Employment Rights Bill

Michael Wheeler Excerpts

Monday 8th December 2025 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to follow the right hon. Member for Ashton-under-Lyne (Angela Rayner).

As this Bill has progressed through Parliament, the Liberal Democrats have welcomed many of the principles underpinning it, and we are keen to see it progress. We welcome the fact that the Bill increases support for carers, boosts statutory sick pay and gives workers on zero-hours contracts more certainty. There is a lot in the Bill that we support in principle and that moves us in the right direction. However, we are also clear that the changes must happen in a fair and practical way that truly benefits workers, small businesses and our economy as a whole. That is very much how we are approaching the amendments in today’s debate.

First and foremost, we are glad to see that the Government have finally agreed to set the qualifying period for unfair dismissal claims at six months. That is a fair and sensible shift that will equally benefit workers and business. Employers have finally been given the necessary clarity to make hiring decisions with confidence, and we have avoided the danger of unnecessarily slowing down the labour market even further, which would have deprived so many people of vital employment opportunities. We are proud that Liberal Democrats in the House of Lords were instrumental in securing that crucial improvement to the Bill.

However, it is disappointing that the Government have effectively hijacked that breakthrough to abolish the cap on compensation for unfair dismissal at the last minute. The Minister will be well aware that abolishing the cap was not agreed in recent negotiations between employer groups, trade unions and the Government. Most businesses would have been happy for the cap to have been increased, but completely scrapping it, without any consultation or negotiation, has understandably left employers feeling deeply worried and facing yet another nasty surprise. There is real worry among businesses that doing away with the cap, which currently stands at £118,000, risks undoing much of the progress achieved by the six-month compromise, creating open-ended liabilities and encouraging litigious behaviour. I expect the Minister would agree that no one wants to see failed water company bosses jamming up the already-strained tribunal system, seeking eye-watering payouts.

More broadly, one has to reflect on how the Government’s approach to this last-minute change affects the relationship between Government, businesses and workers. Does the Minister not understand that springing the change on us at the 11th hour undermines business confidence and unnecessarily strains labour relations? The Liberal Democrats had hoped that today we could support the Government in setting the qualifying period at six months, but in the light of this abrupt change, it simply is not possible to support the motion in its current form. At the very least, will the Minister listen to concerned businesses and commit to setting a new, higher cap through secondary legislation following consultation with all relevant stakeholders?

[Michael Wheeler (Worsley and Eccles) (Lab)]

I am perplexed and confused by what I am hearing. Does the hon. Member appreciate that by moving the goalposts once again, and delaying this crucial Bill once again, she is leaving an open goal for unscrupulous employers?

[Sarah Olney]

Nobody is keener to see the Bill pass than the Liberal Democrats, and we have repeatedly worked with the Government to try to express our concerns. We would support the motion were it not for the lifting of the compensation cap being snuck in at the last minute. This last-minute change has not been part of any conversation that we have had with Ministers in the other place. That is why we will abstain on the motion.

--- Later in debate ---

[Sarah Olney]

The goal of the Employment Rights Bill should be to strengthen the economy for all so that we can get better employment conditions for everybody. I strongly believe that we need to strike the right balance so that we can support the economy as a whole.

[Michael Wheeler]

Will the hon. Lady give way?

[Sarah Olney]

I will make some progress, bearing in mind what Madam Deputy Speaker just said.

Zero-hours workers and businesses need far more clarity. Can the Minister at least clarify on the Floor of the House what the Government’s intended duration is for subsequent reference periods? I hope that after scrapping compensation caps, the Government will be a bit more transparent with stakeholders when it comes to flexible work.

One amendment that I am happy to welcome is on seasonal work. Many businesses, such as in the farming and agricultural sector, depend on recruiting the right people at the right time. Any obstacles to hiring seasonal workers can have a significant impact, exacerbating the long list of challenges they already face. Hospitality firms such as pubs, cafes and restaurants also often rely on seasonal workers and are particularly vulnerable to any regulatory changes that make it harder or more expensive to access the talent they need. All those employed as seasonal workers, whether in farming, hospitality or elsewhere, deserve reassurance that their work will not dry up. Last time the Bill was debated in the Commons, I spoke in favour of measures that would improve the clarity of the legislation on seasonal work, and I am glad that the Government have made progress. We are glad to support Lords amendment 48B, which would ensure that businesses relying on seasonal work and bodies representing seasonal workers will be properly consulted when secondary legislation is drawn up.

Businesses across the country, especially our SMEs, are struggling with unprecedentedly high costs, such as the Government’s unfair national insurance rise, sky-high energy bills and a broken business rates system. Struggling businesses means fewer jobs and lower pay, so it is clear that we must look for ways to support local businesses and all who rely on them.