Employment Rights Bill

Sarah Olney Excerpts

Consideration of Lords amendments
Monday 15th September 2025 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to follow the hon. Member for Ellesmere Port and Bromborough (Justin Madders), and to hear his passion for the Bill; I wish him every success. I also welcome the new Secretary of State for Business and Trade to his place. I look forward to opposing him.

The Liberal Democrats support many of the Bill’s aims. We have long called for employment rights to be strengthened in several ways, including by boosting statutory sick pay, strengthening support for whistleblowers and increasing support for carers. There is a lot in the Bill that we support in principle, and that moves the country in the right direction. However, we remain concerned about how many of the measures will be implemented. We must ensure that the legislation strikes the right balance for both employees and business. Some of our worries arose from the extent to which crucial detail has been left to secondary legislation, or will be subject to consultations. That does not facilitate stability and certainty for business or workers, and it precludes long-term planning. That will particularly impact small businesses, start-up businesses and those businesses looking to grow. That is why we are supportive of, for example, the amendment that sets the qualifying period for unfair dismissal claims at six months; that would create certainty for business. Any new measures to support workers must go hand in hand with much-needed reforms to support our small businesses, which provide employment. Those reforms include reform of the broken business rates system, a removal of trade barriers, and proper reform of the apprenticeship levy.

I am in favour of Lords amendment 1, which would change the obligation to offer guaranteed hours to a right to request them. The Liberal Democrats have long stood for giving zero-hours workers security about their working patterns, and we are deeply concerned that too many zero-hours workers struggle with unstable incomes, job insecurity and difficulties in planning for the future. However, we also recognise that many value the flexibility that such arrangements provide. Many young people and those balancing caring responsibilities alongside work value adaptability in their shift patterns. It is therefore important to strike a balance that ensures that workers can have security and flexibility.

[Katrina Murray]

I spoke to a hospital catering worker in my constituency who was contracted to work 12 hours a week, but she regularly worked 36 hours a week. However, when she took annual leave, she was paid for 12 hours a week. Does the hon. Lady not think that this catering worker deserves the respect of actually being paid for the hours she works, and of having a contract for the hours she works?

[Sarah Olney]

If the hon. Lady supported Lords amendment 1, the catering worker would have a right to request, and could get the certainty she requires. The amendment would very much offer that right, which she currently does not have, but it would also mean there was no requirement on the employer to maintain records, and the employer would not have the administrative burden of being forced to offer those hours to workers in the industry who did not require such flexibility. That is why we think the amendment strikes the right balance.

We strongly support the principle of enabling workers to obtain fixed-hours contracts, but we have concerns about the implementation method proposed in the Bill. Small businesses have highlighted that having to offer employees fixed-hours contracts on a rolling basis could impose significant administrative burdens. Many small employers lack human resource or legal departments, and the change could be a significant cost for those with limited resources. That would compound other challenges, such as the recent increase in employers’ national insurance contributions and the fallout from the previous Government’s damaging Brexit deal. In the retail and hospitality sector, part-time and entry-level roles are often taken up by young people looking for flexible hours, people with caring responsibilities, and others who may not want to make long-term work commitments. My hon. Friend the Member for Mid Dunbartonshire (Susan Murray) offered a compelling example of a zero-hours contract giving someone what they required from work. For all those groups, flexibility is key.

The amendment is in line with our long-standing manifesto commitment to give zero-hours and agency workers the right to request fixed-hours contracts—a right that employers could not refuse unreasonably. The measure would maintain a flexibility that benefits both parties, whereas an obligation to offer guaranteed hours imposes a significant burden, which does not benefit either party.

We are clear that employees should be supported to exercise this right—and all employment rights—without fear of any negative consequences in their workplace, and we are pleased that the Government have taken steps to set up a unified Fair Work Agency. We hope that the Government will look into our other proposals—for example, the proposal to give zero-hours workers a 20% higher minimum wage to compensate them for the uncertainty of fluctuating hours.

The amendment strikes a balance between security for workers and flexibility for employers. Much of the contention about the Bill relates to the lack of detail and clarity around key definitions, which makes it hard for businesses and employers to plan. That is why I also wish to speak in favour of Lords amendment 8, which would define a short-notice cancellation as a cancellation with 48 hours’ notice. That provides a workable balance. It gives employers clarity, while ensuring that workers are compensated when shifts are cancelled late.

