Employment Rights Bill

Clause 23: Right not to be unfairly dismissed: removal of qualifying period, etc

Amendment 49

Moved by

49: Leave out Clause 23 and insert the following new Clause— “Right not to be unfairly dismissed: reduction of qualifying period and introduction of initial period of employmentSchedule 3 contains provision—(a) reducing the qualifying period of employment for unfair dismissal and introducing provisions in respect of an initial period of employment, and(b) making further consequential amendments.” Member’s explanatory statement This amendment provides that the qualifying period for unfair dismissal is reduced as set out in further amendments to Schedule 3. It also provides for an initial period of employment after the qualifying period during which a modified process and different compensation limit would apply, as set out in further regulations.

My Lords, the Government’s intention to protect workers is commendable. We all agree that fairness, dignity and security at work are essential pillars of a just society. However, the approach taken in this Bill, particularly the changes to unfair dismissal rights and the introduction of a statutory probationary period, is confused and counterproductive. What the Government have failed to grasp is that, when businesses are given the flexibility to manage their workforce pragmatically, that is precisely when they are more likely to take on new staff. Hiring is always a risk. By heightening that risk and making it more difficult to manage, this Bill creates disincentives to hire, particularly at the margins of the labour market, where the stakes are highest. This is fundamentally a question of incentives. Reduce the employer’s ability to assess suitability, cultural fit or even basic reliability, without the spectre of legal sanction, and you will see fewer jobs created. The cost is very real, but nowhere is it properly considered in the Government’s own impact assessment. That acknowledges a likely 15% rise in employment tribunal claims, but makes no attempt to model the knock-on effect on hiring behaviour. The tribunal system, as we know, is already overstretched, with cases often taking more than two years to resolve. A 15% increase without corresponding investment will only deepen the backlog, and employers will know that they are walking into a system that is clogged and uncertain. Then there is the statutory probationary period, which the Government propose with no real clarity. The Bill fails to explain how this period interacts with the obligation to act reasonably or whether there will be a different standard for dismissals during this window. Will there be a list of fair reasons? Will an employer be able to extend the period if performance takes longer to assess? None of this is addressed. As any employer will tell you, uncertainty in employment law leads not to innovation but to caution and legal advice. Perhaps the most troubling aspect of the Government’s approach is its likely effect on social mobility. When you raise the legal risks of hiring, it is not the well-connected, polished graduate who loses out but the individual on the edge of the labour market, the person returning to work after illness or parenting, the school leaver with no contacts, the ex-offender with a spent conviction, the refugee trying to prove themselves. The Government’s impact assessment recognises this risk, because it says that making unfair dismissal a day one right “could damage the employment prospects of people who are trying to re-enter the labour market, especially if they are observed to be riskier to hire”. Those are not my words but the Government’s. The same is true for a “cultural fit”, which the Minister dismissed in Committee as an illegitimate reason for dismissal. She said: “The Government do not believe that an employee not being a cultural fit within an organisation should be a fair dismissal”.—[Official Report, 21/5/25; col. 334.] However, “cultural fit” is not a euphemism for prejudice; it is about whether someone complements the way in which a team works, the style of communication or the pace and rhythm of a workplace. This is particularly acute for a small business. Hiring mistakes are costly. Even a highly skilled worker takes time to reach full productivity and the cost of advertising, onboarding, training and then managing a dismissal is not trivial. If employers cannot be confident that they will have a window in which to assess a new hire, including on soft factors such as team dynamics, initiative or client manner, they will become more conservative. They will play it safe. Who loses then? Again, it is the person who just needed someone to give them a chance. My amendment offers a better path. It reduces the qualifying period for unfair dismissal from two years to six months, a meaningful extension of protection for workers. It also creates an initial period of employment following that six months in which a simplified process and lower compensation cap would apply. That strikes a fair balance, giving employers space to assess suitability while ensuring that bad-faith dismissals still carry consequences. Crucially, it also removes the sweeping power given to the Secretary of State in the Government’s clause to modify Section 98(4) of the Employment Rights Act, a power that could drastically shift the fairness test without proper parliamentary oversight. Employees already have day-one protections against discrimination and automatically unfair dismissal, as they should. However, general unfair dismissal should be subject to a short and defined qualifying period that employers understand and workers can plan around. My amendment delivers that clarity. It also avoids a situation where employers are left wondering whether a dismissal based on fit or reliability will land them in court, even when handled with care. We have to be clear that jobs are not abstract concepts; they are costs. In the early stages, even the most promising employee is an investment that takes time to repay. Employers need space to make those judgments. This Bill, as it stands, puts a thumb on the scale in favour of caution and against second chances. That is not fair, that is not just and that is not how we grow a dynamic, inclusive labour market. I beg to move.

My Lords, I have two amendments in this group, Amendments 50 and 67, which, like the amendments the noble Lord, Lord Sharpe, has just spoken to, which I have also added my name to, relate to day-one unfair dismissal rights. I thank the noble Lords, Lord Leong and Lord Katz, for making time to discuss this issue with me, for which I am very grateful. The introduction of day-one dismissal rights will have a range of consequences: in particular, additional costs to business, which the impact assessment says will run to hundreds of millions a year and the Government themselves says will fall disproportionately on smaller businesses; and greater numbers of tribunal cases on an already overloaded tribunal system. But the most important impact is on people who are looking for work, especially those with riskier profiles: young people trying to get their first step on the employment ladder; people trying to get off benefits; people with health issues; people changing careers; ex-offenders and so on. The Government rightly want to get all of these into work, but the Bill will make that more difficult, not easier. The current law, with the two-year qualifying period, allows an employer to take a risk on someone—to give them the benefit of the doubt—without facing the risk of an employment tribunal claim if it does not work out. This Bill ends that. An employee will be able to claim for unfair dismissal from day one, and the only valid grounds for fair dismissal will be capability or qualification to do the job, conduct by the employee or some other undefined substantial reason relating to the employee. These reasons are essentially the same as the current reasons for fair dismissal after the qualifying period in today’s law, and they cannot be changed by the regulations that the Government intend to use to create a new—again undefined—type of probation period. Employers will no longer be able to let someone go during a probation period because it is not working, without risking an unfair dismissal claim. So what will be the result? Simply, employers will now have to think twice before hiring anybody with a less than perfect employment record. The Bill will make it harder for an employer to take a chance on such people, to give them the benefit of the doubt. To quote the Federation of Small Businesses: “all it’s going to do is make small employers more reluctant to recruit and fearful of being open to vexatious claims … It’s those furthest from the jobs market who will then suffer, because the less risk small employers can afford to take, the fewer second chances, fresh starts and first jobs they’ll be able to offer”. If anyone is in any doubt, the Government themselves state the same effect in the impact assessment. I will not repeat what the noble Lord, Lord Sharpe, quoted, but this is what the Government also know and think. We already have a million young people not in employment, education or training—the so-called NEETs. If we want to solve that, we need employers who want to take them on, who will take a chance and give them that first all-important opportunity. So, why on earth would we want to make it riskier for employers to take that chance? You would think, therefore, that there must be a good, well-evidenced reason why this Government would decide knowingly to make it more difficult for young people to get their first opportunity to work. I have asked several times during this process for evidence that the existing law is in fact causing any problem. There is no evidence given in the impact assessment, and I have had no real answer to that question. In Committee, the Minister’s answer was: “We have worked with academics who are looking at this subject. I reassure the noble Lord that we have looked at this and are confident that the benefits in this particular case will outweigh the risks”.—[Official Report, 21/5/25; col. 333.] That really is not good enough to take action that the Government themselves acknowledge will damage the life chances of the most vulnerable or those just starting out. Employers do not dismiss people lightly, even during a probationary period; hiring and training are expensive and time-consuming, so employers are strongly incentivised to try to get it right. But it is a fact of life that sometimes, with no fault on any side, things do not work out. As the Minister knows, the noble Baroness, Lady Finlay of Llandaff, wanted to speak in this debate, but, unfortunately, she cannot be here today. She has asked me to point out the impact this change could have on GPs. Not being able to let someone go if the fit or culture is wrong is extremely serious for a small business—as the noble Lord, Lord Sharpe, described—but in a GP practice it could put lives at risk. GP practices tend to be small teams who must work together well and with great understanding and support. An employee who does not fit with the rest of the team could lead to miscommunication, appointment issues and so on. In healthcare, such errors could compromise patient welfare and could even have fatal consequences. It is essential that people can be easily let go if it is not working out in the early stages of their employment.

16:45:00

However, we have to recognise that this is in the manifesto, so we need to try and find a compromise. My amendments try to do that, as do those in the name of the noble Lord, Lord Sharpe. I think we can all agree that the current two-year qualifying period is longer than it needs to be; in the vast majority of cases, six months should be sufficient for an employer to know if the relationship is working. My amendments would therefore simply shorten the qualifying period to six months. Most importantly, they would retain the ability to dismiss without reason during that shortened period, so retaining the critical ability to take a risk on someone. My amendments aim for simplicity. They would retain the existing law but dramatically shorten the period, which I think goes a long way towards the spirit of the manifesto, if not the letter. The noble Lord’s amendments are a little more complex, with the two-stage process that he described, but the end-result would be similar so I am happy to support him.

The Government intend to consult on the probation period. They say they have nine months in mind and talk about a light-touch process during that period. However, the Bill expressly limits the reasons for dismissal that can be used during the initial period to the reasons that I have already outlined: capability or qualification, conduct or some other substantial reason relating to the employee. That prejudges the consultation process, and in no way is that a light-touch process. A probation period that does not allow the employment to be terminated simply because it is not working out or it is not a fit is not really a probationary period.

I mentioned the manifesto commitment, and I am sure the Minister will remind us of that, so I draw her attention to a commitment in the same paragraph of the manifesto:

“We will consult fully with businesses, workers, and civil society on how to put our plans into practice before legislation is passed”.

It seems it is okay to ignore that manifesto undertaking, since the consultation on this critical change, and many of the others in the Bill, will take place after the Bill has passed. The Government might argue that the legislation being passed includes the regulations, but the problem there is that the Bill itself prejudges the consultation by restricting the valid reasons for dismissal during the probation period.

These amendments may not be the only way to encourage employers to take a risk on people. The key is to remove the risk of a tribunal claim during the probation period. There may be other ways to do that, perhaps by looking at the allowable reasons for dismissal during the probationary period, and I am certainly ready to find a constructive answer to that if the Minister is willing to continue discussions.

However, the Government know what the impact will be; they say so in the impact assessment. They have provided no evidence at all that there is a problem to solve. So there is no other way to put it: with this Bill, the Government are knowingly and deliberately damaging the life chances of the most vulnerable, particularly young people trying to get their first step on the employment ladder, and for no apparent tangible benefit. I urge them to think again. In the absence of constructive commitments from the Minister, I will support the noble Lord, Lord Sharpe, if he decides to press his amendments.

