasonal industries, are heavily dependent on flexible staffing to meet seasonal demand. It is these very sectors that offer the vital entry-level opportunities to workers who might otherwise struggle to find employment.

Despite the Government’s understandable ambition to improve labour market fairness, the Bill as currently drafted risks reducing that flexibility rather than enhancing it. The automatic obligation placed upon businesses to offer guaranteed-hours contracts once certain thresholds are met would impose significant and disproportionate administrative burdens, even when the worker involved may have no desire to change their current arrangements.

The problem is particularly acute for larger employers, such as national retailers, as we have heard from my noble friend Lord Wolfson, who delivered an expert speech. They would be forced into a continual cycle of recalculations and offers, simply because an employee’s working patterns have shifted slightly. As my noble friend Lady Verma explained, that affects small businesses as well. In practice, firms would face a daily or weekly obligation to offer a new contract based on changing patterns, resulting in huge and unnecessary administrative costs. This would not only create inefficiency but would discourage businesses offering overtime and additional work voluntarily, thereby reducing opportunities for those who value flexibility.

The amendments I propose take a different approach. Instead of an automatic right to be offered a guaranteed-hours contracts, we propose a right to request a guaranteed-hours contract. It entirely respects the spirit of the Government’s intentions. As the noble Lord, Lord Fox, has already explained, it would impose the same the obligations on employers as the Government’s Bill. This would preserve the choice for workers, empowering them to seek greater stability when they wish, but it would avoid imposing blanket obligations on employers that may lead to perverse outcomes. The Government’s current drafting, with an automatic right to guaranteed hours, risks creating a bureaucracy that neither workers nor businesses have asked for.

On the subject of businesses, it is worth referring to the letter received from five employers’ organisations. For reference, those are Make UK, the CBI, the IoD, the Federation of Small Business and the British Chambers of Commerce. They say in that letter:

“Not every job can be made compatible with every possible need. This reform means businesses incur admin costs whenever an employee works variable hours. The result is that firms are discouraged from offering variable hours even when the flexibility is requested by workers, including voluntary overtime. The cost associated with administering and calculating contract offers on a rolling basis whenever staff work additional hours is also disproportionate and provides no clear benefit to workers”.


I could not have put it better myself.

There has been some reference on the other side, by the noble Baroness, Lady Carberry, to the Low Pay Commission, which met seven years ago. That ignores the fact that, over the last seven years, working practices more generally through the economy—whether on flexible-hours contracts or not—have changed very dramatically, partly as a consequence of the pandemic. I note that the FSB has now signed the letter which includes the quote I have just delivered, so it has clearly changed its mind.

I recognise that there may be an even simpler and more effective alternative to the right to request, which would be an automatic offer of a guaranteed-hours contract combined with the right for the worker to opt out if they so wish, so Amendment 17 introduces a worker opt-out mechanism. A qualifying worker may opt out of receiving a guaranteed-hours contract provided that the employer has provided clear written information about the guaranteed-hours system, the worker has given written notice in a prescribed form, and the employer reminds the worker at regular intervals, at least every six months, that they can opt back in at any time. Under that model, every eligible worker would be enrolled on to a guaranteed-hours contract after the reference period by default.

However, those workers who genuinely value the flexibility of their zero-hours arrangement—and there are many, particularly, as we have already discussed, young people, carers and so on—would have the right to decline the offer by providing written notice. This approach would strike a better balance, because it would ensure that guaranteed hours are the norm unless the worker themselves chooses otherwise, thereby protecting workers who might otherwise feel pressured not to request more security. Equally, it would avoid the unnecessary administrative burden on employers of offering contracts that in many cases would be rejected. We would be sparing businesses the cost and disruption of a process that delivers little practical benefit where flexibility is mutually valued by both employer and employee. It would ensure that the choice remains a real and continuing one, recognising that workers’ needs and circumstances evolve.

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[Baroness Jones of Whitchurch (Lab)]

I take that point. I was attempting to explain in my description, which I obviously need to develop a little bit more, that we understood some of those issues and are trying to find a way through it.

Amendments 3, 4 and 6 seek to change the model for the right to guaranteed hours from a right to be offered to a right to request. We have debated this at some length. These amendments would mean that a qualifying worker experiencing one-sided flexibility would need to make a request to their employer to access their right to guaranteed hours. Noble Lords underestimate the imbalance of powers that employees in this circumstance face. The noble Baroness, Lady Lawlor, mentioned young people, which is the group that is likely to be the most intimidated by having to request guaranteed hours. Therefore, we are attempting to make sure that these rights are balanced in a proper and more effective way.

I am grateful to my noble friend Lady Carberry for reminding us that the Low Pay Commission also looked at a right to request and, understandably, rejected it for exactly that reason. It understood that the people in those circumstances had the least power in the labour market and would therefore, quite rightly, feel intimidated about coming forward. She also raised the issue of what happens if the request is denied. I know the noble Lord, Lord Fox, attempted to address that, but I do not know that the amendments necessarily do so. The noble Lord, Lord Sharpe, says that employment has changed since those days. I would say that employment has become even more unpredictable and unreliable. Nothing that the Low Pay Commission said—or indeed that I said—addresses the potential exploitation which the commission identified. There is an imbalance, and it is very difficult for people to come forward and make that request; that is why we are insistent that it is done in the way that we have suggested.

After receiving an offer, the workers would then be able decide whether to accept it, based on its specific terms. That would empower the worker to decide for themselves, having seen the offer on the table. This addresses the point that some people do want to work flexible hours, and we understand that.

Amendment 15 would allow workers on limited-term contracts of four months or less to voluntarily waive their right to guaranteed hours. We believe that workers should be able to retain the flexibility of a zero-hours contract or arrangement if they wish, which is why those who are offered guaranteed hours will be able to turn them down and remain on their current contract or arrangement if they wish. This amendment would add an additional opt-out mechanism for workers that could create needless confusion for both employers and workers.

Amendment 17 would provide workers with the ability to opt out of receiving guaranteed-hours offers. We understand the importance of workers being able to retain the flexibility of zero-hours contracts or arrangements if they wish, which is why those receiving a guaranteed-hours offer will be able to turn it down. However, to ensure that all qualifying workers will benefit from the legislation, all workers should be able to receive a guaranteed-hours offer. We want to ensure that employers and workers are starting from a position of equal bargaining power. Therefore, through the Bill we have allowed for employers and unions to collectively agree to opt out of the zero-hours contract measure, if they agree. Unions can make these deals based on their knowledge of the industry and a holistic view of what is best for the workers. We feel it is more appropriate than individual workers opting out of receiving offers. After receiving an offer, qualifying workers would then be able to decide whether to accept, based on their individual circumstances.

Finally, Amendment 2 would remove from the Bill the right for qualifying workers to be offered guaranteed hours. We think that all employers should be required to offer their qualifying workers guaranteed hours, as this is the best way of addressing one-sided flexibility in the workplace and ensuring that jobs provide a baseline of security and predictability.

Without guaranteed hours, workers do not have any form of certainty as to their earnings, making it difficult to apply for credit or a mortgage, to rent a flat, to plan for major events, or even to manage their day-to-day life expenses. As I have previously iterated, those who are offered guaranteed hours will be able to turn them down and remain on a current contract or arrangement if they wish. We believe that this is the right balance. I therefore hope that I have persuaded noble Lords not to press their amendments.

[Lord Sharpe of Epsom (Con)]

The Minister is relying a great deal on the fabled consultation that we are going to have. Can we have some idea of when that consultation is likely to take place? Can I suggest that it perhaps takes place before we get to Report, because it will iron out a great many of these arguments? The Minister asserted that some businesses have supported the 12-week reference period. Can she say which ones?

[Baroness Jones of Whitchurch (Lab)]

The Bill sets out, in a number of ways, that there will be regulations that will be consulted upon. This goes back to the issue of when that consultation will take place, but there is a framework for that set out in the Bill which should cover that point.

Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Lord Murray of Blidworth (Con)]

My Lords, I agree with the noble Baroness, Lady Kramer, and my noble friend Lady Coffey. It is frankly not acceptable for the Government at this stage in a Bill to lay this many amendments of this magnitude to the policy in the phase of the Bill as it is travelling through the upper House. These measures will receive no scrutiny from the elected House. It is frankly not constitutionally proper to use this method. It should be used for only minor and technical amendments, and by no measure can these proposals be put into that category. The Government should be very ashamed about this. Frankly, the correct way of proceeding would be to withdraw the Bill and start again, and to lay this entire Bill back before the Commons so that it can be properly scrutinised in accordance with our conventional norms.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Minister for his detailed introduction to the amendments in this group. As he was speaking, I thought that he had inadvertently highlighted the mind-boggling complexity of what employers are up against when dealing with this Bill. I did hear all the words but, to paraphrase a famous comedian, I was not entirely sure that they were necessarily in the right order.