[Laurence Turner (Birmingham Northfield) (Lab)]

Does the hon. Member agree that fair notice may be relative to the industry we are talking about? What is fair notice in, say, the retail sector may be completely different from what is fair notice for someone working on an offshore oil rig.

[Sarah Olney]

No, I do not think so. Forty-eight hours is a reasonable amount of notice in any sector. That is the kind of notice that enables, for example, parents to rearrange childcare, or other members of the family to rearrange their shifts. The 48 hours is a proper definition of reasonable notice, and 48 hours is 48 hours, whether you work on an oil rig or in a shop. I disagree that it is context-dependent.

[Dr Scott Arthur (Edinburgh South West) (Lab)]

I am passionate about ensuring that single parents can enter the workforce, and a big barrier to that is childcare. When thinking about which amendments the hon. Member will support, has she discussed the matter with any organisations representing single parents? Forty-eight hours does not seem like a lot of time.

[Sarah Olney]

As someone with a long history of having to arrange childcare at short notice, I am well aware of the limitations that needing to arrange childcare presents, particularly for working women, both those who are single parents and those in a relationship. Forty-eight hours is not ideal, but it is a reasonable compromise, and it is absolutely vital that employers have clarity about what “reasonable notice” looks like in this circumstance.

I wish to speak in favour of Lords amendment 48. Businesses, particularly those in the hospitality sector, that rely on seasonal workers are particularly vulnerable to changes in labour regulations and the knock-on impacts on the cost and availability of labour. The sustainability of farming businesses, for example, depends on being able to get the right people to the right place at the right time, and obstacles to that can have a big impact on ability to generate produce for sale, and therefore on the sustainability of the business. If we allow a different set of regulations to apply to seasonal work, a clear definition of “seasonal work” must be created to prevent employers from avoiding their legitimate responsibilities by claiming seasonal work in inappropriate circumstances. While we do not believe that this legislation should create contrasting employment law requirements for businesses, we continue to defend the principle that businesses should be properly considered when secondary legislation is created, so I urge Members to support the amendment.

Lords amendment 46, tabled by my good friend and Richmond Park predecessor Baroness Kramer, would introduce protections for whistleblowers. It follows her long-standing campaign for support for whistleblowers, and I pay tribute to her commitment to the cause.

[Ian Roome]

There is no standard requirement for most companies to have a whistleblowing policy. Does my hon. Friend agree that the Bill would be a good opportunity to put in place real protections for whistleblowers who try to highlight crime, danger and malpractice in the workplace?

[Sarah Olney]

My hon. Friend is absolutely right. The current framework for whistleblowing applies only if somebody has lost their job. It does not address the duty on businesses to follow up whistleblowers’ serious concerns about crimes. That urgently needs to be addressed.

Too many whistleblowers who raised serious concerns about matters ranging from fraud to patient safety are ignored by their employers, or are reticent to speak out because of fears of unfair repercussions. The new clause in Lords amendment 46 has received the support of numerous international civil society organisations, including Protect and Spotlight on Corruption. It would be a long-overdue update to our once world-leading whistleblowing legislation, and I urge colleagues from across the House to support the change.

I support Lords amendment 47, which would expand the right to be accompanied to employment hearings to include certified professional companions. Currently, employees may be accompanied only by certified trade union representatives, leaving many workers to navigate proceedings alone. Although trade unions provide valuable support to their members, only 22% of workers are in a trade union, including only 12% of private sector workers, with recent figures at a record low. The current provisions made sense at a time when trade union membership was higher nationally, but those provisions have become largely outdated as trade union membership has fallen and the labour market has modernised. Without the amendment, we consign many employees facing unfair dismissal to navigating the requirements of disciplinary hearings on their own, without any kind of professional or educated support.

[Dr Arthur]

Does the hon. Lady agree that the best protection against unfair dismissal is trade union membership?

[Sarah Olney]

No, I do not. I think that people should have the freedom not to join a trade union if that is what they wish, not least because their trade union contributions might go to a party that they do not vote for. Many professions these days are better represented not by trade unions that cover a whole range of different employment categories but by professional bodies. As an accountant, I was a member of the Association of Chartered Certified Accountants. Had I been facing a disciplinary in relation to my professional duties, I would have been much better represented by a fellow member of that body than by a trade union.

[Katrina Murray]

I am a member of the Chartered Institute of Personnel and Development. Professional bodies are there to set the standards of the profession. Does the hon. Lady not recognise the conflict of interest that could arise from the professional body representing an employee at a disciplinary hearing when it has to uphold the standards of the profession?

