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.

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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.