As my noble friends Lady Coffey and Lord Murray, and the noble Baroness, Lady Kramer, have pointed out, the Government tabled these 27 amendments only a few days ago. Perhaps they are simply technical amendments, but I am afraid I am inclined to agree with the other speakers that they do not appear to be so. I will just pick a few items at random from the Minister’s speech. If amendments involve national security, insolvency and the death of a claimant at an employment tribunal, these are matters of substance; they are not technical at all.

This is not the way to do business in this House. The last-minute approach is symptomatic of a much deeper issue, which is the lack of care and due diligence when it comes to this Bill. It is rushed, it is poorly thought-through, it has been inadequately consulted on, and it is one that these Benches will scrutinise to the fullest possible extent.

We have to ask why the Government have still not tabled any amendments to address the concerns of businesses regarding the changes to zero-hours contracts in this Bill. These are not niche or minor concerns; they go to the heart of how businesses—especially, as we have been discussing all evening, small and seasonal employers—operate.

We have heard already some of the germs of the future scrutiny that these amendments can expect to receive in depth. We will not oppose them today, but we of course reserve the right to revisit them at a later stage, when we have had time to digest them and read the Minister’s comments in much more detail.

On a personal note, I read Amendment 14 with mounting horror. It induced a minor heart flutter because it reawakened memories of a particularly unsuccessful algebra exam I took when I was about 16. I would be very grateful if we could have a minor health warning on any future amendments of that type.

[Lord Leong (Lab)]

I thank all the noble Lords for their contributions. Some noble Lords raised concerns about the number of amendments tabled by the Government, and I would like to reassure the Committee that these really are technical amendments, brought about as a result of welcome scrutiny of the Bill. They are entirely appropriate and an ordinary part of making good legislation. I remind noble Lords that we had tons of government amendments when we debated the Procurement Bill recently, so this is not unusual.

I will answer some specific points raised by noble Lords. The noble Baroness, Lady Coffey, asked about Amendment 53. This is one of a number of technical amendments designed to ensure that the Bill operates as it was intended to operate. As an example of how technical they are, Amendment 53 seeks to amend new Section 104BA because we realised that it was not clear that Section 104 of the Employment Rights Act 1996 already ensured that dismissal in such cases was automatically unfair.

The noble Lord, Lord Murray, mentioned scrutiny. There will be technical regulations tabled at a later stage, or during the course of this legislation, and the House will have every opportunity to scrutinise these through the affirmative procedure. There will be time for noble Lords to scrutinise delegated powers and this Bill.

Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

Moved by

[Lord Sharpe of Epsom]

18: Clause 1, page 8, leave out lines 41 to 44
Member's explanatory statement
This amendment removes the Secretary of State’s power to make regulations specifying additional circumstances in which the duty to offer a guaranteed hours contract does not apply, or an offer may be treated as withdrawn.

[Lord Sharpe of Epsom (Con)]

My Lords, I begin by thanking the noble Lord, Lord Leong, for his letter explaining certain matters that were left over from the last day of Committee. The fact that the algebraic question required a three-page, detailed answer for one worked-up example rather illustrates our point that this adds a huge and possibly unnecessary level of complexity for small businesses in particular. But I will let that lie for now.

Amendments 18 and 19 standing in my name would remove the broad delegated power in new Section 27BD. This Bill continues the concerning trend of the steady transfer of legislative authority from Parliament to Ministers. As I noted at Second Reading, it contains no fewer than 173 delegated powers. The Government may, and probably will, argue that this is justified by ongoing consultation, but that is in effect an admission that this Bill is not yet complete or ready for full and proper scrutiny by this House.

Time and again, we have seen ill-defined powers handed to the Executive allowing for significant policy changes to be made by regulation without meaningful parliamentary oversight. Clause 1 exemplifies this problem. It inserts new sections into the Employment Rights Act 1996, establishing a framework for a new statutory right relating to guaranteed hours. However, through new Section 27BD(6), it grants the Secretary of State a remarkably wide power to make regulations specifying circumstances in which the duty to offer guaranteed hours does not apply or where an offer may be treated as withdrawn. There are no limitations, no criteria and no guiding principles. There is no requirement for a consultation or justification. In effect, the Secretary of State is given a blank cheque.

The Delegated Powers and Regulatory Reform Committee has been very clear that the power is “inappropriately broad” and should be

“restated with a greater degree of precision”.

While the Government’s memorandum refers to

“maintaining the original policy intent while allowing reasonable exemptions”,

the committee rightly points out that nothing in the Bill legally constrains the Secretary of State’s discretion in that regard. Moreover, as we raised on the first day of Committee, businesses need clarity on the operation of guaranteed hours. If there are to be sector-specific exemptions—and there may very well be a case for them—they should appear in the Bill, not be left to future ministerial discretion. Uncertainty benefits no one—not workers, not employers and not enforcement bodies. Allowing such fundamental aspects of the regime to be decided later by regulation undermines the transparency and stability of the framework that the Government are seeking to establish.

I remind the Minister that, during the passage of the Data Protection and Digital Information Bill, she rightly accepted similar concerns and tabled amendments which directly reflected the recommendations of the Delegated Powers and Regulatory Reform Committee. At the time, she said:

“I hope the Minister is able to commit to taking on board the recommendations of the Delegated Powers Committee in this respect”.—[Official Report, 27/3/24; col. GC 198.]


Why should that principle not apply here? If it is truly the Government’s intention that this power will be used only in limited and specific cases, then the legislation should make that clear. As it stands, any future Secretary of State could by regulation significantly weaken or disapply this statutory regime without the involvement of Parliament.

Regardless of one’s views on the underlying policy, that is not an acceptable way to legislate. When Parliament creates new rights in statute, they should not be left vulnerable to being hollowed out at the stroke of a ministerial pen. This amendment removes that overly broad delegated power and ensures that any substantive changes to the scope of the duty must be brought back to Parliament through primary legislation. Will the Minister now commit, as she has done before, to taking seriously the recommendations of the Delegated Powers and Regulatory Reform Committee and amending the Bill accordingly?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, it is very good to return to the subject of zero-hours contracts as we start day 2 of Committee. As we debated last week, the Government are committed to ending one-sided flexibility and exploitative zero-hours contracts, ensuring that all jobs provide a baseline of security and predictability so that workers can better plan their lives and their finances.

Employers who already provide this security and predictability for their workers will benefit from a level playing field, but these measures will help drive up standards and eliminate undercutting across the board. Meanwhile, employees who enjoy the flexibility of their current zero-hours arrangements will not be pressurised into accepting a guaranteed-hour contract.

I thank the noble Lord, Lord Sharpe of Epsom, for tabling Amendments 18 and 19, which would remove the power to make regulations specifying circumstances in which the duty to offer guaranteed hours does not apply, or an offer may be treated as withdrawn. This power would allow the Secretary of State to react dynamically to changing employment practices that may arise, allowing for updates to maintain the original policy intent of providing a baseline of security and predictability so workers can better plan their lives. It could provide the required economic flexibility that businesses have been asking for, to ensure that the policy is working as intended while adapting to changing circumstances.

This power is separate to the power in the Bill to exclude categories of workers. Regulations made under the excluded workers power would allow specified workers to be taken out of scope of the right to guaranteed hours. Since the right to guaranteed hours is a new, novel right, it could be necessary to exclude certain workers in order to respond to the changing employment environment.

The power at issue here relates to specified circumstances where the right to guaranteed hours would otherwise apply but limited and specified circumstances justified an exception to the duty to make a guaranteed-hour offer. We envisage that any exceptions to the duty to offer guaranteed hours will be narrow and be applied in specified circumstances; for instance, where the measures would otherwise have significant adverse impacts, even when the employers and the workers act with good intentions and there is no other accepted way to mitigate the risk. Examples could include unforeseen circumstances such as a pandemic or a state of emergency.

Consultation is required to further determine which specific circumstances may justify a potential exemption. I assure the Committee that we will give full consideration to any representations made in this House and by respondents to that consultation. Gathering the views from those who will be impacted by the policy via consultation remains of the utmost importance to this Government. By removing the power, we would become unable to make such exceptions and to provide flexibility in those specific circumstances. The power will also be subject to the affirmative procedure, meaning that both Houses will have the opportunity to debate this matter.

Like the noble Lord, Lord Sharpe, I am, as ever, grateful to the Delegated Powers and Regulatory Reform Committee for its careful consideration of the Bill, including in relation to the power with which we are here concerned. The committee continues to serve your Lordships’ House well by providing a thoughtful analysis of the Government’s legislative programme, and I thank it for that.