My Lords, I support Amendments 49 and 50 and Amendment 51, to which I have added my name. I agree with the case that my noble friend Lord Sharpe of Epsom has made, and with the arguments put forward by the noble Lord, Lord Vaux of Harrowden. I point out that the detail of the arrangements for improving protection against unfair dismissal was one of the areas that provoked the widest debate in Committee. Some 21 noble Lords spoke, and nearly all were concerned about the perverse effects of completely removing the two-year qualifying period. When we discussed my concerns in Committee, the Minister said that when I saw the Government’s implementation plan I would be reassured. However, while it is generally helpful, all it says on this matter is that in summer/autumn 2025 they will consult on: “Giving employees protection from unfair dismissal from ‘day 1’, including on the dismissal process in the statutory probation period”. So we still do not know what the rules will be. I believe that the approach the Government are taking of making up the vital detail of legislation after Bills have passed, so well exemplified here, as the noble Lord, Lord Vaux, has said, is profoundly undemocratic. This is giving too much power to the Executive. The Minister should be able to tell us categorically today that employers will be able to dismiss unsatisfactory staff without risking a tribunal during a probation period of six or nine months. I will not repeat all I said in Committee from the historic perspective of a good employer like Tesco. We even had a unique partnership with the trade union USDAW, seemingly very different from some of the public sector unions dominating this Bill. My main current concern, as the Minister knows, is that day-one rights will make employers extremely nervous about taking on new employees, especially the young or those with a risky track record like the unemployed or the disabled. This will kill growth. My noble friend Lord Sharpe talked about the disincentive to hire. That sums it up perfectly. There is government evidence to support this. DBT’s economic analysis of 21 October 2024 admits, in section 16, on unintended consequences, that: “There is some evidence that employment reforms make employers less willing to hire workers including evidence specific to the strengthening of dismissal protections. For example, the OECD noted that more stringent dismissal and hiring policies involve an inherent trade-off between job security for workers who have a job, and firm adaptability to changes in demand conditions or technology”. In other words, lower growth. The provisions will require significant extra internal resource to ensure compliance. It will be necessary to implement cumbersome administrative procedures across all businesses for all employees from day one, and indeed in the public sector. It will make the introduction of Making Tax Digital look extremely easy in contrast. It is a looming tragedy for smaller businesses already drowned in regulation. Above all, it will increase costs, adding to the jobs tax in the last Budget, and at a time when the Chancellor is promising to reduce red tape. Another certainty, as we have heard, is that the changes will increase the traffic through employment tribunals. There is already a tremendous backlog of 50,000 cases in the system. I know someone whose case has been listed for 2027. Because it is important, I am extremely keen to help the Government find a way out of this unfortunate set of circumstances. The fact is that sometimes, appointments do not work out, and it is no one’s fault. I accept that that should normally be clear within six or nine months, which I believe the Government are contemplating for their probation period, but we need certainty on this and probably a government amendment before the Bill becomes an Act. For me, this uncertainty, which is why I have chosen to speak from the Back Benches on an area outside my own responsibility, could prove to be the very worst aspect of this Bill. I hope that, even at this late hour, the Government will think again.

If there is not to be a sensible probation period, is any employer going to have the courage to take on an ex-offender?

My Lords I support the amendments in this group because they would mitigate the potential damage to employment from the perspective of both the employer and the employee, whether that employee is a jobseeker or someone recently appointed. The danger exists particularly in this clause. As your Lordships know, Clause 23 and the linked Schedule 3 repeal Section 108 of the Employment Rights Act 1996. They remove the qualifying period of employment and make further amendments to the Act in respect of the repeal. Section 108 stipulates that the protection under Section 94 of the Act, which establishes the right not to be unfairly dismissed, subject to certain conditions, does not apply to the dismissal of an employee unless he has been continuously employed for two years. During this two-year extended training period—for that is what it is, and I speak as an employer—when you induct a new employee, you know that if they do not work out, and there are clear headings governing this under law, they can be let go without unfair dismissal claims. Now, that is to be removed by Clause 23 and Schedule 3. We are repealing Section 108 of the 1996 Act, one of the basic building blocks of employment law in this country. This is one of the most familiar and important pieces of legislation for the labour market. As my noble friend Lord Sharpe and the noble Lord, Lord Vaux of Harrowden, have said, it helps offer protection to both parties. It makes for a fluid labour market and avoids the zombie businesses which do little for the wider economy and militate against growth. I will not go through each of the amendments because noble Lords have heard about them already, but they would facilitate good working practices for both parties. Those looking for a job would be more likely, as we have heard, to be appointed. There will be more job vacancies, which, as we know, have sadly fallen and continued to fall over the last year. Those looking for a job would be more likely to find one and more likely to start their first job, as we have already heard today. The employer would be able to take a risk, as we have heard today—to take a chance on a new employee. Taking on a new employee involves a great commitment. It involves the commitment not only of a salary, which is only a small fraction of the cost, but of time, training, patience, showing the ropes and bringing someone into the culture of the organisation, so that they can contribute as a happy, contented, productive and effective member of the team. With this clause, we will not have the protections of that. I cannot think of any small employer who will not think twice about taking on a new person, and this will have very bad effects on the economy and growth. We know there are legal grounds already for unfair dismissal in respect of the job itself. They include conduct, capability, redundancy, legal restrictions on employment and other substantive reasons. Noble Lords have spoken about these today, but there are cast-iron reasons for not being unfairly dismissed. You cannot be dismissed as a whistleblower or for discrimination, and these do not require the two-year qualifying period. The law takes care of this. Now, with the removal of the two-year period goes the protection for the employer and the opportunities for new employees particularly, but also for many employees who want to change jobs and start a new walk of life. They may find they are not so good at what they were doing and want to try their hand at a new job. They need time to settle in, just as the new person coming into their first job does. I am not at all convinced that this initial period, which Ministers have told us will have a lighter touch in respect of unfair dismissal arrangements, will actually be very helpful. Some law firms fear that it will impose pretty much the same strictures on an employer. We really need to know from the Minister what exactly the period will be and what the arrangements for unfair dismissal during that period will be, because I cannot see how we can have a Bill setting all this out when we do not know what is intended. Like other noble Lords, I would value some statement. I do not need to refer to the compliance cost, the impact assessment that estimates hundreds of millions of pounds, or the additional complexity in the recruitment process. Added to the other measures in the Bill, Clause 23 and Schedule 3 add a new dimension of insecurity. If we are to have businesses, particularly small businesses, willing to grow, to raise productivity as the Government want and to hire the new employees needed to raise that productivity, the Government should welcome Amendment 49 and all the amendments in this group. They accept the spirit of the manifesto pledge and go some way in helping the Government to get out of the mess, which is of their own creation.

17:00:00

My Lords, I broadly support this group of amendments and, in particular, Amendment 49 in the names of the noble Lords, Lord Sharpe and Lord Hunt. My noble friend Lord Vaux’s more straightforward Amendment 50 would reduce the length of the qualifying period from two years to a minimum of six months, during which an employee may not claim unfair dismissal. I am happy to agree with the Government that the current two-year period for effective probation, from my experience as an employer, is excessively long and merits revision. Like others, I understand that the Government are consulting on the length of the IPE, the initial period of employment, and that nine months is being suggested. However, given that most permanent employees have a formal annual review at 12 months, during which their remuneration and performance are reviewed, I think it is fair and transparent that the 12-month review also represents the end of the probationary or qualifying period. That provides clarity to both sides and, I believe, is sufficient time for the employer to assess the employee’s performance, competence and cultural fit. I accept that, in the majority of cases, performance issues during probation surface within the first six months. A proactive employer should then step in to either articulate a performance improvement plan for the next six months, with clear markers and milestones, or come to an early conclusion that this is not going to work out and move on to dismissal. But if we overly squeeze the probationary period, we will deter employers, particularly entrepreneurs, from the creation of new jobs by reducing their appetite to take a risk on new recruits, as we have heard, which is surely not what the Government intend. Clause 23 and Schedule 3 threaten to be a real menace for two groups of employer in particular. The first, as we have heard, is those sectors with naturally high staff attrition rates given the nature of their business, such as retail and hospitality. The second, perhaps less obviously, is those businesses that rely on particular job functions that carry higher risk and performance requirements, in particular sales, marketing and business development jobs that run across so many of our economy’s key sectors: everything from sales on the floor, in the park or in the kiosk, and, yes, telesales—which we all try to avoid—to those involved in B2B business development and client account management. I know from personal experience in advising start-ups and scale-ups that these are critical, revenue-generating roles with strong personal performance criteria where much of the remuneration comes—quite correctly—in the form of performance-related pay. We will do real damage to productivity and economic growth if we do not allow fair and proper time for assessment of these types of roles without the threat of unfair dismissal hanging over employers’ heads prematurely. That said, I will support Amendment 49 if it is put to the vote.

My Lords, I support the amendments tabled by my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral, as well as those proposed by the noble Lord, Lord Vaux of Harrowden. Throughout our debates, one thing has become clear: Clause 23 is one of the more troubling areas for the business community and therefore potential employees. That concern is reflected not just in what we have heard in this Chamber but in the Government’s own impact assessment. When a company hires someone new, it takes a risk. No matter how impressive someone’s CV may be or how well they come across in interview, things do not always work out, as we have heard. That is why probation periods exist. They give both the employer and the employee a chance to assess whether it is the right fit. I have seen this at first hand in my own company, Marsh Ltd. For small businesses in particular, hiring someone new, especially during a period of growth, can be a major financial and operational commitment. When things do not work out, the company should not be left to carry all the burden because of a mismatch that is no one’s fault. Introducing a day-one right to claim unfair dismissal outside the already established exceptions places a heavy weight on employers. It could discourage them from hiring altogether. Worse still, it may lead to pressure being placed on existing staff, who are asked to do more because their employers are hesitant to take on new people. In the Financial Times, the Chancellor said an excessive safety-first approach was not seen in any of Britain’s global competitors, adding: “It is bad for businesses, bad for growth and bad for working people”— a description of this Bill and Clause 23 in particular. These amendments offer a sensible middle ground. They would reduce the current qualifying period for unfair dismissal protection from two years to six months. That strikes me as fair and proportionate. It matches the length of the probation period used in many companies, and certainly in the one I work for. Six months should be enough time to determine whether someone is right for the role. These amendments would make it better for business, better for growth and better for working people. That is why I support them.

My Lords, I support the amendment. It seems to be a reasonable change to get rid of the two years, and I think six months is a more reasonable representation. My question, though, is about how this will affect police officers. Police officers are not employees. Their terms and conditions are governed by secondary legislation or police regulations. It is already quite difficult to remove the ones who should be removed because, first, they are represented by lawyers—I say this with all respect to the lawyers in the room—in the misconduct process. It never makes it quicker, and it always makes it more expensive. Secondly, when the assessment is made of whether the proof is there to sack them, the test of the standard of evidence is moved from the balance of probabilities to beyond reasonable doubt. That is the same standard for criminal proof, so it is quite a high standard, and they are represented by a lawyer. It gets quite difficult. The two-year probationary period has always been a good way to remove those people who should be removed or who are not suited to the role. If we are to remove that two-year period, one of the measures by which we get rid of the worst officers will be lost, and I worry about that. We know from research that often the officers who turn bad later should have been removed in their probationary period, had everyone had the courage to take that decision. I am not saying that it is wrong or right, nor that the police regulations should definitely change, but I would like to understand what the Government’s reaction is. We will have a group of people who are not classed as employees—police officers—who will still have a two-year period and, under the new scheme, might have none at all. This is a group I think we should pay particular attention to. Perhaps the Government might give their view on how they intend to deal with that.