[Sarah Olney]

I understand the hon. Lady’s point, but a fellow qualified accountant would be better able to advise somebody facing a disciplinary than an official from a general trade union, who would not necessarily understand the points in dispute.

[Gareth Snell]

The hon. Lady makes good points in some parts of her speech, but not in others. The point of a trade union representative—or any representative who goes with an individual to a disciplinary process—is not to advise on the particulars of the worker’s skillset, but to ensure that processes are followed and the worker’s rights are protected. I fully understand what she says about accountancy, but are there people in her professional organisation who can give her employment rights advice? Disciplinaries relate to employees’ rights, not their professional skillsets.

[Sarah Olney]

As the hon. Gentleman and the hon. Member for Cumbernauld and Kirkintilloch (Katrina Murray) have said, that has not been a requirement for professional bodies, but if we create the right for suitably qualified professionals to accompany employees, I fully expect that those bodies would go on to develop that capability. It is surely up to an employee to decide whether they want a fellow professional or a trade union official to protect and defend their interests. They should have the opportunity to make that choice for themselves.

The Liberal Democrats also support the retention of the opt-in system for contributions to trade union political funds. We believe in maximising choice and transparency for individuals in relation to the political funds to which they contribute. We therefore oppose measures that would make it an opt-out system.

--- Later in debate ---

[Ian Lavery (Blyth and Ashington) (Lab)]

I refer to my declaration in the Register of Members’ Financial Interests and my support of the trade unions. On the thresholds, does my hon. Friend agree that those who choose to abstain should be counted as “no” votes?

[Sarah Olney]

I am slightly surprised to be referred to as “hon. Friend”, not least because I am probably going to disagree with the hon. Gentleman. To undertake such massive action, including in the NHS, and on the tube—we saw the level of disruption that that caused the public last week—there needs to be a positive vote in favour of strike action, which is why I back this amendment.

[Ian Lavery]

You haven’t understood my point.

[Sarah Olney]

I am happy to take another intervention.

[Ian Lavery]

I simply mean that if there is a threshold of 50% and it is not met, are those who did not participate in the ballot classed as “no” votes? Is that correct? It is pretty simple.

[Sarah Olney]

I think the point that the hon. Gentleman is making is that people who did not express a view either way should be counted as voting against. What I am saying is that in order to justify the levels of disruption that strike action has caused recently, it is important that a trade union can demonstrate that it has majority support from its workforce. That is why I support the amendment. We believe that the current threshold for strike action is suitable, and that making it easier to strike risks putting further pressure on public services and damaging the economy, as we saw last week with the disruption across the capital caused by the tube strikes.

Most employers are responsible businesses that want to do the right thing by their staff, and many of them support the aims of the Bill. However, they have significant concerns about the lack of clarity and the proposed implementation process. So much of the detail of the legislation is still undecided and will compound the challenges that small businesses are facing—from the Government’s changes to employers’ national insurance and the reduction in business rates relief, to the absence of any meaningful action to bring down commercial energy prices. We must find a way to support and provide clarity for businesses that are trying to plan ahead. The Liberal Democrats support many aims of the Bill and the spirit of measures that strengthen employment rights, but we will support the Lords amendments that will help to ensure that the legislation strikes the right balance for workers and businesses.

[Tristan Osborne (Chatham and Aylesford) (Lab)]

I welcome the Government amendments, and thank those who have steered the legislation to this point.

This is a generational upgrade in employment rights, and as a Labour MP, I am very proud to support it. It is a landmark shift in some ways—a declaration that in modern Britain, hard work should be rewarded with decent, stable work, security, dignity and fairness. Having worked in the private and public sectors at different times in my life, I believe that the Bill strikes a fair balance between the workplace rights of the individual and the rights of the employer. That is why I welcome the extensive consultation that the Government have undertaken with the private sector and with trade unions and other organisations. I am a member of USDAW—the Union of Shop, Distributive and Allied Workers—and the National Education Union and have proudly represented and spoken for them in my career to date.

I wish to speak about a number of the Opposition Lords amendments and my concerns about them in short order. I have concerns about Lords amendment 1. Zero-hours contracts have allowed people to be trapped by insecure work, low pay and one-sided flexibility. I know from speaking to shop workers in my constituency that they have not been able to plan ahead with their finances because of the unscrupulous nature of some working relationships with employers. That has left families unable to plan their weekly shopping and childcare as well as their futures, especially in respect of securing loans and other financial settlements. It has become a way for employers to manage down by allowing too many people to take very short hours and then not allowing them to gain other forms of employment.

