Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

Moved by

[Lord Sharpe of Epsom]

313: After Clause 150, insert the following new Clause—
“Social mobility impact reportingWithin 12 months of the day on which this Act is passed, the Secretary of State must publish an independent assessment of its impact on social mobility.”

[Lord Sharpe of Epsom (Con)]

My Lords, in some ways, we are continuing a theme with Amendment 313 in my name. The Government have talked about supporting those on the fringes of the labour market; this is a goal that I hope we all share. We know that different individuals face different work challenges, whether due to educational background, employment history, health circumstances or socioeconomic factors. The question before us is whether this legislation achieves that laudable objective or whether it inadvertently makes it harder for precisely those individuals whom the Government claim they want to help.

I start with the day-one right concerning unfair dismissal, and I pose a fundamental question: why would any employer take on what might be considered a high-risk hire? Why would they take a chance on a young person seeking their first opportunity? Why would they hire a student who did not attend a top-tier university? Why would they consider a person from a lower socioeconomic background, who may lack conventional credentials but definitely possesses untapped potential? When employers face immediate legal liability for dismissal decisions, they naturally become more risk averse in their hiring practices. They gravitate towards candidates with proven track records, established credentials and minimal perceived risk. This is not callousness; it is rational economic behaviour in response to the regulatory environment.

The Government’s refusal to include a meaningful probationary period at this stage compounds the problem significantly. I have little doubt that, fairly soon, the Government will be arguing that they intend to consult and to continue with a light-touch probationary regime, which, it is suggested, could last for up to nine months. That is all well and good, but what does it mean in practice? What does the phrase “light-touch” mean and how will it be defined? Who are they going to be consulting, and on what? What are the Government thinking about this? It needs to be in primary legislation. Make no mistake: this uncertainty is affecting business decision-making now.

It looks as if the Government fundamentally fail to understand that employment relationships involve mutual discovery. In the short term, virtually all jobs represent a cost to business. Employers hire workers not because they are immediately profitable but because they are confident that, over time, these workers will develop skills, reach their peak performance and productivity, and ultimately become a net benefit to the company or employing organisation. This process of development and mutual learning requires flexibility. It requires the ability for both parties to recognise when a match is not working and to part ways without excessive legal complexity. By removing this flexibility from day one, the legislation creates a powerful incentive to hire only the safest and the most predictable candidates—precisely the opposite of supporting those on the fringe of the labour market.

The same perverse logic applies to the day-one right to sick pay. Consider the position of someone who has been absent from the workforce for an extended period. There are businesses that will make a point of hiring such individuals, recognising their potential and being willing to provide them with opportunities. But now the cost calculation has fundamentally changed. An employer considering such a hire must now factor in the immediate liability for sick pay from day one, combined with an inability to part ways if the employment relationship proves unsuccessful. The rational response is fairly obvious: avoid the risk entirely.

This is not theoretical speculation; it is how labour markets function when faced with regulatory constraints. No amount of academic opinion can state otherwise. I urge the Government to review the impact on social mobility, so that they can adapt the legislation to avoid the unintended consequences I have highlighted. Like my noble friend Lord Deben on the last group, I would like to be proved wrong on this. If I am, I invite the Government to gloat to their hearts’ content about that, but I think we need the evidence. I beg to move.

[Lord Jackson of Peterborough (Con)]

My Lords, I support my noble friend’s excellent amendment, as we reach the end of Committee. Before I get into the substance of that, I will offer some praise. Noble Lords know that, last week, I took issue with the Government Front Bench about the potential lack of response to letters from individual noble Lords who had raised specific points during Committee. The noble Baroness, Lady Jones, who is no longer in her place, took some issue with that, resiled from my analysis and said that it was not the case. However, over the last few days, I have received a plethora of epistles from the Government in my email. As Private Eye may have said in the past, are those two occasions by any chance related? That was my praise; I thank the Government for coming forward with those letters and we will hold them to account when we reach Report. I am grateful for small mercies, nevertheless.

I commend to the Government the excellent report of the Social Mobility Commission, State of the Nation Report 2024: Local to National, Mapping Opportunities for All. I probably say this at every juncture, but my noble friend’s amendment is helpful, because there is a cross-party consensus that we should all be working to help young people in particular into work, innovative employment, and skills and training. As we all know, and as has been found by apolitical third parties such as the charity the Sutton Trust, which focuses on improving social mobility, there are disparities across the country. There are sectoral and geographic disparities, and disparities in people’s backgrounds, race, ethnicity, age et cetera. As far as is practicable, we should be designing legislation that tackles issues around improving life chances, training and skills, and innovation.