My Lords, I will begin with an explanation. When I supported the amendment from the noble Lord, Lord Vaux of Harrowden, in Committee, there was concern about a risk assessment that said that if there was no probation period, it would be quite difficult for some employers to take people on. The same question was then posed, rather more sharply, by the noble and learned Lord, Lord Phillips: would you employ an ex-offender if there was no probation period at all? That little sentence requires probing. Last time, I began with apprenticeships. In particular, I spoke about a young man called Oscar, who has been taken on by one of our best plumbers in Berwick, and I said that I hoped he qualifies. I was about to move on to the actual amendment when I said that, when Oscar finishes his apprenticeship, he will have an interview with his current employer and some other people, and that if he passes that interview he will be expected to serve a period of probation, and that this wonderful plumber would not be likely to retain Oscar if there was no probation period. That is where I was going to end. It is right that we remove the two-year qualifying period, which is too long, but I am not so sure that it should be nine months. In the Church of England, no cleric is an employee because they are all self-employed. I remember a wonderful case where someone complained about a bishop for something they had said to this particular clergy, who had gone to a tribunal after a series of reviews that showed that he was not competent in what he was doing. At the end of the hearing, the clergy was told that he was suing the bishop but that the bishop was not his employer—his employer was God. He was told that if he could bring God into this, he could sue him because he was self-employed and answerable only to God. We have lived without this worry, but the more I have worked with a lot of people and become a trainer for some, the more I have realised that, if we remove the probation period, we are going to find ourselves in a very difficult situation. The people who are more likely to miss out are young people who need some mentoring and support, and who can be directed to different things. I am not sure where this is coming from. There are, of course, bad employers, who like to dismiss people at the shortest notice. If we went for six or 12 months in the statute, most employers would abide by what they have taken on. Let us give a good word to employers and not think that all of them simply want you to get out as soon as you come in. I support Amendments 49, 50 and 51. If all of them are put to a vote, I will be the first into the Lobby.

My Lords, I support this group of amendments, as the initial period of employment is so important to both employers and employees. I declare my interest in the register as the part owner of an SME veterinary practice that employs 140 employees. I am one of those people who will suffer from Clause 23, which is changing our views because of the uncertainty it will bring. Your Lordships have made many very important points that I will try not to repeat. As employers, we still have no details of when the consultation on probation periods will be launched or how it will work, again creating uncertainty. Probation periods are so important to both employees and employers. The start of a new job is very important for both parties and is, we hope, the start of a long and productive relationship. Employers value employees who stay for many years, as the cost of employing individuals is so expensive. Employees have flexibility at the start of a job, with generally a week’s notice. All we ask is for flexibility for employers as well. That is what probation periods grant, but the Bill will potentially remove these. Why is the probationary period so important for employers? It is a time to assess whether the individual that you have employed has the capacity to do the required tasks of the job. Do they have the skills that they said they have? Do their skills meet the standards that you set for your business? Is their attendance of a reasonable standard to be part of a team? Do they fit the culture of the business and hold similar values? If the employee, for whatever reason, does not fit, the employer has to go through a long, time-consuming and unfair dismissal process, even when someone has been in the business for two or three weeks or a couple of months—a process that uses up valuable management time and brings uncertainty for the employee. In some cases, it is blatantly clear that this relationship between the employee and the employer is not going to work. As said by the noble Lords, Lord Sharpe of Epsom and Lord Vaux of Harrowden, we need guidance on the initial period of employment, as it is so important for employers to take on employees who may be disadvantaged in the job market. If employers want to give them a chance but have no clear guidance or a short probation period, they will not take a risk that could benefit potential employees and those who, in the long term, may become really valuable with some time. This group of amendments seeks to bring important parts of the employment relationship into the Bill, rather than waiting for a long, detailed consultation, with no details. It would help the Government’s plan to make work pay by encouraging all into work. That is why I support this group. If the noble Lord, Lord Sharpe, calls for a Division, I will follow him into the Lobby.

17:15:00

My Lords, I will be brief—not quite as brief as the noble and learned Lord, Lord Phillips of Worth Matravers, but I shall do my best, and I promise to keep away from the police and definitely the clergy. I had lunch with the right reverend Prelate the Bishop of Manchester, so I think I am safe for today. While we agree that the current two-year qualifying period is too long, we are concerned about removing it entirely without a clear statutory probation period in place. This could leave businesses in a state of uncertainty, with a gap between the removal of the qualifying period and the introduction of the new probation framework. It risks inconsistency in employment tribunals, as claims will be judged under a system that lacks clarity until the probation period is formally established. Amendment 49, in the name of the noble Lord, Lord Sharpe, would reduce the qualifying period to six months. Most other amendments in this group are consequential to ensure legislative consistency. We are gently supportive of this amendment, as it would reduce the timeframe for an employee with a plausible case to claim unfair dismissal, while allowing businesses time to correct genuine and non-pernicious hiring mistakes. If the noble Lord were to test the opinion of the House, we would support him on this occasion.

My Lords, this Government were elected on a manifesto to provide unfair dismissal protection from day one of employment—not two years, not six months, but day one. To deliver this commitment, we will remove the qualifying period for these rights. The Government recognise that, from time to time, employers will need to fairly dismiss an employee for a fair reason. We expect that most employers already fairly dismiss employees, and the process need not be too arduous. Our changes will not prevent fair dismissal. An employee who has been working in the job for some time but whose performance has dipped will continue to have the standard protections against unfair dismissal. However, the Government believe that it is not right to expect employers to have to meet the same standards in the first few months of employment when they are assessing their newly hired recruit and deciding whether that person can deliver what the employer expects. This is why our policy creates a statutory probationary period, during which light-touch standards for dismissal relating to an employee’s performance and suitability will apply. The noble Baroness, Lady Lawlor, asked what length the probationary period would be. As we have said previously, the Government’s preference is for nine months. We intend to consult on the duration and how the light-touch standards will operate. The current two-year qualifying period is designed not as a training period but a qualifying period before the individual can claim unfair dismissal. If the amendments tabled by the noble Lords, Lord Sharpe and Lord Vaux, were to be accepted, employees would still have the threat looming over them of being fired arbitrarily. Amendment 51 preserves the policy in the Bill of exempting a dismissal due to a spent conviction for many qualifying periods—a point raised by the noble and learned Lord, Lord Phillips. I am pleased that the noble Lords agree with the Government’s policy, at least to that extent. However, I can tell the noble Lord, Lord Vaux, that the Government do not believe in protection for some workers in some limited circumstances; instead, they believe in protection for all employees, benefiting 9 million people. The noble Lord spoke about the needs of young people looking for work. Of course we identify with that, and the Government are committed to supporting people as they take their first steps into the world of work or return to work. As the Prime Minister set out on the Get Britain Working White Paper in November 2024: “Our country’s greatest asset is its people”. As I explained in Committee, we are “transforming the apprenticeship levy into a new growth and skills levy that will deliver greater flexibility” for learners and employers “aligned with the industrial strategy”. This will include “shorter duration and foundation apprenticeships in key sectors, helping more people to learn new high-quality skills at work, fuelling innovation in businesses across the country, and providing high-quality pathways for young people”.—[Official Report, 21/5/25; col. 305.] We also intend to limit unpaid internships for those who are part of an education or training course. The law is clear that, if an individual is classed as a worker, they are entitled to at least the national minimum wage and anyone eligible must be paid accordingly. Beyond enhancing learning on the job and ensuring that a fair wage is paid for young people’s work, we also believe that all employees should be provided with security of work through protections from being fired arbitrarily. It is no less distressing to lose a job at the start of your career than at any other point in the years that follow. However, the Government recognise that employers use probationary periods to assess new hires’ performance and suitability for their role. We will ensure that UK businesses can hire with confidence. The noble Lord, Lord Sharpe, talked about social mobility. We recognise that good employers take a chance on what we might call “rough diamonds” up and down the country. The valuable time that employers take to support new hires by developing their skills and their talents on the job is not recognised often enough. The statutory probationary period will enable this, with light-touch standards for fair dismissals. We have said explicitly that our intention is to provide for a less onerous approach for businesses to follow to dismiss someone during their statutory probationary period for reasons to do with their performance and suitability for the role. Of course, that will apply equally to healthcare employees. The noble Lord, Lord Sharpe, talked about potentially increasing the number of tribunals. Provided that the employer can show that the reason for dismissal was fair, they should have no concerns about the outcome, as nothing is really new from the current situation. The noble Lord, Lord Hogan-Howe, asked about police officers. I understand that they are excluded from the existing legislation, as they would be from the Bill. In that sense, there is no change. Noble Lords have raised the issue of a cultural fit, which, of course, can mean many different things. “Not a good fit” is often used euphemistically to refer to attributes such as an employee’s work ethic, their level of commitment to the job, or how they interact with their colleagues. In many situations, these reasons will fall into the category of dismissal for conduct or capability, to which the new light-touch standards will apply. If the cultural fit is linked to a protected characteristic then of course dismissing someone for that reason could lead to discrimination claims, and the Bill does not affect that. Beyond these reasons for dismissal, which clearly fall within the conduct and capability category, the Government will carefully consult on what other kinds of “some other substantial reason” dismissals should also be subject to those light-touch standards. The Bill contains a power for the Government to define what a “some other substantial reason” dismissals “relating to the employee” should mean. As I have noted, the intent is to define what relates to an employee’s performance and suitability for their role. We will welcome employers’ and trade unions’ input on that important issue. However, these amendments would remove the Government’s statutory probationary period to enable light-touch standards for fair dismissals for the first nine months of employment. Noble Lords asked about consultation. We have already consulted on the proposals, and we are continuing to engage with trade bodies and trade unions prior to publicly consulting later this year. The Secretary of State for Business and Trade issued a letter to stakeholders on Thursday 26 June, which outlined the fundamental principles that are guiding the Government’s development and implementation of day-one rights to unfair dismissal protections and invited stakeholders to engage on the detail of the policy. Should your Lordships be interested, I have now placed a copy of that letter in the House Library. I should also say to the noble Baroness, Lady Neville-Rolfe, that the road map shows that these day-one rights, including protection from unfair dismissal, will not be introduced before 2027. In the meantime, these amendments would not deliver on the Government’s manifesto commitment to introduce a day-one right against unfair dismissal, leaving many newly hired employees without robust employment protections. I therefore ask noble Lords not to press their amendments. Finally, my Amendment 52 is simply a minor technical amendment that corrects a cross-reference in Schedule 3. With that, I ask the noble Lord to withdraw Amendment 49.

Before the Minister sits down, is nine months now the Government’s official position on the initial period? If it is, can they confirm what they are minded to put into their light-touch unfair dismissal arrangements?

My Lords, as we have said before, we will continue to consult on this but that is our preferred option at this stage. We think that is a reasonable balance between the current arrangements and some of the proposals we have before us today.

My Lords, I am enormously grateful to the Minister for her response. It was remiss of me earlier not to thank the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Neville-Rolfe for signing various amendments. I am grateful to the noble Lord for his comprehensive and powerful speech, and for reminding us of the comments made by the noble Baroness, Lady Finlay of Llandaff, about GP surgeries. As the noble Lord, Lord Goddard, pointed out, we have heard from the police, doctors, businesspeople, lawyers, vets and the clergy, and there was no argument in favour of the status quo but there were powerful arguments for common sense. I wonder whether the silence from the Government Benches indicates a degree of unease in what we are debating—a change that will fundamentally alter the balance of risk in hiring, at a time when unemployment has risen in every month that this Government have been in power. This clause will do nothing to promote fairness in the workplace. It will erode flexibility, choke opportunity and harden the barriers that those on the margins already face. The Minister argued that employers have nothing to fear from tribunals, but the Government’s own impact assessment says that they expect the number of cases to rise by 15%, so I am afraid I do not follow the logic of her argument. Also, the Government’s own impact assessment admits—I will repeat this, even though the noble Lord, Lord Vaux, did not—that introducing day-one rights to claim unfair dismissal would “damage the employment prospects of people who are trying to re-enter the labour market, especially if they are observed to be riskier to hire”. As the noble Lord said, the Government already know that, so why are they doing this? The noble and learned Lord, Lord Phillips of Worth Matravers, asked a very to the point question, and the noble and right reverend Lord, Lord Sentamu, made an argument based on his experience. Both noble Lords were, in effect, making the point that this is also the compassionate thing to do. This clause is not ready, safe or wise. We need to avert what my noble friend Lady Neville-Rolfe described as a “looming tragedy”. Therefore, I seek to test the opinion of the House.