As acknowledged by that committee, the need to respond to changing circumstances is an appropriate basis for such a power, but in the committee’s view, that power should be narrowed—whereas the amendment goes much further than what has been proposed by it. On that basis, I hope I have been able to set out more information on how the Government intend to use this power, and I of course look forward to responding more fully to the Delegated Powers Committee report in due course. I hope that reassures the noble Lord so that he feels able not to press his Amendments 18 and 19.

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[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Minister for her response to these amendments, but I have to confess that I am disappointed, not simply that the amendment is being rejected but that the Minister has chosen not to uphold the principle of parliamentary scrutiny which she championed herself only last year. At that time, she said

“the limits on effective scrutiny of secondary legislation are manifest”.—[Official Report, 27/3/24; col. GC 197.]


That is spot on; I could not agree more, so I have to ask: does the Minister still stand by those words, or does she now disagree with her own assessment—and indeed that of the Attorney-General? I will refrain from quoting again from the Bingham lecture that he gave last November, but we may have to return to that in due course.

Today, the Government are defending a delegated power that is not just broad but boundless. It is a power that allows a future Secretary of State to undo or dilute a statutory right without reference to Parliament and without any of the safeguards the Minister has previously endorsed. I am disappointed, and I regret that the Minister has chosen not to accept these amendments or to listen to the Committee, but it seems that she does not listen even to her own warnings. For now, I beg leave to withdraw my amendment.

Amendment 18 withdrawn.

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In the end, this is a further case of prematurely tabling the Bill. We do not have a sense of what the Government mean by this—so it is important for the Minister to set out how we will find out. If this is still in the process of consultation, we are back at exactly the same point that we were in previous groups. In general, we have passed the point of trying to demonstrate that work is lumpy, because the Minister has agreed that work is lumpy; this is about how that lumpiness is accommodated, as the noble Lord, Lord Lucas, set out. What is reasonable for employers to do, what is reasonable for employees to accept, and what is the Government’s view on that? That is what we need to know before we get to Report so that we can take this forward.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to my noble friend Lord Lucas for introducing this group with his Amendment 21A. I could not agree with him more that flexibility is a key part of an efficient economy. That deserves to be written in stone. I am also grateful to my noble friends Lady Lawlor and Lady Noakes for their support for various amendments in this group and to the noble Lord, Lord Fox, for his positive comments.

I shall speak to Amendments 22, 24 and 28 in my name. There are many circumstances in which an employer has no choice but to make a request or cancel a shift on short notice—my noble friend Lady Lawlor gave us some very useful examples of that. But to go on a bit, for example, if a colleague calls in sick, which is something that is likely to increase in frequency with changes to statutory sick pay governed in other areas of this Bill, or if events beyond the employer’s control intervene, such as local flooding or public disturbances, payment for unworked cancelled shifts becomes an additional financial burden at precisely the time when a business is already experiencing a downturn. It is not simply about inconvenience; it is actually about viability.

To give another particular example, we have heard from the hospitality industry that the proposed rights around notice and cancellation of shifts could severely undermine existing staffing practices. For instance, in the case of pubs, which as we know are under pressure anyway, those with outdoor garden spaces in particular operate in a highly unpredictable environment. One representative of the sector made it very clear to us when he said:

“The new right to notice of shift allocation and cancellation could undermine a pub’s ability to offer voluntary overtime”.


During the course of the discussion, the examples were magnified to some extent—and to some extent the example that I am about to give is the flipside of the one that my noble friend Lady Coffey highlighted with regard to restaurants in a previous group, and the fact that they are pre-charging for tables. The representative of the industry pointed out to us that in many cases, for example, offering food in a pub Monday to Wednesday is a highly marginal business, and they often let their staff go early, and so on. He is of the opinion that, as a result of the Bill, much of that work will simply disappear; they will not bother to open, because it will be too complicated to administer. Not the least of it is that it is not just the administration but the costs of offering the compensation that is governed by this clause. That would obviously not be very good for consumer choice, plus of course there are implications for tax receipts and a whole host of other areas as well.

In practice, these businesses rely heavily on flexibility, which includes voluntary shift swaps and short-notice availability. As we have discussed on numerous occasions, if the weather turns—and in Britain, let us be honest, that is not a small variable—a pub expecting a busy day may suddenly find itself very overstaffed. Under the Bill, cancelling those shifts could result in mandatory compensation.

I turn to Amendment 24. Another flaw identified in the Bill is that it presumes that, in every instance, a cancelled, moved or curtailed shift entitles the employee to compensation. This rigidity, however, does not account for the unforeseen events which, as noble Lords across the House will know, are a common occurrence throughout the working world. We have heard many examples of those. The assumption that the employer is always somehow at fault does not reflect the realities of working life. Our amendment therefore seeks to clarify and incorporate a degree of flexibility into the Bill. As the noble Lord, Lord Fox, pointed out, we are proposing that the conditions that govern this entitlement to compensation should be subject to regulation in this case. There is a strong case to be made for this exception to our general principled dislike of the amount of regulation on which the Bill relies. As defined by the Secretary of State, this could be nuanced to ensure greater parity in the employer/employee relationship.

It is vital that we remember throughout these debates that we are discussing a piece of legislation that will profoundly affect workers and employers across the country. I am concerned that, in certain elements of this Bill, an ideological assumption is made about the relationship between the worker and the employer, which leads to absolute positions—another point that the noble Lord, Lord Fox, raised in a previous group. We all have a duty to ensure that the Bill meets the practical demands of the real workplace and does not just speak to such assumptions. This amendment would balance the relationship between the employer and the employee and would make sure that those who provide the work are protected, alongside those who undertake it. There is an essential symbiosis that needs to be maintained in order for us to have a thriving economy, with good jobs available for workers. We cannot fall prey to inflexible, absolute stances that upset this relationship. Our amendment seeks to correct this mistake in the text of the Bill.

I am very grateful to my noble friend Lady Noakes in particular for her support for Amendment 28, because she raised unarguable points. The reasonable belief test outlined in the Bill raises several concerns. One of the most substantial is that the term “reasonable” is incredibly broad and creates a great deal of uncertainty for both workers and employers. As noble Lords across the House will know, this part of the Bill is designed to make working entitlements clearer and provide greater clarity and certainty to workers about the shifts they are working and the sort of income they can therefore expect to receive. However, the text in its current form is wide open to a massive range of interpretations and fails to provide clarity or protection for either workers or employers. How is either party to know what constitutes a reasonable expectation? Redefining this element of the Bill so that a formal confirmation of a shift is required for entitlement to compensation will provide clarity for both parties and will create a mutual responsibility between the worker and the employer to make expectations and duties clear.

It is my understanding that the Government intend this section of the Bill to place an obligation on the employer to clearly communicate shift assignments to workers in order to avoid misunderstanding. We agree that this should be the case, although the current text of the Bill uses language that is far too vague. If the Government want to promote the clear communication of shift assignments, surely providing for a formal commitment of work, rather than the belief of being needed, is the way to make sure that that obligation is met. Our proposal of a formal confirmation requirement would mean that both employer and employee know where they stand and what is expected of them and would address the shortcoming in the text as it stands.

I will say just a few brief words on Amendment 27, in the name of the noble Lord, Lord Fox. Forty-eight hours seems to us a perfectly reasonable notice period regarding the time before a shift is due to start. A survey from the Association of Convenience Stores found that 90% of colleagues in the convenience sector report that they have never had a shift cancelled with less than 48 hours’ notice. Unless a reasonable notice period is reflected in the new requirements, it is likely to lead to a cautious approach to staffing by many hospitality and retail businesses. This would mean restricting operating hours and/or staff numbers during periods of uncertain footfall, rather than offering shifts that may ultimately be surplus to operational needs on the day, thus incurring compensation costs for late cancellations.

Moreover, there is a notable asymmetry in the Bill as drafted, because there are no reciprocal requirements for employees to provide notice when they are unable to work at a scheduled shift. That gap will have significant implications. One of the biggest challenges for employers, particularly in retail, is managing last-minute cancellations by employees due to illness, childcare needs or other issues. When employers must find cover at short notice, how are they to meet the same reasonable notice requirements that they themselves are held to?

We need common sense in this legislation, so I urge the Government to accept my and other amendments, or to be honest about why they will not.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, before I address the amendments in this group, I take this opportunity to refer to the letter I wrote regarding the algebraic formula. There are existing formulae in employment rights legislation—for instance, in relation to the calculation of the amount payable to an agency worker as calculated in Section 57ZH of the Employment Rights Act 1996, so this is not something new. We will, however, publish full and comprehensive guidance in due course, which I am sure many noble Lords will find fascinating.