The Government’s measures to ensure zero-hours contracts are controlled—where the individual can request zero-hours contracts but there is an onus on the employer to support guaranteed hours—strike the correct balance. I therefore reject Lords amendment 1 as the Government’s measures strike a fair balance between the employee requesting and the employer giving.

Lords amendments 23, 106 and 120 relate to sensible changes on unfair dismissal. As has been mentioned, under the last Government the unfair dismissal provision was set at 12 months and that was extended to two years under the current Government. This does not take into account the fact that many who are subject to unfair dismissal might have been working for the employer for a significant period and also be subject to paternity leave, parental leave and other types of support. We should be supporting people with secure provision in work, and I believe that six months is a fair period in which most employers would be able to grade that assessment.

I do not accept Lords amendment 48 on seasonal work. It would add a loophole by which employers could exploit workers. The Bill pays due regard to the realities of seasonal work, both at Christmas and in farming and other types of practice, and I would welcome consultation on such provision continuing.

On political funds, I urge colleagues to reject Lords amendments 61 and 72. We must return to a model that has worked for over 70 years where people choose to opt out of political funds, because securing employment rights is one of the endeavours of a trade union. The trade unions were set up to secure rights for employees, and seeking to achieve that is one of their political endeavours.

I have concerns about Lords amendment 62. The Conservatives complain about the 50% threshold but they did not adopt that in their former leadership election, and perhaps it will not be the threshold in their leadership election to come in the next six months. If they adopted their recommended 50% threshold of members, we might not see a replacement. If they cannot use it for their own internal processes, that raises questions about why others should be made to do so. I also encourage the Government to consider online balloting as a next necessary step. We do online balloting for many of our leadership processes and it is a sensible way forward, as well as other forms of engagement by post.

As a former teacher, I do not support Lords amendment 121. Negotiations should be conducted in a fair way and the Bill covers that, preventing one-sided correspondence between teachers and their professional body.

As a former special constable, while I accept Lords amendment 21 in principle in supporting our special constables on the ground, that should not just be for a single group of people but should be considered for others, perhaps including carers and other support workers. I welcome the Government’s review of employees’ right to take time off; that is the most sensible approach.

On balance, I am not surprised that the Conservatives and others do not support the Bill—I and others have written as USDAW MPs. I believe that we should support a balanced approach between employees and employers. I welcome the work the Government and former Ministers have done to that end. The Bill strikes a fair balance between those who work in the private and public sectors and the obligations employers are to offer, which is why I will be supporting the Government tonight.

Employment Rights Bill

Sarah Olney Excerpts

Consideration of Lords message
Wednesday 5th November 2025 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

It is a real pleasure to follow the right hon. Member for Ashton-under-Lyne (Angela Rayner) and hear her passionate advocacy for this Bill.

The Liberal Democrats support many of the principles of this Bill. We have long advocated for strengthening employment rights in several ways, including by increasing support for carers, boosting statutory sick pay, and giving people on zero-hours contracts more certainty about their working patterns. There is a lot in the Bill that we support in principle and that moves us in the right direction, but we remain concerned about the specific way in which the Government plan to implement many of its measures. So much of the detail that should have been in the Bill has been left to secondary legislation or future consultations, making it impossible for businesses to plan ahead with certainty.

For that reason, we support amendments that provide clarity for businesses, for example by setting the qualifying period for unfair dismissal claims at six months. Training, hiring and retaining a skilled workforce are issues that affect businesses across the country, and we must ensure that this legislation strikes the right balance for both employees and businesses.

[Antonia Bance]

Does the hon. Member believe that, in the first six months of employment, it is appropriate for people to be dismissed for unfair reasons and without a fair process?

[Sarah Olney]

The point has been made on a number of occasions that it is always possible for employers to make mistakes in their hiring—for people to not be the right fit for the job. There should be a straightforward way for those employers to dismiss those people without being challenged on the basis that the dismissal was unfair. The key point is not that employers should be allowed to make unfair dismissals, but if a dismissal has been fair, they should not have to defend it.

[Justin Madders]

The Liberal Democrat spokesperson has just said that it is not right that employers should pay for a mistake they made in hiring someone. Why should the employee pay for that mistake, if it was not theirs?

[Sarah Olney]

There is a balance between the employer and the employee. If the fit is not right, it is better for both sides that the employment is brought to an end, and that the employee is free to seek more appropriate employment.