1|17:28|304|160|Division on Amendment 49|Amendment 49 agreed.||0|0

The Division result was initially reported as Contents 299; Not-Contents 165.

See col. 1901 for explanation of mistake in voting figures.

17:41:00

Amendment 50 not moved.

If Amendment 51 is agreed, I cannot call Amendment 52 by reason of pre-emption. Schedule 3: Right not to be unfairly dismissed: removal of qualifying period, etc. Amendment 51

Moved by

51: Schedule 3, page 194, line 24, leave out paragraphs 1 and 2 and insert— “1 Section 108 of the Employment Rights Act 1996 (qualifying period of employment) is amended as follows—(a) in subsection (1) omit “two years” and insert “six months”;(b) after subsection (5), insert—“(6) Subsection (1) does not apply if section 4(3)(b) of the Rehabilitation of Offenders Act 1974 (read with any order made under section 4(4) of that Act) applies.”.”Member’s explanatory statement This amendment reduces the qualifying period for unfair dismissal from two years to six months, leaving in place the existing exceptions to that qualifying period in section 108(3) of the Employment Rights Act and adding a new exception in relation to spent convictions.

Amendment 51 agreed.

Amendment 52 not moved.

I suggest that we take Amendment 53 and a number of consequential amendments en bloc. Amendments 53 to 66

Moved by

53: Schedule 3, page 196, line 29, after “employment” insert “beginning with the day after the employee has been continuously employed for the period set out in section 108(1) of the Employment Rights Act 1996” Member’s explanatory statement This amendment provides that the initial period of employment begins after the qualifying period for unfair dismissal.

54: Schedule 3, page 196, line 33, leave out “on or before the last day of” and insert “during” Member’s explanatory statement This amendment is consequential on another in the name of Lord Sharpe of Epsom which provides that the initial period of employment begins after the qualifying period for unfair dismissal.

55: Schedule 3, page 197, line 31, leave out from beginning to end of line 2 on page 198 Member’s explanatory statement This amendment provides that the initial period of employment begins after the qualifying period for unfair dismissal.

56: Schedule 3, page 198, line 10, leave out paragraphs (b) and (c) Member’s explanatory statement This amendment provides that the initial period of employment begins after the qualifying period for unfair dismissal.

57: Schedule 3, page 198, line 20, after “occurs” insert “before the employee has been continuously employed for the period set out in section 108(1) or” Member’s explanatory statement This amendment provides that an employee is not entitled to a written statement of reasons for dismissal if the employee is dismissed during either the qualifying period for unfair dismissal or the initial period of employment.

58: Schedule 3, page 198, line 27, after “substitute” insert “she has been continuously employed for any period or” Member’s explanatory statement This amendment is consequential on other amendments to Schedule 3 by Lord Sharpe of Epsom and provides that an employee is entitled to a written statement of reasons for dismissal if dismissed when pregnant or on maternity leave, regardless of length of service.

59: Schedule 3, page 198, line 30, after “substitute” insert “he has been continuously employed for any period or” Member’s explanatory statement This amendment is consequential on other amendments to Schedule 3 tabled by Lord Sharpe of Epsom and provides that an employee is entitled to a written statement of reasons for dismissal if dismissed when on adoption leave, regardless of length of service.

60: Schedule 3, page 198, line 32, leave out sub-paragraphs (3) and (4) Member’s explanatory statement These amendments are consequential on others to Schedule 3 in the name of Lord Sharpe of Epsom.

61: Schedule 3, page 198, line 39, leave out sub-paragraphs (6) to (10) Member’s explanatory statement These amendments are consequential on others to Schedule 3 in the name of Lord Sharpe of Epsom.

62: Schedule 3, page 199, line 12, leave out paragraph 7 Member’s explanatory statement These amendments are consequential on other amendments to Schedule 3 in the name of Lord Sharpe of Epsom.

63: Schedule 3, page 199, line 22, leave out sub-paragraph (2) Member’s explanatory statement These amendments are consequential on other amendments to Schedule 3 in the name of Lord Sharpe of Epsom.

64: Schedule 3, page 199, line 38, leave out paragraphs (b) to (d) Member’s explanatory statement These amendments are consequential on other amendments to Schedule 3 in the name of Lord Sharpe of Epsom.

65: Schedule 3, page 200, line 1, leave out paragraph 11 Member’s explanatory statement These amendments are consequential other amendments to for Schedule 3 in the name of Lord Sharpe of Epsom.

66: Schedule 3, page 200, leave out lines 11 to 22 Member’s explanatory statement These amendments are consequential on other amendments to Schedule 3 in the name of Lord Sharpe of Epsom.

Amendments 53 to 66 agreed.

Amendment 67 not moved.

Clause 26: Dismissal for failing to agree to variation of contract, etc

Amendment 68

Moved by

68: Clause 26, page 46, line 14, leave out “and” and insert “to” Member’s explanatory statement This amendment is consequential on my other amendments of clause 26.

My Lords, these government amendments are tabled in the name of my noble friend Lady Jones of Whitchurch. They target the application of the clause to a set of restricted variations, to better focus the measures on unscrupulous “fire and rehire” tactics. We have heard many representations from both businesses and trade unions on the effect of this measure, and we have listened to the well-argued points in this House and the other place. We have greatly valued the input and co-operation of groups across industry on this issue, including the CBI, the British Retail Consortium and their members, as well as the TUC, Unite, USDAW, the RMT and many other businesses and trade unions. It is our intention to ban the unscrupulous use of “fire and rehire”, and we were elected on a manifesto commitment to do so. However, we want to avoid unnecessary restrictions on the ability of employers to make essential operational decisions. Amendments 69 to 72, 77, 79, 82, 86, 91 and 92 mean that fire and rehire will be an automatic unfair dismissal in relation to restricted variations unless the employer is in severe financial difficulties and has no reasonable alternative. These restricted variations are pay, number of hours, leave entitlement and those changes to shift patterns that will be specified in regulations.

17:45:00

Dismissals in relation to other contractual changes, such as location and job role, will be subject to ordinary unfair dismissal rules, with enhanced protections to ensure that employers meaningfully consult and negotiate with employees when doing so. This should include consultation with trade union representatives where there is a recognised trade union. These changes have been made to strike the right balance between protecting employees against unconscionable “fire and rehire” practices and giving employers the flexibility they need to operate effectively.

We will take time to make sure that the measure is effectively targeted through consultation so we are able to take account of stakeholder views when specifying which expenses and benefits in kind are excluded from the restricted variation of pay and which changes to shift patterns will be a restricted variation so that the clause strikes the right balance.

On Amendment 78, we want to make sure that fire and rehire will not be used to reduce employees’ rights for those employed in the private sector and the public sector alike. This amendment will clarify when public and private sector employers can use fire and rehire for restricted variations under the exemption in the clause. This will mean that in both the private and public sectors, fire and rehire for restricted variations can be used only if the employer is facing severe financial difficulties, so that this practice is only available in the narrowest of circumstances.

Amendments 76, 80, 81, 83 to 85 and 89 further provide that local authorities can only use fire and rehire to make restricted variations when they are experiencing financial difficulties and are under statutory intervention as a result of those difficulties. They must also show that they had no reasonable alternative.

Local authorities are more complex compared with other public sector employers by nature of their funding and finances and therefore require a bespoke financial difficulties exemption which takes account of that. These amendments will make it clear to local authorities and their employees when they would meet the exemptions under Clause 26. This will mean that for all employers, restricted variations can be used only if the employer is facing severe financial difficulties, so that this practice is available only in the narrowest of circumstances.

On Amendments 68, 87, 90 and 93, these amendments will specifically stop unscrupulous employers being able to fire their employees and replace them with non-employees, such as agency workers, to do essentially the same role while undercutting wages and other protections.

However, it is important that businesses retain flexibility to carry out legitimate business practices involved in restructuring and outsourcing. Employers will still be able to restructure their businesses and, where necessary, replace employees with non-employees where there is a reduced business need for a particular type of work. For example, if an employer was moving to a seasonal business model, they would still be able to make employees redundant if necessary and engage non-employees to carry out the reduced amount of work. This will prevent unscrupulous employers undermining the protections in this clause by firing and replacing staff with non-employees to do substantially the same work. This amendment will ensure that the Bill is comprehensive in undressing unscrupulous “fire and rehire” and “rehire and replace” practices. I look forward to hearing noble Lords debate the amendments that they have table to this clause. I beg to move.

My Lords, the amendments in this group relate to the Bill’s provisions on fire and rehire. I think there is a consensus across the House that the most outrageous cases of fire and rehire should be outlawed. The particular case and example is P&O Ferries, which was not so much fire and rehire, but just fire: nearly 800 staff were dismissed without consultation or notice. Nevertheless, it serves to highlight the urgent need for stronger protection for workers and clear restrictions on the use of fire and rehire. The series of government amendments in this group clarifies that distinction through the introduction of restricted variations that would permit contract negotiation to proceed in limited circumstances. Government Amendment 72 sets up the condition of restricted variation which, in short, it defines as the removal or weakening of entitlement relating to pay and broader terms and conditions. This approach reflects the intentions behind my Amendment 75, which would allow contract variations where they are not detrimental to employees’ terms and conditions and do not concern paid hours. I am glad that the Government have reconsidered the operability of these provisions, and we are happy to support these amendments to the Bill.

My Lords, I agree with the noble Lord, Lord Goddard of Stockport, that, as we warned when we discussed it in Committee, Clause 26 was, as originally drafted, quite simply unworkable. As we reminded noble Lords throughout Committee, the clause was far too broad. It would have captured entirely routine contractual changes, such as simple variation in work location, and treated them as fire and rehire cases. That approach was not only impractical but potentially damaging to employers and employees alike. We therefore welcome the Government’s decision to bring forward amendment that define the concept of a restricted variation. This brings much-needed clarity to the legislation. Although I would not go so far as to say that the clause now flies, it is at least comprehensible. The Minister quoted Unite. May I quote Unite back at him? It has just issued a statement saying that it condemns the Government’s amendments, which in its own way suggests that progress is being made. The Minister would be well placed to consider the rather detailed brief that Unite has delivered, condemning the way in which the Government are now reworking Clause 26. It suggests that progress is being made and all our warnings are coming to fruition. One now has to wonder, I suppose, whether the realisation dawned when someone in Whitehall spotted that the original drafting could have torpedoed the Government’s own plans to relocate 50% of senior civil servants out of London. Of course, these amendments, while helpful, have added layers of complexity. Look at what Clause 26 now represents: it is a recipe for going to Peers such as the noble Lord, Lord Hendy, and asking, “What does this mean?” There is so much here that is very difficult to understand; these amendments have added layers of complexity. The fire and rehire provisions are probably slightly more workable now—I say this slightly optimistically—but, my goodness, they are intricate. No wonder the Government are preparing to consult on the matter in the autumn; that consultation will be crucial. I quote another major figure: Mike Clancy, the general secretary of Prospect. He has warned that “the government must be careful it doesn’t inadvertently create a veto against all contractual change”. Surely that is the risk. Among the restricted variations now listed are reductions in entitlement to pay, changes to performance-based pay measures, alterations to pensions, variations in working hours or shift times, and reductions in leave entitlements. These are precisely the sort of changes that businesses, particularly smaller ones, often need to make—not recklessly, but to adapt, restructure or just survive during periods of financial strain. So we urge the Government to conduct this consultation with care. The views of employers must be front and centre. The impact on small and medium-sized businesses must be fully understood. Yes, constraints matter, but so do incentives. If we are serious about improving employment practice, we must not just punish the worst but support the best. As amended, this clause is better, but we look forward to hearing from the Minister how he will respond to the many criticisms that have been made.