This has been a very useful debate, and I am very grateful for the contributions of all noble Lords. We have covered several areas in this debate related to the amendments tabled. The noble Lord, Lord Lucas, in his Amendment 21A, is seeking to make changes to the period of notice deemed reasonable for cancellation of or change to a shift for agency workers. The noble Lord, Lord Sharpe of Epsom, in Amendment 22, is seeking to make changes to the right to reasonable notice of shifts for directly engaged workers. The noble Lords, Lord Sharpe of Epsom, Lord Fox and Lord Goddard of Stockport, are seeking to make changes to the right to payment for short-notice shift cancellations, movements and curtailments in Amendments 24, 27, 28 and 29.

Before I address each of these amendments in turn, let me share some analysis that the Living Wage Foundation did in 2023. It suggested that 59% of workers whose hours vary from week to week, which includes zero-hours and low-hour workers, receive less than a week’s notice of shifts, with 13% receiving less than 24 hours’ notice. The vast majority of respondents—90%—stated that they do not receive full payment when their shifts are cancelled unexpectedly, 74% receive less than half, 51% receive less than a quarter and 26% receive no payment. Further analysis, from the Chartered Institute of Personnel and Development, suggests that approximately 33% of UK employers who use zero-hour contracts compensate workers for shifts that are cancelled with less than 24 hours’ notice, with 48% of employers responding that they do not.

I turn first to Amendment 21A. The noble Lord, Lord Lucas, says in his explanatory statement that this amendment

“seeks to define a reasonable maximum period of temporary work for agency workers in primary legislation”,

which

“will help remove any uncertainty for businesses worried about genuine temp work being caught in the new zero-hours regulations”.

The noble Lord seeks to achieve this by providing that the period of what is presumed to be reasonable notice for agency workers must be no greater than 24 hours. This would mean that it would be presumed reasonable if an agency worker receives 24 hours’ notice, but unreasonable if they receive less, so only in those latter situations would the agency or hirer have to prove that the period of notice was still reasonable in the circumstances.

I am not clear how this amendment would achieve this. The amendment would be made to Clause 2, concerning rights to reasonable notice for directly engaged workers, and appears to prevent workers being given more than 24 hours’ notice of cancellation or change to a shift. I reassure the noble Lord that the Bill provides for periods of notice “presumed reasonable” to be set in regulations for directly engaged workers and agency workers, as well as the factors that should be taken into consideration in individual cases.

Following consultation, it may be that the “presumed reasonable” periods of notice and the factors that should be taken into consideration will be different for agency workers and directly engaged workers. We intend to consult on what period is presumed reasonable, because it varies from case to case. Setting a period of reasonable notice in primary legislation would thus pre-empt consultation and not allow us to take into account stakeholders’ views.

--- Later in debate ---

[Lord Leong (Lab)]

I am not sure about that. Basically, we do not want to be too prescriptive and define what reasonableness is, because it varies from case to case and company to company. There needs to be that flexibility there.

Amendment 29 is a probing amendment from the noble Lord, Lord Goddard of Stockport, which seeks to add a power into the Bill to make regulations setting out factors that determine whether a worker reasonably believed they would be needed to work the shift. The Government tabled an amendment during Commons Report stage to ensure that a worker will not be entitled to a payment for a short-notice cancellation, movement or curtailment of a shift unless at some point prior to that they reasonably believed they would be needed to work the shift. This is considered appropriate because it is only where a person reasonably believes that they will work a shift that it is reasonable for them to prepare to work and incur costs as a result.

This amendment was necessary to eliminate the risk of workers taking cases to tribunals and making claims for shifts they did not reasonably believe they needed to work. This is particularly important in situations where an employer offers a shift out to multiple people, for example if they organise shifts through a large WhatsApp group. In cases like this, we want to be clear that people should receive cancellation payments when they are told they are not needed at short notice only if they reasonably believed they would work the shift in the first place.

For example, as set out in the Explanatory Notes, if there is an established practice of “first come, first served”, and an individual says they will work a shift after they have seen that another individual has already done so, they should probably not expect to work that shift. Even where a shift is offered only to one worker, they should still reasonably believe they will work it in order to be eligible for a short-notice payment. For example, if an employer offered a shift four weeks in advance, and the worker accepted the shift only two hours before the shift, it seems less likely they should expect actually to work that shift.

These are the kind of scenarios the Government considered when making the amendment; however, there are other scenarios where issues about this may arise. The Government wish to avoid being overly prescriptive by setting out factors in regulations, given the range of scenarios where this may be relevant. Instead, the Government consider it more appropriate to leave it to tribunals to determine on a case-by-case basis and we want to ensure that tribunals maintain flexibility to do so as they consider appropriate.

Before I conclude, I will answer the questions from the noble Baroness, Lady Lawlor, and the noble Lord, Lord Sharpe, about reasons outside of employers’ control. With better planning, employers need not cancel as many shifts, but it is not right that, when there is uncertainty, the entire financial risk rests with the workers. We really need to have a fair balance, and the Bill offers exemptions as a possibility for that. We will consult on that; however, any exemptions are likely to be narrow, as we do not believe that workers should take the whole financial hit.

I hope that I have been able to persuade all noble Lords and provide assurances on the Government’s wider commitment to consult with stakeholders and businesses. I therefore respectfully ask noble Lords not to press their amendments.

[Lord Sharpe of Epsom (Con)]

Is the Minister really saying that the points that we were making are related only to employers’ bad planning? How on earth are they supposed to plan for natural disasters, floods and so on? Secondly, I apologise for using the wrong reference to the Bill, as the Minister helpfully pointed out. He also helpfully pointed out that much of the Bill is being written on the hoof, so I would be very grateful if he would commit to stop producing new iterations of the Bill, which are ever expanding.

[Lord Leong (Lab)]

I am sure that the noble Lord will be happy to hear that I will consult with everybody as widely as possible, including him. We can have further conversations to explain the purpose of the Bill and why we are doing it. We are not doing this in isolation. I believe that the Bill is pro-business and pro-worker, and we need to get that message across to him and other noble Lords.

--- Later in debate ---

Moved by

[Lord Sharpe of Epsom]

42: Clause 5, page 30, line 35, leave out from “independence,” to end of line 36 and insert “or
(ii) an employee representative body or staff association that—(A) has been formally established for the purpose of consultation or negotiation with the employer,(B) represents a defined group of the employer’s workers or the workforce generally, and(C) operates independently of the employer in its decision-making, andthe worker’s employer.”Member’s explanatory statement
This amendment expands the definition of an appropriate representative to include employee representative bodies or staff associations that are formally established, represent the workforce or defined groups of workers, and operate independently in decision-making. It ensures that workers can be represented by legitimate and independent collective structures beyond traditional trade unions.

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to my Amendments 42, 43 and 44, which address a crucial gap in the Employment Rights Bill as currently drafted. The Bill, in its present form, assumes that collective agreements and the important rights that attach to them can be made only through trade unions. The assumption is problematic, as it fails to reflect the diverse and evolving landscape of employee representation in the United Kingdom.

Across a wide range of sectors, there are effective forms of employee representation that operate independently of trade unions. For example, many large employers across the UK have implemented formal employee forums, staff councils and other representative bodies that play a critical role in negotiating terms, improving working conditions and ensuring that workers have a voice. These bodies operate with transparency and independence; they often work closely with management but are not subject to the control of the employer. In sectors such as retail, hospitality and technology, companies have established these independent bodies to provide workers with a platform to express concerns, suggest improvements and engage with senior leadership on workplace issues. These bodies, although not unions, are trusted and valued by workers as genuine vehicles for consultation and negotiation.

Likewise, in industries such as financial services, employee representation often takes place through staff associations and other internal bodies that focus on consultation, transparency and communication between employers and employees. These bodies are instrumental in maintaining a constructive dialogue between workers and management, and they often handle issues such as pay, conditions and workplace policies without the need for union recognition.

The current draft of the Bill fails to accommodate these vital forms of representation. It risks excluding workers who are represented by such independent bodies from accessing the protections associated with collective agreements, including important provisions on guaranteed hours. This approach undermines existing employee engagement practices that have proven to be effective in fostering good relations between workers and employers. The Government have spoken repeatedly about the need to modernise our economy and bring employment rights into the 21st century. A key part of that modernisation must be acknowledging that trade unions are not the only legitimate means through which workers can be represented. Properly constituted employee forums and staff bodies can and do play a vital role in today’s diverse and evolving workplaces. By recognising this, the Government have an opportunity to align this legislation with the modern realities of work and deliver on their commitment to updating our employment framework.

