Employment and Trade Union Rights (Dismissal and Re-engagement) Bill [HL]

Lord Sikka Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I congratulate my noble friend Lord Woodley on this much-needed Bill, which will make the UK a better place for workers and businesses alike. As my noble friends Lord Woodley and Lord Hendy have explained, the Bill does not completely ban fire and rehire; it merely curbs the abuses and requires companies to properly consult employees on a statutory footing before any major restructuring that might lead to fire and rehire.

The Bill has reminded me of the words of a former US Republican President, who said:

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration”.


That President was Abraham Lincoln and his views are as relevant today as they were in 1861.

We all know that within our economic system there are antagonisms between labour and capital, but there is also a mutual dependence of the two. Workers’ rights are an indispensable part of wealth creation and building a sustainable economy. The Bill comes at a time when fire and rehire is being used as a bully-boy tactic to undermine workers’ pay and conditions across a number of industries.

A study by the Observer newspaper stated that 70% of employers using fire and rehire of staff on worse contracts maintained healthy profit margins and that, in most cases, also increased executive pay. British Gas used fire and rehire tactics to dismiss 500 engineers, but it has now reported a tenfold increase in profits in just one year. At Asda, some 7,000 workers are being impacted by fire and rehire as private equity owners seek to boost their returns.

We cannot build a sustainable economy by increasing worker insecurity. That has not been done anywhere, yet it is what the Government are trying to do here. Workers’ economic security is undermined wherever employers wield the capacity to demand, deny or discontinue work completely at will and with impunity. The Work Foundation estimates that in 2023, around 6.8 million workers—around 21% of them—were in severely insecure work, with wholesale and retail, agriculture, professional and scientific, and hospitality workers particularly badly affected. The Chartered Institute of Personnel and Development has reported that, since the pandemic, nearly one in 10 workers have been told to reapply for their jobs on worse terms and conditions or face the sack.

Women are 2.3 times more likely to be in insecure work than men. People from ethnic minorities, 18 to 25 year-olds and 1.45 million disabled workers are more likely to be in insecure work than any other sections of our population. Fire and rehire increases insecurity, anxiety and physical and mental health problems. Up to 300,000 people with mental health problems arising from their work situation lose their jobs each year. Around 51% of long-term sick leave is due to stress associated with work and insecurity. Since 2019, the total annual cost associated with poor mental health has increased by 25%. Employers are losing £56 billion a year because of the insecurities created for workers. Through this Bill, we can recover a part of that: it offers a road to economic recovery and improved labour supply.

A considerable body of scholarly research shows that improved worker rights and rewards provide a solid foundation for strong and stable economic growth by supporting demand and stabilising local currencies and financial systems. Better worker rights are essential for levelling up and result in higher productivity growth, thus leading to faster, stronger and sustainable economic growth. Improved worker rights result in a better distribution of income, both among workers and between workers and companies. In other words, better worker rights lead to a larger output that is more evenly distributed as well. As the benefits of faster growth are more evenly distributed, local demand tends to be stronger and more stable, preventing our town centres becoming economic deserts with swathes of empty shops.

In the face of fewer safeguards for workers, cuts in income reduce demand and Governments increasingly rely, as the current Government are doing, on a shrinking proportion of the population to reflate the economy. Households with unpredictable employment rights and loss of livelihoods resort to pawning things and borrowing money, which ultimately leads to lower spending, lower consumption, a higher risk of financial distress and higher risks to the financial system. We all know what happened before the 2008 banking crash; many people simply could not afford to pay their mortgages. That is one of the consequences.

In short, the Bill curbs the abuse of fire and rehire policies and facilitates economic benefits. I strongly urge all Members of this House to support it