There are very significant concerns. The lack of clarity about probation periods, which the Minister mentioned, and exactly what they mean, risks piling undue worry on to business managers who are struggling to find the right skills. We can compare that with the provisions in the amendment tabled on unfair dismissal.

My Liberal Democrat colleagues and I, both here and in the other place, have been clear in our support for an amendment that would change the obligation to offer guaranteed hours to a right to request guaranteed hours. Amendment 1B would allow an employee to notify their employer if they no longer wished to receive guaranteed hours offers, but they would be able to opt back into receiving guaranteed hours offers at any time. That reasonable and balanced approach would relieve employers from having to issue guaranteed hours offers each reference period to workers who may simply not be interested in them, while ensuring that those who wished to receive such offers could continue to do so.

The Liberal Democrats strongly believe in giving zero-hours workers security about their working patterns, and we are deeply concerned that too many workers are struggling with unstable incomes, job insecurity and difficulties in planning for the future. However, we also recognise that many people value the flexibility that such arrangements provide. Adaptability in shift patterns is often hugely valuable for those balancing caring responsibilities or their studies alongside work. It is therefore important to strike a balance that ensures that workers can have both security and flexibility.

Specifically, small and medium-sized businesses have highlighted that having to offer employees fixed-hours contracts on a rolling basis could impose significant costs and administrative burdens on their limited resources, compounding other challenges, such as the recent increase in employer national insurance contributions and the fallout from the previous Government’s damaging Brexit deal. The Liberal Democrat amendment that was debated in the Lords is in line with our long-standing policy that zero-hours and agency workers should have the right to request fixed-hours contracts—a request that employers could not unreasonably refuse. We believe that measure would maintain valuable flexibility and benefit both parties when the obligation to keep offering guaranteed hours, even to workers who clearly are not interested in them, imposes a significant burden that does not benefit either side.

As with all workplace rights, employees should be supported to exercise a right to request guaranteed hours without fear of any negative consequences in their workplace. The unified fair work agency being set up by the Government, which we welcome, could help ensure that employees received that protection and support. This approach would still give workers the vital security that they deserve, while avoiding unnecessary burdens for employers.

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, so I will once again speak in favour of Lords amendment 48B. The sustainability of so many companies, such as farming businesses, depends on getting the right people into the right place at the right time. Any obstacles to actioning that can have a huge impact on company operations, potentially throwing the entire business into jeopardy. Hospitality firms such as pubs, cafés and restaurants also rely on seasonal workers and are particularly vulnerable.

[Euan Stainbank (Falkirk) (Lab)]

Can the hon. Lady define what rights somebody working behind a desk in this place should have under amendment 48B that somebody working behind a bar in this place should not?

[Sarah Olney]

They are different kinds of work with different work patterns, requiring different skills and experience. I am not entirely certain what point the hon. Member wants me to respond to.

If a different regulatory framework is to apply to seasonal work, a clear definition of seasonal work must be created to prevent employers from avoiding their legitimate responsibilities by claiming employees as seasonal workers in inappropriate circumstances. We continue to call for businesses that are especially reliant on seasonal workers to be properly considered when secondary legislation is created, so I urge Members to support amendment 48B.

On trade unions, I again speak in favour of Lords amendment 62B to maintain the status quo, in which a 50% ballot threshold is required for industrial action. The Government’s proposal to remove the threshold entirely means that a trade union could take strike action with only a small minority of eligible members taking part in the vote. That is bound to raise questions among the public about whether the will of workers has been accurately represented, and it risks unnecessarily creating tensions between workers, employees and the general public. That would not be a good outcome for any of the parties involved. We should maintain a robust process for launching industrial action.

[Ian Lavery]

Will the hon. Lady inform the House of the statistics relating to her election at the general election? She was elected by a minority. If it is good enough for her—she is doing a great job, by the way—why is it not good enough for ordinary working people?

[Sarah Olney]

The hon. Gentleman will be happy to hear that 53.3% of Richmond Park voters voted for me to be their representative, so I was, in fact, elected by the majority of my constituents. I am delighted to hear that he thinks I am doing a good job for them. I think he was attempting to highlight that many of the people in the Chamber were elected on less than 50%. The first thing I would say to that is that on most ballot papers, there will have been a choice of more than two candidates.

[Ian Lavery]

Will the hon. Lady give way?