Moreover, the Bill raises serious concerns about freedom of association. The principle of freedom of association is about not just the right to join a union but the right not to be compelled into union membership as a condition for accessing fair treatment at work.

If we want to strengthen the relationship between employers and employees, we must ensure that the Bill is inclusive of all legitimate and independent forms of worker representation. These amendments are designed to achieve that. They would extend the recognition of collective agreements to properly constituted employee representative bodies, such as staff forums or associations that operate independently from the employer in their decision-making. They would ensure that these bodies meet clear governance standards, including transparency, accountability and independence.

The Government’s aim is to promote better workplace relations, and these amendments support that aim. They would recognise the wide range of ways in which workers and employers engage with each other constructively. By recognising diverse forms of representation, we can build trust, enhance co-operation and create workplaces where both workers and employers can thrive. I urge the Government to support these amendments, which would reflect the realities of modern employee representation and strengthen the protections available to all workers, regardless of whether they belong to a traditional trade union. I beg to move.

[Lord Davies of Brixton (Lab)]

I totally oppose these amendments. This is the first time I have spoken in the progress of this Bill. I have amendments coming up later. I think the noble Lord’s amendments illustrate the complete difference in mental framework between those who support and work with the trade union movement and those who do not. I should be clear that, although I do not have any formal interest to declare, I have spent most of my working life working in or for the trade union movement. The trade union movement and what it has achieved is based on 150 years of struggle.

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[Baroness Jones of Whitchurch (Lab)]

Phew—I do not know whether I want to join in this philosophical debate because, clearly, we have heard strong views on both sides, and they have strayed way beyond the amendments we are trying to moderate today. But I would say that the Bill overall seeks to find the right balance between workers, unions and businesses, recognising that each has an important role to play. Our aim in the Bill is to modernise those arrangements for the 21st century so that we are not playing “Yah-boo, you did that back in 1953” but are actually looking to the future. We hope that is what the Bill will deliver.

These amendments aim to broaden the provisions in the Bill to allow employee representative bodies or staff associations to collectively agree to modify or opt out of the zero-hours measures. The Bill already allows these collective agreements to be made, but only by trade unions. As we are allowing for modification of statutory employment rights, it is vital that the appropriate safeguards are in place. This includes that only trade unions that have a certificate of independence, and are therefore free from employer control, can agree with employers to modify or opt out of rights, and that rights are guaranteed in exchange and incorporated into a worker’s contract.

I make it clear that staff associations and employee representative bodies, some of which we have heard described this afternoon, can do really good work, and we welcome engagement between employers and workers in all forms. However, we do not think it is appropriate for these associations and bodies to be able to modify statutory employment rights. This is not least because they may not have sufficient independence from the employers—a point well made by my noble friend Lady O’Grady—unlike independent trade unions, which do have that independence and which offer high levels of protection to workers. Furthermore, there is a well-established framework for trade unions, including recognition, independence and incorporation of terms, and the provisions build off these provisions.

I can see that the noble Lord’s amendments suggest a framework of requirements that staff associations and employee representative bodies would need to meet in order to modify or exclude zero-hours rights. These include requirements around independence, recognition, elections and record-keeping.

However, as my noble friends Lord Hendy and Lord Davies have said, the more you incorporate those requirements, the more you add to a staff association or employee representative body, the more similar it appears to be to an independent trade union. Given that the trade union framework is well established, historically and legally, it is not clear to me that it makes sense to establish a similar but different structure just for the purposes of the zero-hours measures. I am grateful to my noble friends Lord Davies, Lady O’Grady and others for reminding us of the hard-won rights that we have achieved through organisations within the trade union movement. Trade unions already serve to protect and advance the interests of workers.

I felt that the noble Lord, Lord Moynihan, presented a caricature of the unions. For every criticism he has, we could come back with all the advantages that trade unions have delivered for working people over the years in pay and conditions and in some of the fantastic campaigns—for example, around the environment, women’s rights, and so on. They have already contributed enormously to modernising workplace rights, so I do not feel that it would be appropriate or proportionate to try to recreate them. The trade unions already provide the constructive dialogue with employers to which the noble Lord, Lord Sharpe, refers, and membership of trade unions remains voluntary for employees.

I say, too, to the noble Lord, Lord Sharpe, that there is a technical issue around all this. If his amendment was accepted as drafted, it would not achieve the aims that he intends. Collective agreements have a specific definition in the Employment Rights Act 1996, which the zero-hours provisions are being inserted into. The definition, referring to the definition in the Trade Union and Labour Relations (Consolidation) Act 1992, provides that collective agreements are ones between independent and certified trade unions and employers’ or employees’ associations, so there would not be scope in the way that the noble Lord has worded his amendment for a wider definition of employee representatives.

We have had a debate which I have a feeling we are going to return to on some of the other trade union issues, but, for the time being, with this set of amendments in mind, I hope that the noble Lord, Lord Sharpe, will consider withdrawing his amendment.

[Lord Sharpe of Epsom (Con)]

That was a short but most interesting debate, and I am grateful to all noble Lords who participated. I am particularly grateful to the noble Lord, Lord Davies of Brixton, and the noble Baroness, Lady O’Grady, for their comments. No one on this side is denying that trade unions often have a proud history. As my noble friend Lord Deben pointed out, they have a very strong history in securing workers’ rights which has been constructive for our country over many years—no one is denying that. However, as the noble Baroness, Lady Fox, pointed out, not all modern trade unions support that history. I am sure that noble Lords would accept that.

The fact is that the world has evolved, and these amendments simply respect that evolution. My noble friend Lord Moynihan points out that only 22% of workers are currently unionised. The latest figure that I can find for the private sector is 12.3%. The other 88% have not been prevented from joining a trade union; they have exercised a choice not to, a democratic choice, so trying to argue that this proposal is somehow undemocratic makes no sense in the context of the rest of the Bill. Why, for example, does the Bill later on scrap the 40% turnout requirement for statutory recognition? That seems profoundly undemocratic.

Having said all that, I am obviously very grateful to the Minister for her response, and I accept that there are probably technical issues with my amendment. With that helpful hint, I shall improve them for the next time that we debate these measures. However, on the first day in Committee, we heard the Government argue that, in relation to guaranteed hours:

“Unions can make these deals based on their knowledge of the industry and with a holistic view on what is best for their workers”.—[Official Report, 29/4/25; col. 1203.]


If the Government are willing to accept that logic for trade unions, surely the same reasoning must be extended to independent staff bodies and employment forums, many of which are embedded deeply within the day-to-day life of a company and have even greater practical knowledge of their specific industries and workplaces. In some cases, those bodies are closer to the operational realities of individual businesses than remote union structures, and they are more trusted by the employees themselves.

The debate should ultimately be about respecting individual workers and their choices. The Government’s stance suggests a lack of trust in individual workers and the belief that, unless a worker is represented through a traditional trade union, their voice is somehow less valid or less informed. Fundamentally, it appears that the Government do not believe in the individual and do not trust workers to know what works best in their own context; instead, they insist on a one-size-fits-all approach, even when that model may be entirely foreign to a smaller business or industries where union involvement has never been the norm.

What about the many employees who are content with their current representation? Will they now be told that their structures are not good enough and that they have to change, bring in new frameworks, hire experts and prepare for union-led negotiations, whether they want them or not? Will industries that have long enjoyed stable relations be pushed into more adversarial models, creating the very tensions that this Bill should be seeking to avoid? Can the Minister perhaps enlighten us as to how smaller businesses and those that have never operated within a unionised environment will adapt to rigid models such as this, which assume that union involvement is the only valid route to collective agreement?

These amendments do not challenge the value of trade unions—very far from it. They simply recognise that unions are not the only route to fair and effective representation. If the Government are truly serious about modernising employment rights, we must begin by acknowledging the diversity of how workers organise today. For now, I am of course content to withdraw the amendment.

Amendment 42 withdrawn.

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[Lord Sharpe of Epsom (Con)]

My Lords, I join the general praise and congratulations for my noble friend Lady Penn for her Amendment 64. There is not much more for me to say, other than that I echo the comments of the noble Lord, Lord Fox. I hope the Government are listening and will address the issue raised by my noble friend as we get to the next stage. If they do not, I would be more than happy to support my noble friend in her future endeavours.

Amendment 66 in the name of the noble Lord, Lord Watson, was expertly spoken to by the noble Baroness, Lady O’Grady. I was going to echo very much the same points about the employment tribunals. An awful lot will be expected of them but, as we know, the simple fact is that the backlog is increasing, there is a shortage of funds and the waiting times are increasing—they are up to two years. It does not seem very plausible to expect that employment tribunals will be able to cope with the amount of work that is coming their way—I am afraid that will probably include work with regard to that amendment. I look forward to hearing the noble Baroness’s comments.