My Lords, I thought for a minute that concord might break out across the House—it did at least partially, but not quite. However, as the short debate we have had today and the debates we had in Committee have shown—the noble Lord, Lord Goddard of Stockport, identified this—there is wide agreement across your Lordships’ House that the unconscionable tactics we saw P&O Ferries use should never be allowed again. We have also heard clear arguments that employers will need to make reasonable operational changes and that this should be permitted. I begin with Amendments 74 and 88 in the name of the noble Lord, Lord Sharpe of Epsom, which seek to make it clear that, where an employer makes redundancies because they have had to change location, this should not be an automatic unfair dismissal. We agree. If there is no longer a job for the employee at a work location because that location has had to close down, this is unfortunate but is still a redundancy situation. That is why new Section 104I will apply only when the principal reason for the dismissal falls within that section. Where an employee’s place of work is closed, the principal reason for their dismissal is likely to be redundancy. We will set out further detail on this matter in our planned code of practice. Further, the changes that the Government are making through their amendments will mean that a change to the location at which an employee works is a non-restricted variation. This means that, even in cases where there is no redundancy situation, a dismissal for failing to agree to a new work location will not be automatically unfair. An employer must still follow a fair process when making such dismissals. Amendment 73 in the name of the noble Lord, Lord Sharpe, seeks to limit the protections in the Bill to cases in which fire and rehire was used to reduce pay and benefits. Government Amendments 69 to 72, 77, 79, 82, 86, 91 and 92 will focus the clause’s protections on variations to certain terms—specifically pay, leave, total hours worked and specified shift patterns. Those terms were identified because variations to them would have a significant impact on employees and should not be imposed under the threat of fire and rehire. This is, we believe, in line with the intention of the noble Lord’s amendment. In his speech, the noble Lord, Lord Sharpe, raised the comments from Unite and Prospect. I think I am right in saying that they were askance. They show that there is a variety of views within the trade union movement as well as across industry. We understand that Unite would like stricter conditions on fire and rehire. We feel that, having consulted a wide range of trade unions—including, of course, the TUC—and a number of business organisations, as well as businesses themselves and representative business organisations, including the CBI and the BRC, we have struck the right balance in the way we have constructed the clause. Amendment 75 in the name of the noble Lord, Lord Goddard of Stockport, proposes to limit the clause to contract variations that are not one of a list of protected terms and are otherwise minor and non-detrimental. The Government’s amendments, which limit the clause’s automatic unfair dismissal protections to a list of restricted variations, achieve the noble Lord’s intended outcome; he very graciously acknowledged this. They also have the benefit of being specific. For example, the Government’s amendments will not require an employment tribunal to come to a decision about whether a variation should be considered minor on the facts of each case. They also give employers flexibility to make reasonable location changes, which employers have told us is an important operational consideration and which would not be possible under the noble Lord’s amendment. I therefore beg to move the amendments in the name of my noble friend Lady Jones of Whitchurch and ask the noble Lord, Lord Sharpe of Epsom, not to move Amendment 73.

Amendment 68 agreed.

Amendments 69 to 72

Moved by

69: Clause 26, page 46, line 25, after “employment” insert “to make a restricted variation (see subsection (3B))” Member’s explanatory statement This amendment and other amendments of clause 26 would limit new section 104I(1) of the Employment Rights Act 1996 to cases where the variation of the contract of employment was of a particular kind. This includes reductions in an employee’s pay or time off and changes to the number of hours an employee is required to work.

70: Clause 26, page 46, line 26, leave out from “employee” to end of line and insert “— (i) did not agree to the restricted variation, or(ii) where the employer sought to make more than one variation, did not agree to a number of variations that included the restricted variation.”Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

71: Clause 26, page 46, line 30, at end insert— “(3A) For the purposes of subsection (3), a contract of employment is a “varied” contract of employment if—(a) the terms of the contract are not the same as the terms of the contract of employment under which the employee worked before being dismissed, and(b) one or more of the differences between the two sets of terms constitutes a restricted variation (see subsection (3B));and, in a case where subsection (3) applies, any reference in this section to the restricted variation is to be read accordingly.”Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

72: Clause 26, page 46, line 30, at end insert— “(3B) In this section “restricted variation” means any of the following—(a) a reduction of, or removal of an entitlement to, any sum payable to an employee in connection with the employment (but see subsection (3C));(b) where the amount of any sum payable to an employee in connection with the employment is determined by reference to a measure of the amount of work done by the employee (including a measure referable to results achieved by the employee), a variation of that measure;(c) a variation of any term or condition relating to pensions or pension schemes;(d) a variation of the number of hours which an employee is required to work;(e) a variation of the timing or duration of a shift which meets such conditions as may be specified in regulations made by the Secretary of State;(f) a reduction in the amount of time off which an employee is entitled to take;(g) a variation of a description specified in regulations made by the Secretary of State;(h) the inclusion in a contract of employment of a term enabling the employer to make any variation within any of the preceding paragraphs without the employee’s agreement.(3C) The Secretary of State may by regulations provide that a reference in subsection (3B) to a sum payable to an employee in connection with the employment does not include a reference to—(a) a sum payable in respect of—(i) any expenses incurred by an employee;(ii) any expenses of a specified description incurred by an employee;(iii) any expenses incurred by an employee other than expenses of a specified description;(b) a payment or benefit in kind, a payment or benefit in kind of a specified description, or a payment or benefit in kind other than one of a specified description.In this subsection “specified” means specified in the regulations.”Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

Amendments 69 to 72 agreed.

Amendments 73 to 75 not moved.

Amendments 76 to 87

Moved by

76: Clause 26, page 46, line 31, at beginning insert “In the case of an employer that is not a local authority,” Member’s explanatory statement This amendment is consequential on my amendments of clause 26 at page 46, line 36 and page 47, line 2.

77: Clause 26, page 46, line 33, before “variation” insert “restricted” Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

78: Clause 26, page 46, line 36, leave out from “affect” to end of line 38 and insert “— (i) the employer’s ability to carry on the business as a going concern, or(ii) where the employer is a public sector employer, the financial sustainability of carrying out the employer’s statutory functions,”Member’s explanatory statement The effect of this amendment is that, for the purposes of the exception to new section 104I(1) of the Employment Rights Act 1996, a public sector employer (other than a local authority) may rely on financial difficulties that are affecting, or likely in the immediate future to affect, the financial sustainability of carrying out the employer’s statutory functions.

79: Clause 26, page 47, line 2, before “variation” insert “restricted” Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

80: Clause 26, page 47, line 2, at end insert— “(4A) In the case of an employer that is a local authority, subsection (1) does not apply in relation to an employee if—(a) at the time of the dismissal, a relevant intervention direction has effect in relation to the authority,(b) the relevant intervention direction—(i) specifies that the reason, or one of the reasons, for the giving of the direction is that the authority is undergoing financial difficulties, and(ii) contains provision relating to the financial management or financial governance of the authority, and(c) the authority shows that—(i) the reason for the restricted variation was to eliminate or significantly reduce, or significantly mitigate the effect of, any of the financial difficulties referred to in paragraph (b)(i), and(ii) in all the circumstances the authority could not reasonably have avoided the need to make the restricted variation.(4B) In determining whether—(a) in the case of a public sector employer (other than a local authority), subsection (4)(b) is met, or(b) in the case of a local authority, subsection (4A)(c)(ii) is met,an employment tribunal must apply the same principles as would be applied by a court on an application for judicial review.”Member’s explanatory statement This amendment provides that the exception for employers undergoing financial difficulties applies to a local authority only if a “relevant intervention direction” has effect in relation to it. It also makes provision about how an employment tribunal should decide whether a public sector employer (including a local authority) could not reasonably have avoided the need to make the variation.

81: Clause 26, page 47, line 4, after “met,” insert “or (where the employer is a local authority) the conditions in paragraphs (a), (b) and (c) of subsection (4A) are met,” Member’s explanatory statement This amendment is consequential on the amendment of clause 26 at page 47, line 2 that inserts a new subsection (4A) into section 104I of the Employment Rights Act 1996.

82: Clause 26, page 47, line 19, before “variation” insert “restricted” Member’s explanatory statement See the explanatory statement for my amendment at page 46, line 25.

83: Clause 26, page 47, line 21, at end insert— “(5A) In this section—“English local authority” means—(a) a county council or district council in England;(b) a London borough council;(c) the Greater London Authority;(d) the Council of the Isles of Scilly;(e) the Common Council of the City of London in its capacity as a local authority, a police authority or a port health authority;(f) a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;(g) a combined county authority established under section 9(1) of the Levelling-up and Regeneration Act 2023;“local authority” means—(a) an English local authority,(b) a Welsh local authority, or(c) a Scottish local authority;“public sector employer” means a person that—(a) is wholly or mainly funded from public funds,(b) is under a statutory duty to carry out any functions of a public nature, and(c) so far as carrying out those functions, does not operate on a commercial basis;“recognised” , in relation to a trade union, has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992 (see section 178 of that Act);“relevant intervention direction” means—(a) in the case of an English local authority, a direction under section 15(5) or (6)(a) of the Local Government Act 1999 (powers to deal with failure to comply with duties relating to best value authorities);(b) in the case of a Welsh local authority, a direction under section 106 or 107 of the Local Government and Elections (Wales) Act 2021 (asc 1) (intervention powers of Welsh Ministers);(c) in the case of a Scottish local authority, an enforcement direction under section 24 of the Local Government in Scotland Act 2003 (asp 1) relating wholly or partly to a failure of the authority to comply with its duties under section 1 of that Act (local authorities’ duty to secure best value);“Scottish local authority” means a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994;“statutory duty” means a duty imposed by or under any enactment, including—(a) a Measure or Act of the National Assembly for Wales or an Act of Senedd Cymru, and(b) an Act of the Scottish Parliament;“statutory functions” , in relation to a public sector employer, means functions of a public nature which the employer is under a statutory duty to carry out;“Welsh local authority” means— (a) a county council or county borough council in Wales;(b) a corporate joint committee established under Part 5 of the Local Government and Elections (Wales) Act 2021.”Member’s explanatory statement This amendment inserts a number of definitions that are needed for the purposes of section 104I of the Employment Rights Act 1996, as amended by my other amendments of clause 26.

84: Clause 26, page 47, line 21, at end insert— “(5A) The reference in subsection (4A)(a) to a relevant intervention direction includes a relevant intervention direction given before the day on which the Employment Rights Act 2025 was passed.”Member’s explanatory statement This amendment makes it clear that, for the purposes of subsection (4A)(a) of new section 104I of the Employment Rights Act 1996, it does not matter if the relevant intervention direction was given before the day on which the Employment Rights Bill receives Royal Assent.