[Sarah Olney]

May I finish the point? If people are choosing from a list of five people, it is likely, under the first-past-the-post system, that the winning candidate will receive less than 50% of the vote. In a strike ballot, the choice is between two options. That is why there should be more than 50% of all members voting for the option to strike. That is the important point here.

Secondly, the hon. Gentleman has given me an excellent opportunity to point out that the Liberal Democrats have long been advocates of voting reform. Last December, I introduced a ten-minute rule Bill advocating for proportional representation, which was passed. It remains the will of the House, as expressed on that occasion, that we should change the way in which we elect hon. Members.

Maintaining a robust process for launching industrial action is particularly important when we consider the scale of the disruption that the public face when strikes happen. The Liberal Democrats also continue to support measures that would retain the current opt-in system for contribution to trade union political funds. Amendment 72B maximises choice and transparency for individuals about the political funds to which they are contributing.

Most employers are responsible businesses that want to do the right thing by their staff, many of whom support the Bill’s aims, but they have significant concerns about the extent of the Bill, much of which is still undecided on and risks compounding other challenges that they face. Changes in employer national insurance, slow progress on reform of the apprenticeship levy and the absence of any meaningful action to bring down commercial energy prices continue to be extremely damaging to businesses, and to our economy as a whole. We must find a way to support small and medium-sized businesses in particular, and to provide clarity, so that they can plan ahead. If the Government were prepared to make meaningful improvements to the Bill that would make things easier for small businesses—for example, through the amendments suggested by the Liberal Democrats—they might find it easier to make progress with the legislation.

We support many of the aims of the Bill, and the spirit of the measures that strengthen employment rights, but I urge Members to support our amendments, which will help to ensure that this legislation strikes the right balance for both workers and business.

[Several hon. Members rose—]

Employment Rights Bill

Sarah Olney Excerpts

Consideration of Lords message
Monday 8th December 2025 Commons Chamber

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[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.

[Antonia Bance (Tipton and Wednesbury) (Lab)]

The hon. Member seems to be under the misapprehension that the lifting of the cap was not agreed as part of the negotiation on the compromise. It was. Perhaps she would like to revise her remarks.

[Sarah Olney]

I will not revise my remarks. We have been speaking to many business groups that were in the room with the Minister, and they have told us that it was not part of the agreement. That is why the fact that it is in this motion has taken everyone by surprise, and why we will not be supporting it today.

[Laurence Turner (Birmingham Northfield) (Lab)]

The hon. Lady just said that she has been informed by business groups that were in the negotiations that this measure was not agreed. Will she name them?

--- Later in debate ---

[Sarah Olney]

I will not name them, but the Minister will know who was in the room with her. That is what they have told us, and that is what I am reflecting in my comments today.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

Does the hon. Lady agree that it would have been helpful if an impact assessment had been carried out, so that everyone could see exactly what the impact of removing the cap would be?

[Sarah Olney]

I would agree, but my point is that this last-minute change has been sprung on us and the business groups that engaged in good faith with the Government on these measures. This is a last-minute change that we and the business groups were not expecting, and that is why we will not be supporting it.

[Kate Dearden]

With respect, I was in the room as part of the negotiations with business representatives and trade unions, and I thank them again for the constructive dialogue and leadership that they showed throughout the numerous days of conversation. I can confirm that the compensation cap was discussed and agreed in the room, so I ask the Liberal Democrat spokesperson to reflect on her comments. I was in the room; with due respect, she was not. That is a true reflection of what was discussed and agreed.

[Sarah Olney]

I take the Minister’s comments. What I would say is that we were not expecting to see this measure in the motion, and that is why we will not support it.

Turning to zero-hours contracts, Liberal Democrats strongly believe in giving all workers security over their working patterns, and we are deeply concerned that too many struggle with unstable incomes, job insecurity and difficulties in planning for the future. However, we have repeatedly reminded the Government that adaptability in shift patterns is often hugely valuable, for example to those balancing caring responsibilities or their studies alongside work. It is therefore important to strike a balance that ensures workers can have both security and flexibility.

Since the Bill’s introduction, many small businesses have highlighted that having to offer employees fixed-hours contracts on a rolling basis could impose significant costs and administrative burdens on their limited resources, compounding other challenges, such as the increase in employer national insurance contributions, charging national insurance on salary sacrifice schemes and the fallout from the previous Government’s damaging Brexit deal. While we advocated for what we think would have been a fairer and less onerous system based on giving workers a right to request fixed hours, the Liberal Democrats are pleased that the Government have at least moved in the right direction through amendment (b). Requiring the Secretary of State to consult businesses and relevant stakeholders on the length of the initial guaranteed hours reference period will at least give affected businesses and workers a stronger voice in designing the new system.