More fundamentally, we need to be designing legislation that tackles endemic, entrenched inequalities, and that is what this amendment is about. My noble friend Lord Sharpe of Epsom is absolutely right that this is about opportunity cost. Many employers, given the chance, will try to help young people by giving them a chance to improve their life chances and skills, and by paying for their exams and training, et cetera—via apprenticeships, for instance. But the legislative regime will be such that they are encouraged not to employ that person, because they may have a disability, may be late to the employment market or may not be socialised—they may not understand the protocols of going to work each day, of being on time and of being dressed smartly, which are very basic things that we take for granted. That risk aversity, employers not wanting to employ those people, will have a negative effect as the corollary of this Bill.

Ministers have a chance at least to engage with this amendment and, when we come to Report, I hope to accept it; it would make a real difference to the lives of people who find it tough to enter and stay in the employment market. I encourage Ministers to look at the report to which I referred, and at the work that has been done to support the Bill and its laudable objectives. My noble friend offers this amendment in good faith in order genuinely to improve the Bill. On that basis, I hope that the Minister will look on it favourably and incorporate its ideas into the finished Bill.

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[Lord Sharpe of Epsom (Con)]

I thank the Minister for his answer. I am also grateful to my noble friends Lord Jackson, Lady Lawlor and Lady Cash for their supportive comments and to the noble Baroness, Lady Fox, who raised some very interesting points.

I gently suggest to the noble Lord, Lord Leong, that we are not just talking about it either; we are proposing to do something about it. We want to protect social mobility, which is why we have tabled this amendment. He sounded disappointed that we have to keep returning to this debate—so are we, but we do not feel that we are getting meaningful answers on the subject of the consultation, which we have brought up on numerous occasions. Until we get those meaningful answers, we will continue to return to this debate.

The Government may not deem a comprehensive impact assessment necessary for these provisions, but they have not given a satisfactory response to the serious concerns raised about social mobility and opportunity creation. In our opinion, this represents a failure to engage with the economic realities of how the employment market functions, and the Minister knows this as well as I do.

We must judge policies by their results, not their intentions. Results are not dependent on the nobility of our intentions but on the incentives that policies create in the real world. This Bill creates the wrong kinds of incentives. It incentivises employers to become more risk-averse, not more inclusive. It incentivises the hiring of safe, conventional candidates over those who might bring fresh perspectives but lack traditional credentials. It incentivises the protection of those already in employment at the expense of those seeking to enter it. In the words of the noble Baroness, Lady Fox, it disincentivises taking a punt.

Do not just take my word for it, take those of the Institute of Chartered Accountants in England and Wales. Its most recent survey stated:

“Members say that, at a time when the government needs business to drive growth by taking risks, the Bill, along with these other pressures, will make businesses more risk averse. ‘We worry businesses will start playing it too safe, choosing a “safe pair of hands” over bold, innovative talent that could drive real change’”.


These are not the incentives of a modern, dynamic economy that seeks to maximise opportunity and social mobility. They are the incentives of a system that entrenches existing advantages and fundamentally will make it harder for those without them to break through. We think that is a tragedy. This legislation will be judged a failure because of the standards its proponents have set for it. When employment opportunities for young people decline, social mobility stagnates and those on the fringes of the labour market find doors closing rather than opening, we will see the true measure of these policies, and that will be regrettable. I beg leave to withdraw the amendment.

Amendment 313 withdrawn.

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[Lord Clement-Jones (LD)]

My Lords, I will see my noble friend Lord Fox tomorrow and I will tell him what he has been missing. I think the noble Lord, Lord Leong, is already making history by using the phrase “very, very soon”—or was it “very, very, very soon”? In my experience, I do not think I have heard that, so it is probably arriving tomorrow morning.

Amendment 318 seeks to introduce specific provisions for dependent contractors. It proposes the insertion of a new section into the Employment Rights Act 1996, by way of a new clause after Clause 150. It is intended to address a significant gap in our current employment law by recognising essential rights and extending them to a growing segment of our workforce. This is a serious and rather surprising omission from the Bill; certainly, it is a gap my party promised to fill in its manifesto last year. I feel an obligation to put this amendment forward today.

The Minister spoke about employment rights in a modern labour market. I do not believe we can secure proper employment rights in a modern labour market without addressing the issue of the dependent contractor. We know that the nature of work has changed and is changing. More and more individuals are engaged to perform work or services personally, relying primarily on a single employer or contractor for their income, yet they fall outside the traditional definitions of employee and fully autonomous independent contractor.