85: Clause 26, page 47, leave out lines 22 to 31 Member’s explanatory statement This amendment is consequential on my other amendments of clause 26.

86: Clause 26, page 47, line 31, at end insert— “104J Contracts of employment: variations that are not restricted variations(1) This section applies to the dismissal of an employee if—(a) the employee was employed for the purposes of a business carried on by the employer, and(b) the reason (or, if more than one, the principal reason) for the dismissal is a reason within subsection (2) or (3).(2) The reason within this subsection is that—(a) the employer sought to vary the employee’s contract of employment,(b) the variation was not a restricted variation or, where the employer sought to make more than one variation, none of the variations was a restricted variation, and(c) the employee did not agree to the variation.(3) The reason within this subsection is to enable the employer to employ another person, or to re-engage the employee, under a varied contract of employment to carry out the same duties, or substantially the same duties, as the employee carried out before being dismissed.(4) For the purposes of subsection (3), a contract of employment is a “varied” contract of employment if—(a) the terms of the contract are not the same as the terms of the contract of employment under which the employee worked before being dismissed, and(b) none of the differences between the two sets of terms constitutes a restricted variation;and, in a case where subsection (3) applies, any reference in this section to the variation is to be read accordingly.(5) The matters that must be considered in determining the question whether the dismissal is fair or unfair include the following—(a) the reason for the variation;(b) any consultation carried out by the employer with the employee about varying the employee’s contract of employment;(c) if the employee is of a description in respect of which an independent trade union is recognised by the employer, any consultation carried out by the employer with that trade union; (d) if the employee is not of a description in respect of which an independent trade union is recognised by the employer, any consultation carried out by the employer with any other person representing the interests of the employee that, at the time of the dismissal, had authority to receive information and to be consulted about the dismissal on the employee’s behalf;(e) anything offered to the employee by the employer in return for agreeing to the variation;(f) any matters specified for the purposes of this subsection in regulations made by the Secretary of State.(6) In this section—“recognised” , in relation to a trade union, has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992 (see section 178 of that Act);“restricted variation” has the same meaning as in section 104I.”Member’s explanatory statement This amendment provides that, where an employee is dismissed for failing to agree to a variation of their contract of employment that is not a “restricted variation”, the matters that must be considered in determining whether the dismissal is fair or unfair include those specified in new section 104J(5) of the Employment Rights Act 1996.

87: Clause 26, page 47, line 31, at end insert— “104K Redundancy: replacement of employees with people who are not employees(1) An employee who is dismissed is to be regarded for the purposes of this Part as unfairly dismissed if—(a) the employee was employed for the purposes of a business carried on by the employer, and(b) the reason (or, if more than one, the principal reason) for the dismissal is to enable the employer to replace the employee with an individual who is not an employee of the employer.(2) For the purposes of this section—(a) an employer replaces an employee with an individual who is not an employee of the employer if (and only if)—(i) the individual, or the individual taken together with one or more employees of the employer or other individuals, is to carry out activities, in pursuance of a relevant contract, for the purposes of the employer’s business,(ii) those activities are the same, or substantially the same, activities as the employee, or the employee taken together with one or more other employees of the employer, carried out before being dismissed, and(iii) the employee’s dismissal is not wholly or mainly attributable to the fact that the requirements of the employer’s business for those activities to be carried out have ceased or diminished or are expected to cease or diminish;and any reference in this section to replacing an employee is to be read accordingly;(b) a reference to replacing an employee with an individual who is not an employee of the employer includes the case where the individual is the one who has been dismissed;(c) “relevant contract”, in relation to an employer, means a contract, other than a contract of employment, to which the employer is a party (whether or not the individual carrying out activities in pursuance of the contract is a party to it).(3) In the case of an employer that is not a local authority, subsection (1) does not apply in relation to an employee if the employer shows that— (a) the reason for the replacement was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect—(i) the employer’s ability to carry on the business as a going concern, or(ii) where the employer is a public sector employer, the financial sustainability of carrying out the employer’s statutory functions, and(b) in all the circumstances the employer could not reasonably have avoided the need to replace the employee.(4) In the case of an employer that is a local authority, subsection (1) does not apply in relation to an employee if—(a) at the time of the dismissal, a relevant intervention direction has effect in relation to the authority,(b) the relevant intervention direction—(i) specifies that the reason, or one of the reasons, for the giving of the direction is that the authority is undergoing financial difficulties, and(ii) contains provision relating to the financial management or financial governance of the authority, and(c) the authority shows that—(i) the reason for the replacement was to eliminate or significantly reduce, or significantly mitigate the effect of, any of the financial difficulties referred to in paragraph (b)(i), and(ii) in all the circumstances the authority could not reasonably have avoided the need to replace the employee.(5) In determining whether—(a) in the case of a public sector employer (other than a local authority), subsection (3)(b) is met, or(b) in the case of a local authority, subsection (4)(c)(ii) is met,an employment tribunal must apply the same principles as would be applied by a court on an application for judicial review.(6) Where the employer shows that the conditions in paragraphs (a) and (b) of subsection (3) are met, or (where the employer is a local authority) the conditions in paragraphs (a), (b) and (c) of subsection (4) are met, the matters that must be considered in determining the question whether the dismissal is fair or unfair include the following—(a) any consultation carried out by the employer with the employee about replacing the employee;(b) if the employee is of a description in respect of which an independent trade union is recognised by the employer, any consultation carried out by the employer with that trade union;(c) if the employee is not of a description in respect of which an independent trade union is recognised by the employer, any consultation carried out by the employer with any other person representing the interests of the employee that, at the time of the dismissal, had authority to receive information and to be consulted about the dismissal on the employee’s behalf;(d) any matters specified for the purposes of this subsection in regulations made by the Secretary of State.(7) In this section—“contract” means a contract whether express or implied and (if it is express) whether oral or in writing;“English local authority” means— (a) a county council or district council in England;(b) a London borough council;(c) the Greater London Authority;(d) the Council of the Isles of Scilly;(e) the Common Council of the City of London in its capacity as a local authority, a police authority or a port health authority;(f) a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;(g) a combined county authority established under section 9(1) of the Levelling-up and Regeneration Act 2023;“local authority” means—(a) an English local authority,(b) a Welsh local authority, or(c) a Scottish local authority;“public sector employer” means a person that—(a) is wholly or mainly funded from public funds,(b) is under a statutory duty to carry out any functions of a public nature, and(c) so far as carrying out those functions, does not operate on a commercial basis;“recognised” , in relation to a trade union, has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992 (see section 178 of that Act);“relevant intervention direction” means—(a) in the case of an English local authority, a direction under section 15(5) or (6)(a) of the Local Government Act 1999 (powers to deal with failure to comply with duties relating to best value authorities);(b) in the case of a Welsh local authority, a direction under section 106 or 107 of the Local Government and Elections (Wales) Act 2021 (asc 1) (intervention powers of Welsh Ministers);(c) in the case of a Scottish local authority, an enforcement direction under section 24 of the Local Government in Scotland Act 2003 (asp 1) relating wholly or partly to a failure of the authority to comply with its duties under section 1 of that Act (local authorities’ duty to secure best value);“Scottish local authority” means a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994;“statutory duty” means a duty imposed by or under any enactment, including—(a) a Measure or Act of the National Assembly for Wales or an Act of Senedd Cymru, and(b) an Act of the Scottish Parliament;“statutory functions” , in relation to a public sector employer, means functions of a public nature which the employer is under a statutory duty to carry out;“Welsh local authority” means—(a) a county council or county borough council in Wales;(b) a corporate joint committee established under Part 5 of the Local Government and Elections (Wales) Act 2021.(8) The reference in subsection (4)(a) to a relevant intervention direction includes a relevant intervention direction given before the day on which the Employment Rights Act 2025 was passed.(3A) In section 105 (redundancy), in the heading, after “Redundancy” insert “: other cases”.” Member’s explanatory statement This amendment provides that an employee’s dismissal is automatically unfair if the reason for the dismissal was to enable the employer to replace the employee, on a broadly like-for-like basis, with someone who is not employed but is, for example, an agency worker or a self-employed contractor. There are exceptions to this rule in circumstances where the reason for the replacement is to address financial difficulties of the employer and the employer could not reasonably have avoided the need to replace the employee.

Amendments 76 to 87 agreed.

Amendment 88 not moved.

18:00:00

Amendments 89 to 93

Moved by

89: Clause 26, page 47, line 34, leave out “subsection (4)” and insert “subsections (4) and (4A)” Member's explanatory statement This amendment is consequential on the amendment of clause 26 at page 47, line 2 that inserts a new subsection (4A) into section 104I of the Employment Rights Act 1996.

90: Clause 26, page 47, line 35, at end insert— “(gp) subsection (1) of section 104K (read with subsections (3) and (4) of that section) applies,”.”Member's explanatory statement This amendment is consequential on the amendment of clause 26 at page 47, line 31 that inserts a new section 104K into the Employment Rights Act 1996.

91: Clause 26, page 47, line 37, leave out ““104I(5)(e),”.” and insert ““104I,” Member's explanatory statement This amendment provides for regulations under new section 104I of the Employment Rights Act 1996 to be subject to the affirmative resolution procedure.

92: Clause 26, page 47, line 37, at end insert “104J(5)(f),” Member's explanatory statement This amendment provides for regulations under subsection (5)(f) of new section 104J of the Employment Rights Act 1996 to be subject to the affirmative resolution procedure.

93: Clause 26, page 47, line 37, at end insert “104K(6)(d),”.” Member's explanatory statement This amendment provides for regulations under subsection (6)(d) of new section 104K of the Employment Rights Act 1996 to be subject to the affirmative resolution procedure.

Amendments 89 to 93 agreed.

Amendment 94

Moved by

94: After Clause 26, insert the following new Clause— “Part 1 exemptions(1) The Secretary of State may by regulations specify that specified categories of person shall be exempt in whole or in part from all or any of the provisions of Part 1 of this Act.(2) Regulations may provide that exemptions apply for a specified period of time.(3) The categories of person exempted by regulations may be defined by the activities which they carry out, their size, their legal status or in any other way that the Secretary of State considers appropriate.(4) Regulations made under this section are subject to the affirmative procedure.”