[Mr Rand]

The hon. Member has talked about the potential for an added burden on employers by scrapping exploitative zero-hours contracts, which Liberal Democrat peers in the other place also made reference to in debates there. Will she reflect on the huge burden on workers from exploitative zero-hours contracts and the financial uncertainty and insecurity that such contracts bring to their lives, including the lives of some of her constituents?

[Sarah Olney]

I agree with the hon. Gentleman, but that is why we need the balance. We need to ensure that workers have the right to request a permanent contract if that is what works for them, but it may be onerous for businesses to have to track hours over a period of time, when the employee themselves may value the opportunity that the zero-hours contract offers. That is precisely what we would tackle with this amendment.

[Andrew Pakes (Peterborough) (Lab)]

I represent a seat with one of the highest levels of zero-hours contracts and insecure work in the country. I am not sure how that compares to the hon. Member’s constituency, but if someone in my constituency requested a full-time contract, but that was turned down because they have only a right to request, how would that deliver them justice?

[Sarah Olney]

We are trying to create a balance, managing the burdens on employers in creating jobs. We have to ensure there is employment in the first place before we can ensure people’s rights. I entirely accept the point that the hon. Gentleman is making, but placing these burdens on employers to track the hours that numerous employees are working will add to the costs that employers incur in taking people on. That is precisely the sort of thing that discourages employers from creating jobs.

[Chris Bloore (Redditch) (Lab)]

Will the hon. Lady give way?

[Sarah Olney]

indicated assent.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I assume the intervention will be short. We have we only got 30 minutes left in the debate, so I assume that Ms Olney is coming to a conclusion soon.

[Chris Bloore]

I thank the hon. Member for Richmond Park (Sarah Olney) for letting me intervene. She must realise that it is macroeconomic conditions, not improving employment rights, that affect a company. What is certain is that when people have zero-hours contracts, they cannot pay their mortgages when downturns and recessions happen, because they cannot get in the money that they need. She talks about the burdens on businesses, but what about the people who cannot even pay their basic bills because of the exploitative contracts they are on?

[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.

[Several hon. Members rose—]

Employment Rights Bill

Sarah Olney Excerpts

Consideration of Lords message
Monday 15th December 2025 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

Today we are debating the fourth round of consideration of Lords amendments to this Bill, and this long and protracted process says a lot about the way the Government have approached this legislation. The Bill was initially put together at great speed, missing much of the detail; there was a long series of Government amendments late in the process; and now a major last-minute change on the compensation cap for unfair dismissal has been sprung on businesses and Parliament. Regardless of what one makes of the different measures in the legislation, I think most of us would agree that the process followed in designing it has been less than ideal. Having said that, let me reiterate what has always been the Liberal Democrat position on the Bill: we support many of the aims of this legislation.

We welcome expanding access to statutory sick pay, improving parental leave and taking steps to address the massive pay gap facing social care workers. We agree with giving those on zero-hours contracts more certainty, even though we proposed what we view as a more practical and balanced way of doing so, and we are pleased to see a unified Fair Work Agency, which we also called for as a way of empowering employees to exercise their rights without fear of any negative consequences. However, we have made it clear that we have significant worries about the specific way in which some of those measures would be implemented, and we have repeatedly raised our concern that crucial detail was being left for secondary legislation.

By far our biggest concern was the complete lack of clarity on unfair dismissal and probation periods, which is why we have worked in both Houses to secure a vital concession setting the qualifying period for unfair dismissal at six months. We are proud that when some tried to brush aside the concerns of the business community and others sought to frustrate the process, it was the Liberal Democrats who secured this vital provision. It is the role of any responsible Opposition party to engage constructively and achieve substantial improvements for the good of our country. It could not be clearer that this fair and sensible shift will equally benefit businesses and workers. So many businesses I have spoken to have said that this is the single most meaningful change that could have been made to the Bill.

[Dr Luke Evans]

I am conscious that we are debating a particular point. Is the hon. Member voting for or against the cap? That is the essence of what we are looking at today.

[Sarah Olney]

I am glad that the hon. Member has raised that. I was coming to that in my speech. Perhaps he could listen with a little more attention.

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. That is exactly what the progressive Resolution Foundation think-tank warned of when it said there was a risk that

“employers would be nervous about hiring new workers or offering shifts, and this would make life harder for job seekers.”