[Lord Katz (Lab)]

I am afraid the noble Lord will not; he will hear from me. I thank my noble friend Lord Watson of Invergowrie in absentia for tabling Amendment 66 and my noble friend Lady O’Grady of Upper Holloway for so ably speaking to it. I also thank the noble Baroness, Lady Penn, for tabling Amendment 64. This has been a broadly helpful debate, if somewhat spicier than expected, on flexible working.

This group and the next deal with flexible working. I agree with many of the comments that noble Lords across the Committee made in highlighting how important flexible working is in helping people to balance work with responsibilities in their personal lives, particularly caring responsibilities. As the noble Lord, Lord Ashcombe, pointed out, flexibility can lead to happier, healthier and more productive employees. He is absolutely right on this point. It is good for employees, good for businesses and, in turn, good for the economy.

As the noble Baroness, Lady Penn, outlined in some detail, along with the noble Baroness, Lady O’Grady, a primary benefit of flexible working for families is that being able to work part-time, or having flexible start and finish times, can make it easier for parents to balance work and childcare needs. Similarly, for those caring for a vulnerable adult or a child with a disability, flexible working can help people to manage their caring responsibilities while remaining in work.

I echo some of the comments of the noble Lord, Lord Fox, about how we regard flexible working. To be clear, flexible working is not solely about working from home—something on which, post pandemic, we have become somewhat focused. Indeed, the ACAS guidance sets out eight examples of flexible working, and working from home is only one of those eight. It talks about compressed hours, staggered hours, remote working, job sharing and part-time hours as well as working from home.

According to the 2023 flexible jobs index, although nine in 10 want to work flexibly, only six in 10 employees are currently working flexibly and only three in 10 jobs are advertised with flexible working. Equally, the Government recognise that business needs vary and that not all flexible working arrangements are possible in all circumstances. That is why the Government are increasing access to flexible working by making it the default, except where not reasonably feasible. I concur with the comments of the noble Lord, Lord Fox: this is not a soft policy but an important economic and human management tool, and we should regard it as such.

Amendment 66 in the name of my noble friend Lord Watson would require the Secretary of State to review and publish a statement on the adequacy of the maximum compensation that an employment tribunal may award to an employee with a successful claim related to flexible working. The maximum compensation award is currently set at eight weeks’ pay for an employee bringing a claim to a tribunal.

Section 80I of the Employment Rights Act 1996 already means that the Government may review the maximum number of weeks’ pay that can be awarded to an employee. If they consider it appropriate to do so, they can then use this power to change the specified number of weeks’ pay by which the maximum amount of an award of compensation is set. It is therefore not necessary to include anything further in the Bill. It is worth pointing out to noble Lords that the maximum has risen every year since its introduction, from £250 in 2002 to £719 now—so this is not something that is caught in aspic. Therefore, we would argue that a statutory review on the maximum compensation award within six months of Royal Assent could create uncertainty across the board and detract from some of the other important reforms that employees, employers, trade unions and the wider economic and business community will need to prepare for.

Before leaving this, it might be helpful to speak to the wider points from the noble Lord, Lord Fox, on tribunals. I cannot speak in any great detail on this issue, but I understand that the Ministry of Justice is undertaking a review of the employment tribunal system. I would hazard that it has not been sufficiently invested in in recent years, and the slowness of that system is certainly something that we should seek to address.

Before leaving Amendment 66, it is worth pointing out that there is a risk in creating uncertainty for both businesses and workers alike by creating the possibility of differing awards for different types of claims. As things stand, a number of types of claims—for example, relating to redundancy and unfair dismissal—face the same maximum award as those relating to flexible working. It might be undesirable to create confusion and undue complexity through in effect having a two-tier system.

I turn to the amendment proposed by the noble Baroness, Lady Penn, Amendment 64, which would extend the right to request flexible working to candidates with a job offer. In practice, the Government believe that this is already the case. The right to request flexible working, which is being strengthened in this Bill, is already a day one right. This means that employees can request flexible working from their first day in a role. We know that, in practice, many employers and employees will begin discussions about working arrangements before the candidate starts work.

As the noble Baroness said, before joining an organisation, informal and constructive discussions can offer a more effective way in which to identify working arrangements that work for employees and employers than a one-off formalised request and response might otherwise achieve. Mandating through legislation a right to request flexible working prior to appointment would not account for the fact that not all job offers come to fruition, for a number of reasons. However, candidates with a job offer have some limited rights. Discrimination and contractual rights are among those. The hypothetical example that the noble Baroness cited in her contribution would indeed be taken care of; discrimination based on protected characteristics is currently outlawed during the recruitment process. However, we would contend that it is not a status that we would want to overformalise at this point.

Additionally, under this proposal, employers would still have up to two months to consider and respond to a request. If the intention of this amendment is to significantly bring forward in time people’s ability to have a flexible working request accepted, it would not succeed in this respect. While the Government encourage employers to start conversations about flexible working with new starters at an early stage, it would not be appropriate to extend the legal framework for flexible working to all candidates under offer.

Lastly, to respond to the point made by the noble Lord, Lord Jackson, on sex discrimination, I contend that this form of discrimination would actually carry a higher risk of penalty and payout than unreasonable refusal of flexible working, so it is probably a little out of place in the debate on this amendment.

To close, I therefore seek that noble Lords do not press their amendments in this group.

--- Later in debate ---

Moved by

[Lord Sharpe of Epsom]

65: Clause 9, page 36, line 9, at end insert—
“(1AZA) But where the employer is— (a) the Security Service,(b) the Secret Intelligence Service, or(c) the Government Communication Headquarters,subsection (2)(b) does not apply, and the notification under subsection (1)(aa) need not explain why the employer considers that it is reasonable to refuse the application on the ground or those grounds.”Member’s explanatory statement
This amendment would exclude the security services from the Bill’s provisions on flexible working.

[Lord Sharpe of Epsom (Con)]

My Lords, in moving Amendment 65 I shall speak also to Amendments 65A and 67. Amendment 65 is necessary because it lies at the very heart of the nature of the work that is performed by these agencies. The Security Service, the Secret Intelligence Service and the Government Communications Headquarters, collectively known as the intelligence agencies, are at the heart of the United Kingdom’s national security apparatus. Their roles involve highly sensitive operations, often conducted in real time and under exceptionally stringent conditions. They work to protect the nation from terrorism, espionage and cyberattacks, among other threats. The national security landscape is dynamic and fast-moving, and it requires the utmost flexibility, discretion and responsiveness from their employees.

In this context, the introduction of provisions for flexible working could unintentionally create significant risks to national security. The need for immediate action, tight schedules and often secretive operations simply cannot be fully compatible with the predictability that flexible working arrangements might demand. We think it is essential that we avoid the unintended consequences of applying the Bill’s flexible working provisions to the intelligence services. Arguably, this list of services could be expanded, of course, to other operations that have implications for national security. As I said, these services operate in highly confidential environments and their work often involves time-sensitive operations that demand secrecy and agility.

This is obviously a probing amendment: I want to ask the Minister what conversations the Government have had with the Security Service, the Secret Intelligence Service and the Government Communications Headquarters regarding the potential impact of the flexible working provisions on their operations.

On Amendment 67, again I join in the broad support for flexible working that we have just heard in the last group, but this amendment presents an important opportunity to better understand the implications of introducing such a right. We think we ought to approach it with a slightly critical eye: specifically, we need to consider the Regulatory Policy Committee’s feedback on the clause, which has raised several concerns that cannot be overlooked. The RPC rating for this clause was red across all three core areas of rationale for intervention, identification of options, and justification of preferred way forward.

The RPC has stated that there is a lack of sufficient evidence presented to justify the need for this intervention. In particular, it highlighted that there is little evidence to suggest that employers are rejecting flexible working requests unreasonably. This is a key point that must be addressed. The committee’s wider concerns suggest that, without strong evidence of a widespread issue with employers rejecting requests, the Government are introducing a policy that is based on assumptions rather than concrete data. What problem are the Government trying to solve by introducing the right to request flexible working if the case is as the committee has described? Do they in effect believe that the RPC’s assessment is incorrect? What data or evidence do they have to demonstrate that employers are systematically denying such requests in a way that harms workers?

One of the most important questions that this clause raises is whether the intervention is justified. The RPC has pointed out that the rationale for introducing the right to request flexible working has not been sufficiently established, so the purpose of tabling this amendment is to find out what the Government have done in this area and to suggest that the overall environment around this debate would be enhanced by a broader understanding of the situation under consideration.