My Lords, Amendment 94 seeks to give the Secretary of State power to introduce exemptions from Part 1 of this Bill. I thank the noble Lord, Lord Londesborough, for adding his name to the amendment. In Committee and on Report, noble Lords have warned about the impact that this Bill could have on businesses. The right to guaranteed hours, the statutory sick pay changes and the day-one rights which we debated earlier all create problems for businesses, especially small businesses and micro-businesses. The Government are ignoring these concerns. These provisions directly affect businesses, but noble Lords opposite should share our concerns that the real effect of these new rights will be fewer job opportunities. As we have heard, employees with risk factors, from the employer’s perspective, will find it harder to get work because of day-one rights and the statutory sick pay changes. These include young people, people with incomplete job histories, people with a history of illness and ex-offenders. People who value part-time flexible work—this particularly affects women and students—might find fewer opportunities because employers fear triggering the guaranteed-hours requirements. The Government are introducing these changes at a time of great economic uncertainty. While the employment numbers continue to edge upwards, there are warning signs in a rising unemployment rate, falling job vacancies and falling average hours worked. Business surveys are consistently flagging a reluctance to hire among businesses and increased expectations of workforce reductions. Even the Governor of the Bank of England, not a man to be careless with words, has flagged a slowdown in the jobs market. Growth is virtually non-existent and our inflation rate is now the highest in the G7. This economic background increases the likelihood that this Bill will create real pain for some businesses, and that pain will inevitably end up being felt in the workforce. In Committee, I argued for exemptions from Part 1 being hardwired into the Bill for small and micro-businesses. My noble friend Lord Sharpe of Epsom’s Amendment 159 in this group is similar. His Amendment 107 would exempt farm businesses of all sizes from some of the provisions. These are both great amendments, but my guess is that the Government are not yet psychologically ready to admit that some sorts of businesses would be so hard hit by this Bill that they should be exempt from its scope. The Government have rejected exemptions, citing the need to avoid creating a two-tier workforce, despite the fact that in an open economy such as ours, workforce tiering occurs naturally and is certainly a feature of the current UK workplace. My amendment is a simple one. It does not require the Government to do anything. It is a reserve power which the Government can use to assist the UK economy if things turn out as badly as we fear. It gives the Government power to create exemptions from all or any of the Part 1 provisions to categories of employer as defined by the Secretary of State. It thus allows very targeted interventions if the Government believe that it is necessary. Some of the potential pain points in the Bill can be dealt with in the way that detailed regulations are framed. Amendment 105 in this group helpfully requires the Secretary of State to have regard to seasonal work when making regulations. However, regulations cannot deal with removing burdens from, for example, small and micro-businesses, which are the focus of several amendments in this group in the name of my noble friend Lord Leigh of Hurley. They cannot address whole sectors, such as hospitality or agriculture, nor home in on subsectors of those sectors, such as the pub sector, which could be massively impacted by Clause 20, or particular types of farm. It would do no harm to the Government’s position if they accepted Amendment 94. They can press ahead with plan A and see what happens. If, however, they discover real problems of the kinds that many noble Lords from across this House have described, it would give the Government a backstop power if they, and they alone, think that it is necessary. On this basis, I commend Amendment 94 to the Government and I beg to move.

My Lords, I will speak to Amendment 94, tabled by the noble Baroness, Lady Noakes, and Amendment 159, tabled by the noble Lords, Lord Sharpe and Lord Hunt, both of which I have signed. I also support the amendment in this group tabled by the noble Lord, Lord Leigh, which calls for some scientific and statistical significance in polling a representative group of SMEs on the impact of certain provisions in the Bill. This Government’s consultation with SMEs is, to put it politely, curious and opaque, lacking, so far, any meaningful numbers or quantified response, and with barely any names. Consultation carries little weight if it lacks statistical credibility. The entirely sensible and pragmatic amendment tabled by the noble Baroness, Lady Noakes, seeks to hand the Secretary of State regulatory tools to bring in exemptions to Part 1 for certain groups or sectors, for specified periods of time, should he or she decide that these are appropriate. Noble Lords may remember that the Government were offered similar powers of exemption by amendment in the NICs Bill earlier this year, voted through enthusiastically by Conservatives, Liberal Democrats and the majority of Cross-Benchers, only to receive the custard pie treatment in the other place under the cloak of financial privilege, which was a great pity. The noble Baroness has, very generously in my view, made the same offer again, and I hope it gets a more constructive response this time. For there is broad consensus across business that Part 1 of the Bill will have a significant impact on the jobs market, especially for SMEs, but let us be frank: the degree or level of impact is highly unpredictable. If we see the sorts of outcomes suggested by membership surveys from such bodies as the ICAEW and the FSB, then the Secretary of State would be well advised to grab the option of these exemption tools with both hands rather than doggedly sticking to a one-size-fits-all mantra. Turning briefly to Amendment 159, seeking the disapplication of certain provisions for small and micro-businesses with fewer than 50 employees, this gets my wholehearted support. I will spare the House a repeat of my arguments in Committee. But for the Government to argue, as I am sure they will, against this amendment, because they do not want to create a two-tier workforce, simply does not reflect economic reality or indeed the jobs market or the structure of businesses. SMBs cannot compete with large businesses when it comes to pay scales, training, promotion opportunities, pensions and a whole range of other benefits. That is a reflection of their size, their culture and their stage of development, yet they succeed in delivering strong employee loyalty and identification. This is true of family businesses, start-ups and scale-ups. To apply all the provisions in this Bill, and specifically those listed in this amendment for disapplication, to a micro-business employing five staff as it does to a multinational employing 10,000 is wilfully indiscriminate and, I suggest, economically illiterate. That is why I put my name to the amendment.

My Lords, it is a pleasure to follow the noble Lord, Lord Londesborough, and, of course, my noble friend Lady Noakes. I shall speak to my Amendments 106, 153, 155 and 184. The main thrust of the first amendments is to force the Government to listen to real concerns of the SME community who, frankly, even at this late stage, are unaware of the effects of this Bill. They are too busy trying to keep afloat in a difficult economic environment, where the painful costs of NICs and other tax rises are kicking in. I declare an interest as an adviser to many SME businesses in my career at Cavendish plc and, to the extent that it is relevant in union matters, as a Conservative Party treasurer. We have not yet heard from any Labour Party Back-Benchers today, but I am sure that, if we do, they will declare their interests in respect of union membership. Turning first to Amendment 106, which relates to Part 1 of the Bill, we are constantly told by the Labour Front Bench that they want to consult with business—indeed, they repeated that today. They want to consult with business, but they fail to disclose who exactly they are consulting with, let alone what they are being told by those businesses and their representative bodies. I suspect that is because they are embarrassed by the backlash against the severity of this Bill from SME and micro employers, who will make it clear to the Government that this Bill will mean they are less likely to employ more people and much more likely to let people go as the burden of employment is ratcheted up. I am grateful to the noble Lord, Lord Vaux of Harrowden, for reminding us of the Labour Party manifesto’s commitment to consultation. If the Government are so confident of the benefits of this Bill for all businesses, why not agree to engage with them? This proposal is really very modest: just 500 companies out of some 5.5 million in the UK. It is not unreasonable to ask the Government to be honest with us and tell us what the reaction of the SME community is and what are its concerns, particularly as we know there has been a shocking lack of impact assessments for this Bill. We know that the recent CIPD survey revealed that 79% of organisations expect these legislative changes to increase employment costs.

18:15:00

To be helpful, I have carried out my own consultation of SMEs and recently asked an HR director of a company employing 200 people for his views. He said:

“Extending employment rights from day one may appear to promote equity, but it will almost certainly increase the volume and complexity of employee disputes. Businesses will be compelled to strengthen their legal frameworks and invest more heavily in compliance … that will come at a cost … In real terms, this will … mean a reduction in hiring, particularly where every headcount decision is already heavily scrutinised. Furthermore, granting Trade Unions a statutory right of access to workplaces to promote membership risks introducing unnecessary friction in the employer-employee relationship. Rather than enhancing collaboration, the reality is that it will … escalate tensions and lead to a rise in employment tribunals”—

by the way, in England there is currently an 18-month wait for employment tribunals as it is.

I cannot emphasise enough how significant and game-changing are the proposals in Part 1 of this Bill for SMEs and micro-businesses. Whether on parental leave, flexible working, zero hours or dismissal, the new rules will all have a dramatic effect on small businesses and most—in fact, I would say, nearly all—have no idea what is about to hit them.

When we had the pleasure of meeting the Minister and civil servants working on the Bill, for which we are very grateful, we asked the civil servants how many SMEs they had consulted. They could not answer; they referred to how many stakeholders they consulted—that does not mean SMEs. All we have to date from the Government, in their fact sheet, by way of experts claiming to support this Bill is a don from Cambridge University. But, on closer examination, the professor is not an economist at all but a lawyer; he is a professor of law, not of economics. I am sure he is a top man in law, but it is telling that HMG did not seem to be able to find one economist to support their plans, let alone credible numbers from the SME field. Maybe, since that time, they have briefed the Minister on how many genuine SMEs have been specifically consulted on this Bill. If so, I would be very grateful if she could give us that number later.

Why would the Government not want to consult wider? Indeed, I am not sure how many times the Minister has said in debates on the Bill that the Government will consult widely before various implementations. If she wants to be true to her word, can she agree these amendments?

The later amendments, Amendment 153 and following, are very time-sensitive and relate to Parts 4 and 6 of the Bill. The reason these are so important is that they relate to measures that will come into effect on Royal Assent, or immediately thereafter, including the repeal of the great majority of the Trade Union Act 2016 —which many in this Chamber will remember. The Minister will recall the debate we had in Committee on Section 77, when confusion existed on what was actually meant by the clause. I am grateful to the Minister for her letter of 25 June, which clarifies that what I said was absolutely right. I stand by my claim that this legislation will mean that, while the total amounts of income and expenditure will still be disclosed, the detail of what is in the expenditure will no longer be available.

“Why should that matter?” you might ask, “since surely all the political funds will go to the Labour Party or Labour MPs”. Well, it does not. I have tried to look at union accounts, and I started with the obvious one—Unite. Unfortunately, we cannot see any recent accounts from Unite, as over the last three years it has provided only partial accounts to the Certification Officer, the auditors having refused to sign the full accounts because of the ongoing investigation into corruption in relation to the £112 million hotel deal. So, I was forced to go back to the most recent disclosed, which is the 2019 accounts. Have a look inside Unite’s return to the Certification Officer for 2019 to see where the political fund payments go to—it turns out that they list payments to the Palestine Solidarity Campaign and other organisations. Can that really be what members of Unite want to see their hard-earned wages go to?

I apologise for interrupting the noble Lord’s flow, but I feel that his comments on political funds go a fair way outside the scope of the amendments we are speaking to today. There will be plenty of time to discuss political funds next week on Report.

With the greatest respect, I do not know if the noble Lord has read my amendment, but that is exactly the point. The point is that before the Bill is passed there should be consultation on these proposals, but there is no opportunity for consultation because they are implemented at Royal Assent. The Government keep telling us that there will be a consultation, but how can there possibly be consultation if the measures come in at Royal Assent? Still, I am grateful to the noble Lord for that interruption because it proves the point. It also allows me to explain to him another payment from the Unite political fund, which he may not be aware of, to the Marx Memorial Library. I kid you not—you could not make it up. I am sure the members of Unite are thrilled to know that their hard-earned wages are going to support the Marx Memorial Library, but when the Bill becomes an Act, in a matter of months, they will no longer have the right to see that disbursement. If that is what Unite wants to do then that is up to Unite, but surely it should not be covered up. All I am asking at this time is that proper consultation on the effects of Parts 4 and 6 should take place before this is ramrodded through on the statute book without any proper consultation and discussion with, as the Government like to call them, “relevant stakeholders”. It is on Amendment 106 that I will probably be seeking to test the opinion of the House today.

My Lords, I rise to support these amendments and declare my interests, as recorded in the register, as the chairman of three businesses that would undoubtedly qualify as small enterprises. I was provoked into intervening in this debate by an observation made by the Minister when she replied to the last debate. She said to your Lordships that if an employer dismissed an employee for cause, as set out in the Bill, the employer would have nothing to worry about because the tribunal would find in their favour. Very long ago I practised in the field of employment law, and I saw at first hand the consequences—often very damaging, sometimes disastrous—for a small business of having to spend the time, trouble and expense involved in contesting a case at the tribunal, even if ultimately, it was successful. In the real world, faced with that predicament, employers often find themselves obliged to settle these cases, again at considerable expense, even if the application is completely unmeritorious and would stand scant chance of success, were it ever to come before the tribunal. That factor ought to be taken into account. My question to the Minister, the noble Lord, Lord Leong, is this. Attention has been drawn today to the impact assessment, particularly by my noble friend Lord Sharpe of Epsom, who pointed to the increase in the number of tribunal cases that would be a consequence of the Bill. To what extent did that impact assessment take into account disputes that were not actually taken to the tribunal and were settled by the employer, who could not afford the consequences of contesting the case at the tribunal, but which would nevertheless involve substantial, damaging and sometimes disastrous consequences for the employer?