As I pointed out last week, it is really disappointing that the Government decided to muddy this improvement by simultaneously abolishing the cap on compensation for unfair dismissal. Employers were not in favour of scrapping the £118,000 cap, and I once again point out that bringing in a change like this at the last minute is not how we build trust between Government and business. However, I note that employers and business groups have been equally clear that this last-minute change must not stand in the way of the far more important changes secured with regard to the six-month qualifying period. Above all else, business values pragmatism, and that is exactly why it wants to see this breakthrough protected and enshrined in law. That is what has guided our approach throughout.

Will the Minister confirm on the Floor of the House that the Government will conduct an assessment of the impact of the removal of the compensation cap, actively seeking views from businesses, as was indicated to the Liberal Democrats in the other place? On a broader level, will she give a cast-iron commitment that the Government will hold regular debates in both Houses to ensure that Parliament can scrutinise what work is being done to consult businesses and workers on all relevant implementation aspects of this Bill? How are the Government planning to support employers in order to ensure that they have robust policies and practices in place to navigate these changes to the unfair dismissal regime?

Lastly, to those in the Conservative party who have been trying to sabotage this crucial compromise on the six-month qualifying period, I simply say that they are acting not in the interest of British businesses but only in their own narrow party political self-interest.

[Graham Stuart]

On that very point, does the hon. Member believe that it is totally pragmatic to have disregarded her objections to the removal of the cap in return for additional places for the Liberal Democrats in the House of Lords?

[Sarah Olney]

It is so revealing of Conservative Members’ mindset that they cannot believe what I am actually saying is the reason for our change, and that they assume instead that we must have sought some benefit for ourselves. It is so revealing that that is what the Tories think. It beggars belief that the Conservatives, having hammered businesses while in government, are now doing everything in their power to undermine UK plc from the Opposition Benches.

I note that the Government have taken steps to improve the clarity of the legislation with regard to seasonal work, introducing measures that will ensure that businesses relying on seasonal work and bodies representing seasonal workers will be properly consulted when secondary legislation is drawn up. Many businesses, such as those in the farming and agricultural sector, as well as thousands of pubs, cafés and restaurants, depend on seasonal workers, and any obstacles to hiring them could have a significant impact, exacerbating the long list of challenges they already face, so we must ensure that they are supported as much as possible. Small businesses in our local towns and communities are struggling with the Government’s unfair national insurance rise, high export costs due to Brexit red tape and a business rates system that is not fit for purpose. Struggling businesses mean fewer jobs and lower pay, so it is vital that we take steps to support high street businesses and all those who rely on them.

It is time that we listened to the business community, which is telling us that the best way forward is to look for balanced solutions through secondary legislation and to put an end to the uncertainty and avoid losing the six-month qualifying period, which we were happy to have helped secure. Continuing to delay the passage of the Bill at this late and protracted stage would risk further uncertainty for businesses, particularly small and medium-sized enterprises, and would jeopardise significant changes that will benefit workers, such as expanded protections against workplace harassment and improved paternity leave rights.

I urge Members to be pragmatic and to provide clarity to businesses and workers alike regarding an implementation timeline. That is critical for providing a stable operating framework so that businesses can plan ahead. We should now work together to ensure that this legislation can be implemented to benefit businesses and workers alike.

--- Later in debate ---

[Jerome Mayhew (Broadland and Fakenham) (Con)]

We are short on time, so I will limit myself to two points.

I will start with what my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) admirably described as the “craven capitulation” of the Liberal Democrats. Just a week ago, the Liberal Democrats were arguing passionately about unions’ abilities to cause strikes, and about the right to guaranteed hours. Then what happened? Five peerages came along. Now they are in favour of those things. It used to be the case with their last Prime Minister, Lloyd George, who famously used to sell peerages for money. Now it seems that the Liberal Democrats sell their principles for peerages.

[Sarah Olney]

On a point of order, Madam Deputy Speaker. I think that is disgraceful. The hon. Gentleman is literally implying corruption. I made it very clear in my speech what the basis of our change in support in the Lords was for, and I think it is intolerable that we are being accused.

[Madam Deputy Speaker (Caroline Nokes)]

I thank the hon. Member for her advice. As it happens, she makes a good point. The hon. Member for Broadland and Fakenham (Jerome Mayhew) should not be suggesting any particular motive attributed to that issue, and could he perhaps confine his remaining comments for the next 90 seconds?