These dependent contractors are often subject to a degree of control over how, when and where they work, leaving them in a precarious position, without adequate employment protections. No doubt this Committee will be familiar with many of those who work in the gig economy—delivery workers, contracted drivers, piece-rate workers, home workers and even consultants who work almost exclusively for a single client. Granted, some Uber drivers and Hermes couriers went to court and managed to establish that they are in fact workers and not independent contractors, but more needs to be done. We need explicit statements about the status of such workers and explicit rights set out in this Bill.

The amendment seeks to rectify the situation by defining dependent contractor status clearly within the Employment Rights Act. Crucially, it proposes to extend several key employment rights to these individuals, treating some of the measures in the Bill as applicable to them. Specifically, this amendment would ensure that dependent contractors are entitled to the rights set out in proposed new subsection (2) of my amendment. This includes payment at or above the national minimum wage for all work performed; the right to payment for cancelled, moved and curtailed shifts, which mirrors the vital protections the Bill introduces for zero-hours workers; statutory sick pay from day one of sickness, aligning with the Bill’s improvements to SSP; day one rights to paternity and parental leave, and the new right to bereavement leave.

The amendment also includes a statutory right to disconnect from work-related communications outside of normal working hours, and protection from detriment for exercising this right, as the Bill establishes for other workers. It also includes protection from unlawful deductions from pay, and against discrimination. It further includes an entitlement to guaranteed hours if regular and predictable hours are worked for a defined period, moving beyond just the right to request and aligning with the new provisions for qualifying zero-hours workers.

It is also important to note that this amendment respects the distinct nature of dependent contractor relationships. It acknowledges that, unless specified otherwise in their contracts or by future regulations, dependent contractors would not automatically be entitled to statutory redundancy pay or general minimum notice periods for termination, so there would continue to be a distinction between employment and dependent contractor status.

Furthermore, the amendment would empower the Secretary of State to issue further regulations to define key terms and the specifics of these rights, ensuring flexibility and the ability to adapt to evolving working practices. It would also mandate the issue of guidance, including an online tool to aid in determining dependent contractor status in disputed cases. By accepting the amendment, we would have the opportunity to bring fairness and greater security to a significant and growing portion of our workforce. We could ensure that individuals who are deeply reliant on a single employer received fundamental employment rights reflecting the modern realities of the work. I very much hope that the Government will support this vital addition to the Bill. I beg to move.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Clement-Jones, for his amendment. As we consider this legislation, it is timely to reflect on how it would interact with one of the most significant shifts in our labour market in recent decades: the rise of the gig economy. This sector has delivered considerable benefits, including increased flexibility, new income opportunities and innovative business models. It has allowed many individuals to engage with work on terms that suit their circumstances, whether as a primary or supplementary source of income.

However, with any new form of work comes a degree of legal complexity. Our current employment framework was designed largely in a different era—one where work tended to take place in fixed locations, during fixed hours and under traditional contracts. The gig economy challenges many of those assumptions. For businesses, this complexity can lead to inconsistencies in regulation, administrative uncertainty and litigation risk; for individuals, it can mean uncertainty about rights and entitlements, and for policymakers, it raises the broader issues of whether and how the legal definitions of employment need to evolve to reflect modern working practices.

The Bill, while not focused exclusively on the gig economy, touches on matters such as workplace rights, regulation and the role of secondary legislation that will inevitably affect it. We should therefore consider whether the legislation provides sufficient clarity for businesses operating flexible models, whether it supports fair and predictable frameworks for all parties, and how future regulations will ensure that any changes to employment classifications or entitlements are based on clear, evidence-led analysis.

The question before us is not so much whether the gig economy is good or bad—it is part of the modern labour market, and it will obviously continue to grow and remain so. The more pressing question is whether the labour market is equipped to keep up with that evolution, and whether the Bill provides the right foundation for doing so. In that context, thoughtful and measured discussion about emerging work patterns such as dependent contracting, platform work, freelancing —which we discussed the other day—and other hybrid models are not only appropriate but very necessary. I look forward to further discussions with the noble Lord, Lord Clement-Jones, and others, on this subject.