Amendment 65A seeks to provide clarity and fairness regarding the refusal of flexible working applications in roles where such flexibility would fundamentally alter the nature of the job or undermine critical operational needs. Clause 9, as drafted, is obviously well intentioned but is ultimately a blunt instrument. New subsection (1ZA) sets out a list of what are deemed reasonable grounds to refuse a flexible working request, but they are largely subjective and difficult to quantify in practice. For example, how can an editor reasonably be expected to prove that a journalist’s writing has deteriorated because they are working from home? How does one assess the decline in creative spontaneity that often arises when collaboration in the newsroom is replaced by isolated remote working? This ambiguity could create a climate of uncertainty for employers. Rather than making legally risky judgments, many may simply acquiesce to requests even where remote work may compromise essential aspects of the role. I go back to the example of journalism: this could disrupt the delicate balance of the newsroom and undermine quality, editorial cohesion and the development of junior reporters through in-person mentoring, and so on.

This is precisely why we think that sector-specific exemptions are needed. A one-size-fits-all approach, as is implied in the current drafting, is simply not adequate. This amendment provides a clearer and more realistic framework, recognising that in certain sectors and occupations physical presence is not optional but essential. To expect employers in some of these sectors to navigate the current subjective standards is both unfair and, we think, unworkable. This amendment seeks to offer a constructive alternative by allowing a reasonable refusal where the core nature of the role would be compromised, and by specifying sectors where that risk is most acute.

As I have said, we support flexible working in principle, but flexibility must be implemented with common sense and a clear-eyed understanding of operational realities. We do not believe that the current drafting provides that assurance. We urge the Government to take serious note of these amendments, because we may have to return to them on Report. I beg to move.

--- Later in debate ---

I hope that the noble Lord, Lord Sharpe, is reassured and feels able to withdraw his amendment.

[Lord Sharpe of Epsom (Con)]

I thank all noble Lords who participated in this very interesting debate and I thank the Minister for his detailed answer. I accept and am somewhat reassured by his answer on Amendment 65; it is good to know that the security services employers have been properly consulted and are content with this legislation. That is to be welcomed, and I thank the noble Lord for it.

I was most interested in the comments from the noble Baroness, Lady Bousted. I believe she said—I apologise if I am misquoting—that employers have a poor understanding of what flexible working involves in education. I am sure they do, and that a lot of parents and people who are involved in education do. It rather makes the case for why Amendment 67 is necessary. The RPC’s opinion may not have related to the policy, but it still remains red: the fact is that the impact assessment was not good enough.

My noble friend Lady Neville-Rolfe raised a very good point about what flexible working is. We agree that flexibility is to be encouraged, but I noticed that the noble Lord has now relied twice on the eight types of flexible working identified by ACAS. I suspect that that is not widely understood in the public domain. The proposed impact assessment would go a long way to make it much clearer what people could and should be asking for, what employers should be thinking about, the likely economic impacts and the more societal impacts from the right to request flexible working.

This would help the noble Baroness, Lady Bousted, as well, because people would have a much broader understanding of what it means in teaching. Obviously, 100% of teachers cannot work from home—that goes without saying—so what does this actually mean in practice? I do not think that anybody has much clarity about that, including, by the sounds of it, employees and many teachers themselves.

[Baroness Bousted (Lab)]

I am chairing a commission that will be very clear about what it means and how it can be employed in schools. I hope that will enlighten lots of people.

[Lord Sharpe of Epsom (Con)]

I look forward to being enlightened.

The noble Lord, Lord Fox, again made some very good points about the need to describe the job; I accept that that was an imperfect way of tabling that amendment. However, I leap into the defence of my noble friend Lord Murray of Blidworth from his attacks by the Fox. As I heard it, my noble friend was not saying that employment tribunals are no good; he was saying that there is a backlog, that they are probably underresourced and underfunded and that, because of their structural nature, they do not necessarily resolve things. An increasing reliance on them to resolve things will not necessarily have the desired effect. That is an incredibly important point that we should return to in the discussion that the Minister offered the Committee because, as I said in my last summary, we are placing an increasing reliance on employment tribunals to resolve an awful lot of the unanswered questions that are being discussed as a result of the Bill. For things not to be resolved even after they have got to an employment tribunal, after a long delay, seems a little short-sighted.

For now, as I say, I am somewhat reassured on Amendment 65, and I am grateful to the Minister for his answers. We should return to the idea of Amendment 67 and a much broader impact assessment, but for now I am content to withdraw Amendment 65.

Amendment 65 withdrawn.

Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

Moved by

[Lord Sharpe of Epsom]

71A: Clause 11, page 37, leave out lines 21 to 24 and insert—
“(1) Statutory sick pay is payable by an employer to an employee—(a) at a rate of 60% of the employee’s normal weekly earnings for the first three qualifying days of any period of incapacity for work,(b) at a rate of 80% of the employee’s normal weekly earnings for subsequent qualifying days,subject to a maximum of £116.75 per week.(2) Subsection (1) applies regardless of whether the employee earns above or below any lower earnings limits that were previously set.”Member’s explanatory statement
This amendment adjusts the rates of Statutory Sick Pay (SSP), providing 60% of normal weekly earnings for the first three qualifying days and 80% for subsequent qualifying days.

[Lord Sharpe of Epsom (Con)]

My Lords, I shall speak also to Amendments 71B and 75 standing in my name.

According to the latest figures from the Office for National Statistics this morning, the number of payrolled employees fell by 33,000 in April, or 106,000 on the year, and the number of job vacancies also fell. Wage growth has slowed. This evidence suggests that the OBR was right and the provisions in the Bill are already creating a net negative impact. The Chartered Institute of Personnel and Development’s latest survey was widely cited at the weekend. It confirms that employers’ confidence is at the lowest level since the pandemic and that a quarter of employers are planning to make redundancies in the next quarter. The CIPD’s economist, Mr James Cockett, was quoted as saying:

“The Employment Rights Bill is landing in a fundamentally different landscape to the one expected when it formed part of the Labour manifesto in summer of last year”.


This picture was confirmed in KPMG’s and the Recruitment and Employment Confederation’s reports. Recruitment activity across the UK continued to weaken at the start of the second quarter. The chief executive of the REC, Neil Carberry, has said that

“it is time for real changes to address employers’ fears and boost hiring. A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone”.

Last week the noble Lord, Lord Fox, called for the Bill to go on vacation because we need to get it right. This raft of new statistics proves his prescience, and perhaps the vacation ought to be permanent. Instead, we are now being asked to consider further obligations on employers through changes to statutory sick pay. A number of businesses across sectors have made it very clear that, while they support the principle of statutory sick pay, they are concerned about the rate and structure being proposed. Many have called for the rate of statutory sick pay to be set at 60% rather than 80%, as a more sustainable and proportional figure. The Government claim to have consulted widely with businesses, trade unions and various stakeholder groups to try to strike a fair balance, but, based on the data and the concerns raised, we believe that the right answer, particularly for the initial days of absence, is 60%.

Let us look at some of the other evidence. In the British Chambers of Commerce 2024 workforce survey, a full 50% of respondents stated that they would be negatively impacted by the proposal for statutory sick pay entitlement from day one. That is a clear warning sign that the proposed structure may have unintended consequences. Further, in a survey by the London Chamber of Commerce, 38% of firms predicted that they would need to freeze hiring as a direct result of the statutory sick pay changes; 30% expected a reduction in profits; and 33% anticipated lower wage increases for their existing staff.

--- Later in debate ---

I assure my noble friend that of course the Government remain committed to monitoring the impact of the changes we are making to strengthen statutory sick pay, how the SSP is used by employers and how it supports employees, including lower-paid employees. This issue will be kept under review, and in the meantime I hope the amendment can be withdrawn.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Minister very much indeed for her response, and, indeed, all noble Lords for their contributions to what has been a thoughtful and valuable debate. My particular thanks go to my noble friends Lady Noakes, Lady Coffey and Lady Lawlor, as well as to my noble friend Lady Cash, for bringing to the debate her unique expertise in the area of behavioural science.

It is it is crucial that the Government fully recognise that many provisions in this Bill are interlinked, as we have heard from all sides of the Committee. Changes in one area can have unintended ripple effects in others. As I have said, we support statutory sick pay, but we must also acknowledge that these proposed changes will result in higher costs for employers. My amendments were an attempt—in the words of the noble Lord, Lord Fox—to ameliorate some of those costs and find some sensible compromises. I am disappointed that the Government have chosen to reject them. Without clarity, businesses cannot plan, cannot invest and cannot hire with confidence. As I pointed out in my opening remarks, the facts are plain: jobs are being lost now.

Regarding an SME rebate scheme—as highlighted by my noble friend Lady Coffey in her Amendment 73 and spoken to by my noble friends Lady Noakes and Lady Lawlor, as well as by the noble Lord, Lord Fox, in his Amendment 74—the Government have stated that final decisions will follow consultation with business through secondary legislation. The impact assessment notes plans for “extensive engagement” with small and medium-sized businesses to

“test where mitigations can be made”.

However, SMEs have spoken: they have asked for a rebate scheme as used during the pandemic. It is therefore disappointing the Government have not accepted the amendments to provide that support.

I would suggest that the Minister takes up the offer of the noble Lord, Lord Fox, to talk more on this subject —a conversation that we would like to be party to. I am pretty sure that we will be returning to it on Report. If I may paraphrase the noble Baroness, Lady O’Grady, it should not be beyond the wit of man to design a simple scheme that works. For now, however, I beg leave to withdraw my amendment.

Amendment 71A withdrawn.

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[Lord Katz (Lab)]

My Lords, if I felt we were able to finish the group in the next five minutes, that would be fine. We have had a good debate, but this is an important topic, and it is important that the Committee is able to finish the group by hearing from any other Back-Benchers who might wish to contribute, as well as from the Front-Benchers and the Minister. All of the Committee might not be aware of it, but we have agreed through the usual channels that we will have the dinner break early to accommodate the repeat of the Statement. We are ultimately in the whole Committee’s hands. That is why we are breaking now. I know it is not usual to break midway through a group, but, as I say, it has been agreed through the usual channels that a dinner break at 6.30 pm would take priority. Perhaps we can resolve this.

[Lord Sharpe of Epsom (Con)]

I have had confirmation from my side that the usual channels have agreed.

[Baroness Jones of Moulsecoomb (GP)]

I am grateful to the noble Lord, Lord Katz, for his explanation.

Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, I will speak very, very briefly. It is heartening to hear support for the amendments in this group right across the House. I will speak in particular to those from the noble Baronesses, Lady Lister and Lady Penn. I have already shared with the noble Baroness, Lady Penn, that, when I was at the TUC, I very, very vividly remember having conversations with young men who were working as riders and delivery drivers, and they really, really wanted to be good dads. They had young babies and children, and what was most important to them—and I hope others will reflect this in paying attention to how we make working families’ lives better—was predictability of shifts and guaranteed hours, so they would know how much money they could earn, but they also wanted paid paternity leave.

To keep this really, really brief, I have a couple of questions for my noble friend the Minister before she responds. First, can we accept that the starting point for a review would be to recognise that, compared with other countries, the UK is so ungenerous in its paid paternity leave? We do not need a huge review to know that; it is our starting point. If we are to move into the 21st century, we also need to recognise that new dads from all sorts of backgrounds want time to bond with their babies and be involved more equally in their care. Secondly, will this review focus specifically on paid paternity leave, working from the simple premise that, unless it is paid, there are whole swathes of new dads who simply cannot afford to take it?

I have been encouraged by the discussion around the House. I think there is a cross-party consensus that we all want to see new dads having that opportunity. We all know it will bring benefits for women—including closing the gender pay gap—and opportunities for children to have a better life, too.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lady Penn for her very thoughtful amendments in this group. I acknowledge the valuable contributions from all noble Lords, in particular the noble Baroness, Lady Lister, for introducing her amendments, and the noble Lord, Lord Palmer of Childs Hill, for introducing his amendments and, perhaps more importantly, reminding the House of the Conservative-led coalition Government’s work in this area—although I note that he did not heap praise on the then Secretary of State for Work and Pensions, my right honourable friend Iain Duncan Smith.

We fully recognise and support the intention behind these proposals, which is to strengthen support for families and in particular to enhance the role of paternity leave in allowing fathers to spend essential early time with their children. This is a laudable aim that clearly finds broad sympathy across the House.

However, while the objective is clear and commendable, we must also consider the practical implications of how such policies are implemented, particularly in relation to the impact on businesses. Many employers, large and small, continue to face significant challenges in the current economic climate, as we have discussed at length this evening. The introduction of new requirements, even when limited to large employers, must be approached with caution and care, and I acknowledge that my noble friend Lady Penn addressed many of those concerns directly in her speech.

As for the reporting obligations set out in Amendment 128, tabled by my noble friend, these would apply to businesses with 250 employees or more. While this threshold helps to focus the requirement on larger organisations, we should still be mindful of the potential administrative and financial burdens such reporting could entail. Even within that category, resources vary significantly, and not all may be equally equipped to take on new reporting functions—a point that was addressed by my noble friends Lord Bailey and Lord Ashcombe. That said, transparency and data collection can play a valuable role in shaping effective policy. If it can be clearly demonstrated that these measures would bring mutual benefits, improving employee well-being and retention, for example, without imposing disproportionate costs or complexity on employers, it is certainly something that we should be prepared to consider further.

Ultimately, we have to strike the right balance, ensuring meaningful support for families while safeguarding the viability and flexibility of the businesses that employ them. That is the lens through which we should view not just this amendment but the broader provisions of the Bill.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this has been a wide-ranging, informative and very exciting debate. I thank all noble Lords who have contributed. I take this opportunity to congratulate the noble Lord, Lord Harlech, on his four month-old son. I begin by recognising the key role that parental leave plays in supporting families—I wish it had been available when I became a father, at a much older age, some 18 years ago. I thank the noble Lord, Lord Gascoigne, for sharing his story about the difficult time he had during the birth of his children.

This Government understand that the arrival of a child, whether through birth or adoption, is the most transformative time in a family’s life. We understand that the current parental leave system needs changing so that it better supports working families. We have committed to do this and we are taking action in a number of different ways. Through this Bill, the Government are making paternity leave and parental leave day-one rights, meaning that employees will be eligible to give notice of the intent to take leave from the first day of employment. I hope that many noble Lords will welcome this position. This brings such leave in line with maternity and adoption leave, so simplifying the system.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, we could hardly have expected two more expert speakers to propose this amendment. This is another case where society is getting something on the cheap and, even though it is a different argument from the one about unpaid carers, it is another way where, in fact, we are not recognising the value that society is getting from these people who work as special police officers.

I really want to hear what the Government say on this and I hope it is not the sort of answer that my friend, the noble Lord, Lord Paddick, suggested it might be but is something rather more constructive that can come forward the next time this Bill comes up.

[Lord Sharpe of Epsom (Con)]

My Lords, I would very much like to thank the noble Lord, Lord Hogan-Howe, for his important amendment in this group and for the valuable context he gave in his opening remarks, and the noble Lord, Lord Paddick, for speaking so eloquently to it as well.

They are both right. Special constables play a vital role in our communities and, as they pointed out, they serve alongside other police officers, offering their time and their skills to protect the public and contribute to the safety and well-being of society at large. As the noble Lord, Lord Fox, has just pointed out, society benefits from their work.

It is often overlooked, though. For many, being a special constable is something they do alongside other regular employment. These individuals are already balancing their professional lives with the demands of policing and, as has been pointed out, that can be both challenging and rewarding.

I could bore on for hours about how valuable special constables were when I was policing in Hong Kong—but I will not. I welcome this amendment and believe it represents a small but significant way to better support those who give their time to serve our communities by ensuring that special constables can fulfil their duties without facing conflicts with their employment obligations. We would be sending a strong message of support for public service generally, as well, of course, as for special constables. So we are very minded to support this amendment.

[Lord Katz (Lab)]

My Lords, this has been an interesting debate—some might say “esoteric”, but not me— and indeed, thankfully, a slightly shorter one. I thank the noble Lord, Lord Hogan-Howe, for tabling Amendment 82, co-signed by the noble Lords, Lord Paddick and Lord Evans of Rainow. I am also grateful to the noble Lords, Lord Hogan-Howe and Lord Paddick, for meeting me, the Minister and the noble Lord, Lord Leong, earlier today to discuss this amendment. It was really helpful to have the opportunity to, as we heard from both noble Lords this evening, hear the background context to the work of special constables, how they are regarded within the force and how they are integrated within the forces in which they serve.

Amendment 82 would give employees who are special constables a statutory right to time off from work to carry out their voluntary police duties. This Government recognise, as I think we all do across the House, and really value the important role that special constables play in our communities, and we are committed to ensuring that they are supported to navigate those responsibilities that they carry out as special constables alongside their working life.

Special constables, along with the full range of police volunteers, bring valuable and diverse skills, which complement the roles that full-time officers and staff play in delivering the best possible service to the public in protecting our streets and making sure that our communities are safe.