Before I sit down, I thank the noble Lord, Lord Leong, for the great courtesy with which he has always conducted himself in his discussions and deliberations with our side. I enjoyed his valedictory remarks. I felt that he was perhaps slightly irked by the fact that we have had some relatively lengthy debates—perhaps because he did not agree with the premises of some of them. I would say very gently that that is the point of Committee; we are not supposed to agree, we are supposed to probe. As a former Home Office Minister, I have to say that these debates are not long; they are brief. These debates are like Usain Bolt; ours were like Mo Farah.

[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, I thank the noble Lord, Lord Clement-Jones, for tabling Amendment 318. He raises an important issue. As we have been discussing, the changing nature of work and the gig economy are a real challenge for us, and we recognise the complexity and shortcomings of the UK’s current employment status framework.

I can reassure the noble Lord that the Government have committed to consulting on a simpler framework for employment status, and this remains our intention. We have been clear that, as a result of the complexity, some of the reforms in the plan to make work pay will take longer to undertake and implement. We want to get the potential changes to the framework right, and we will consult on the fundamental aspects of employment law before taking action. I think that in part echoes the comments of the noble Lord, Lord Sharpe, who recognised the complexity and the need to think it through before we get it right. We are determined to follow this through and take action.

I am sympathetic towards the noble Lord’s aims to extend the protection of employment law. The self-employed make a huge contribution to the UK economy. As the noble Lord, Lord Sharpe, said, while many enjoy being their own boss and the flexibility that self-employment brings, others can find themselves highly dependent on one particular client with little choice, which can bring them challenges and problems.

I appreciate that the noble Lord is seeking to address this with his amendment by introducing a new employment status of “dependent contractor” and extending employment protections to those individuals. However, the amendment would further complicate what is already a highly complex area—one where, as I am sure the noble Lord knows, there have been several high-profile Supreme Court judgments in recent years. We want to avoid introducing an additional employment status before we have had the opportunity to reflect and consult further.

In addition, I can assure the noble Lord that the Government are committed to supporting and championing the self-employed. We have already announced a package of measures to help the self-employed thrive in good-quality self-employment, including measures to tackle late payments to small businesses and the self-employed. I urge the noble Lord to listen to our reflections and our determination to look at the whole issues around the gig economy, and to give us a little bit of space to do that. For this reason, I ask him to withdraw Amendment 318.

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[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Baroness, Lady Bennett, for bringing forward this amendment requiring a review of safe homeward transport for workers. I also welcome her back from her brief visit to the Maoist utopia on her last amendment. The safety and well-being of workers, particularly those finishing their shifts late in the evening, is a matter of significant importance. Many sectors operate outside traditional working hours, and the challenges faced by employees in securing safe and affordable transportation home after 11 pm are real and varied.

Understanding these issues is crucial, especially for vulnerable groups, including women and girls, for whom late-night travel can present heightened risks. It is also important to recognise that safe transport arrangements can contribute positively to worker morale and retention and may even play a role in reducing crime or accidents. The review has the potential to shed valuable light on current practices and challenges and provide a basis for informed discussion about how best to support workers who face late-night journeys home. I look forward to the Minister’s response.

[Lord Katz (Lab)]

My Lords, I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 321. We recognise the concern underpinning the amendment and agree that workers finishing late at night should be able to travel home safely and affordably. We are aware that for some workers, particularly those in hospitality, healthcare and security, late shifts can pose challenges when public transport options are limited. We also acknowledge and welcome that some employers, including firms in the City of London, have taken proactive steps to support their staff with safe transport home.

While we do not believe that it is appropriate to legislate for a review at this time, I hope I can reassure your Lordships’ House that we are committed to supporting workers’ well-being and safety. That commitment is evident throughout the Bill. For example, as we discussed on the second day of Committee in early May—another opportunity for a history lesson, it seems so long ago—the Bill strengthens the right to request flexible working from day one of employment. This flexible working provision empowers workers and employers to agree working patterns that better suit individual circumstances, including, where appropriate and reasonable, avoiding late finishes. We are also taking steps to improve enforcement of existing rights and to ensure that employers meet their obligations to provide safe working conditions.

Although it is not the subject of this legislation, the Government are also committed to reviving, rejuvenating and investing in public transport, not least through the Bus Services (No. 2) Bill, the creation of GBR, improvements to rail services and the huge amounts being invested across the country, particularly in the north, in new transport projects, all of which will provide a greater level of options and service for not just people working late but those who want to enjoy the night-time economy and to use public transport more generally.

While we cannot support this amendment, we share the underlying concern and will continue to work to ensure that all workers are protected and supported. I therefore ask the noble Baroness, Lady Bennett, to withdraw her Amendment 321.