Given that the noble Lord, Lord Howard, and I practised in employment tribunals, does he agree with me that there are now strong procedures by which employment tribunals can strike out vexatious claims without there being a full hearing? I had the pleasure, of course, of appearing against the noble Lord in the Employment Appeal Tribunal, I think it must be 40 years ago—it was a delight—but the mechanisms have developed over those decades and tribunals now do not hear vexatious claims. They strike them out before they get there.

I do not know if the noble Lord’s memory extends to which of us won on that occasion. It is true that there has been an improvement, but it would be a mistake to assume that those provisions would cover all the cases to which I drew attention in my remarks.

My Lords, it is a pleasure to follow my noble friend Lord Howard of Lympne and indeed all noble Lords who have made such compelling arguments for the amendments in this group. I rise to support Amendment 107 in the name of my noble friend Lord Sharpe of Epsom, to which I have added my name. I again refer the House to my registered interests, particularly as a dairy and livestock farmer and as a forester. The farming community needs help after the run of negative actions taken by this Government: the slashing of delinked payments, followed swiftly by the cut-off in sustainable farming incentives with no notice, contrary to previous promises. That leaves a large number of farms with negligible environmental payments, incentivising the intensification of their farming operations, undermining their businesses and undermining nature restoration. To that is added the more general burden placed on all businesses of increased employer national insurance contributions. Farmers’ long-term planning has been thrown into chaos by the reduction in inheritance tax reliefs on agricultural and business property. It is a burden that farming businesses simply cannot afford and will lead to the sale and break-up of many of these on the death of a family member, with families also losing their homes and businesses as a result. In the run-up to the introduction of the reduced reliefs in April 2026, the financial incentive for elderly or terminally ill farmers and business owners to take their own lives increases. In Committee, I was grateful to the Minister, who is again in his place today, for his promise to speak to his ministerial colleagues at Defra and the ONS about keeping accurate and timely data on farmer and business-owner suicides. I ask him again today: what has been the result of those discussions? How can the Government assess the impact of this measure on suicide rates if they simply rely on out-of-date and insufficiently granular ONS data? On Amendment 107, the arguments in favour of granting farming an exemption from these Bill provisions have been well made in Committee, and I will hit only the headlines. Farming is almost uniquely exposed to seasonality in its harvesting operations, as well as the weather variability in the timing of those operations. Livestock farmers have to look after their animals every day and rely on casual labour to fill in gaps due to illness or scheduling issues. That requires flexibility in its engagement with seasonal and part-time or casual staff. There are penalties enough in weather unpredictability without introducing more through compensating staff for changing hours at short notice or having to compensate for sickness from day one. These obligations are simply unaffordable for farmers and unworkable in practice. Farming operates on cycles that are unknown in other businesses. It is easy enough to assess the quality of work and the suitability of staff in retail, offices and manufacturing, even after the first day or so. However, most farming workloads are solitary, with little oversight. We know whether a new employee has drilled a field correctly, looked after animal hygiene effectively, checked weed growth around new trees without damaging the trees, or ensured that livestock is back in calf in the necessary window, only months after those operations are performed. Reducing probationary periods and leaving farmers exposed to human resource and litigation risks, potentially from day one, is simply not acceptable or workable. As my noble friend Lord Deben highlighted in Committee, this is not a Government who have a background or experience in the farming or rural economy. That lack of experience is often evident, and I urge the House and the Government to listen to those of us who have that experience and to support this critical amendment. I hope to hear encouragement from the Minister that the Government are listening.

My Lords, the amendments in this group relate to the disapplication of provisions of the Bill to certain sectors and employment types. Amendment 94 would give the Secretary of State the ability, through regulations, to vary or exempt specific sectors from the provisions of the Bill. We do not support this amendment as we generally do not support facilitating two-tier employment systems in which certain businesses have statutory obligations that they must adhere to and others do not. Instead, we are focused on ensuring, as part of the Government’s consultation process ahead of implementation, that sectors likely to be disproportionately affected are properly engaged and supported to operate under the Bill with minimal disruption.

18:30:00

Amendment 105 in the name of the noble Lord, Lord Sharpe, which I have signed, would create a definition of seasonal work and require the Secretary of State to lay regulations regarding work of this nature. In Committee, we placed our concerns on the record about the Bill’s impact on seasonal workers and the difficulties those businesses may have in adhering to it. We believe the amendment would not create contrasting employment law requirements for businesses but would ensure that those businesses are properly considered when secondary legislation is created. We would support any action on this amendment.

Amendment 107 seeks to exempt individuals employed by farming businesses from Clauses 1 to 13, 23 and 26. Despite our strong advocacy on behalf of farming communities, we cannot support this amendment because, throughout the passage of the Bill, we have consistently opposed the creation of a two-tier employment system that excludes certain sectors from core protections. In addition, we believe that some of the provisions the Conservatives propose for exemption should still apply to farm workers, including those relating to the right to request, which the Conservatives voted in favour of on Monday, and statutory sick pay. We also believe there are other struggling sectors, such as adult social care and early years providers, which are not receiving such special arrangements, so we cannot support Amendment 107.

My Lords, I shall speak to Amendments 105, 107 and 159 in my name. On Amendment 105, the Government are well aware that this Bill, in particular Part 1, will have a detrimental effect on seasonal work and seasonal industries, but they have failed to provide any clear definition of what seasonal work is. We therefore think it is essential that the Bill includes a precise definition to protect those vital sectors to ensure that the law reflects their unique and fluctuating nature. We are discussing the lives and livelihoods of thousands who work not in rigid year-round roles but in the beating heart of seasonal industries, such as agriculture, hospitality, tourism and the performing arts. Their work ebbs and flows with seasons, festivals, harvests and holidays, not according to neat quarterly reporting periods. Yet, under the present draft, a 12-week reference period is being proposed as a basis for determining what constitutes an established pattern of work. Let us pause on that. Twelve weeks—barely three months or, one might observe, the precise duration of just one of the four seasons—is being treated as a sufficient measure for sectors whose very nature is defined by unpredictability and periodic intensity. That is not only an inadequate metric but, in many cases, an actively misleading one. A fruit farm may employ hundreds in May and none by August. A theatre technician might work flat out during festival season and then have no engagements for months, or be working elsewhere. A seaside hotel may be bustling in July but deserted in November. To take a short-term temporary rise in demand and then draw long-term legal assumptions from it about continuity of work is not merely a flawed approach but deeply unfair to both employers and workers. Businesses cannot predict with such precision. They cannot bind themselves to a rhythm that the market does not keep. If they are forced to do so, they will, understandably, become more cautious. They will hire fewer people, reduce opportunity and retreat from flexibility altogether. Flexibility is not a sin, nor is it bad for an economy. In many cases it is the only practical means by which people—students, carers, parents and artists—can participate in the labour market. We must not make mistake irregularity for instability, nor seasonal work for insecure work. This amendment does something elegant and essential: it defines seasonal work in clear, practical terms; it captures its recurring yet temporary character, grounded in the real operational rhythms of key sectors; and, crucially, it instructs the Secretary of State to have regard to this definition when drafting regulations. That is not an escape clause; it is a safeguard against blunt policy-making. We are not asking for a loophole; we are asking for recognition that not all labour is uniform and not all employment patterns can or should be squeezed into the same regulatory mould. If we pass this Bill without such a safeguard, we risk chilling seasonal hiring altogether—not protecting workers, just denying them opportunities. I am grateful to my noble friend Lord Roborough for signing Amendment 107 and I look forward to hearing the answers to the questions that he asked, particularly on the suicide statistics. I hope the Minister is able to address those. Before turning to the matter at hand, I must begin with an unequivocal condemnation of the Government’s recent family farms tax policy. This disastrous measure has placed an unbearable strain on family farms, which are the very foundation of our rural communities and the heart of our national food security. Instead of supporting these hard-working families, the Government have chosen to punish them with policies that threaten their very existence. I urge the Government to commit today to reversing this tax immediately for the sake of our farmers, our countryside and our country. Having said that, I turn with equal concern to the Employment Rights Bill. Although this Bill’s goal is to enhance worker protections, which is commendable, it tragically fails to take into account the unique realities of farm businesses and seasonal work. As we have heard, farming is unlike any other industry. It is defined by seasonal peaks and troughs, by work that is dictated by the weather and the cycles of nature, and by labour demands that can change from one week to the next. To impose inflexible employment rights designed for stable year-round jobs on these seasonal industries is to misunderstand them fundamentally. Take, for example, the proposal to extend unfair dismissal rights from day one of employment, which we have just discussed, or the Bill’s restrictions on zero-hours contracts, which would further exacerbate some of these issues. Zero-hours contracts in agriculture are not a tool of exploitation but a necessary mechanism for managing the ebb and flow of seasonal labour. Moreover, the proposal to require compensation for cancelled shifts fails to consider farming’s intrinsic unpredictability. Decisions about work can hinge on weather conditions that change with little notice. To expect farmers to pay for cancelled hours when fields are unworkable is simply unrealistic and unfair. Even the Bill’s provisions on the right to request flexible working place an undue burden on farmers. Agricultural work is highly seasonal and task driven, as my noble friend Lord Roborough explained. That makes flexible working requests difficult to accommodate in practice. Raising the threshold for employers to refuse these requests will hamper farms’ ability to plan and respond to fluctuating labour needs. That is why Amendment 107 is not merely desirable but essential. By introducing a clear baseline definition of seasonal work, the Bill can be tailored to reflect the cyclical, temporary and weather-dependent nature of agricultural labour. This amendment recognises the reality of these industries, allowing for the necessary flexibility that the Bill currently denies. Without this amendment, the Government risk imposing a one-size-fits-all regime that will force many farms to cease hiring, increase costs or even close altogether, yet again devastating rural communities and endangering our food security. I urge people around the House to support this amendment and send a clear message that the law must work with and not against the realities of seasonal work. Yes, we must protect workers, but let us also protect the farms and farmers who feed this nation. I am grateful to the noble Lord, Lord Londesborough, for supporting Amendment 159. A few years ago, in a remarkable TV interview, a one-time Labour shadow Chancellor could only suggest “Bill somebody” when asked to name a business leader who supported Labour’s policies. Sadly, this Government’s Employment Rights Bill risks the same fate. Ministers cannot name a single small business that supports all the measures contained within it—if any exist at all. This Bill is being rushed through with little regard for the very businesses that form the backbone of our economy. The Government’s own impact assessment hints at a looming disaster but fails to fully capture its devastating effects. The Federation of Small Businesses warned that this Bill is weighing heavily on the minds of small business owners, already forcing them to put investment and job creation on hold at precisely the moment when they are most needed. The noble Lord, Lord Londesborough, cited the ICAEW, and the Institute of Directors recently revealed that 72% of businesses believe this Bill will harm growth with 49%, so nearly half, saying they intend to hire fewer staff as a direct result. Yet the Government insist that businesses will simply absorb these costs—a statement that is not only unrealistic but dismissive of the precarious financial position many small enterprises face. Larger firms may weather the storm but small businesses often survive on razor-thin margins, and their survival will come at the cost of lower wages, reduced opportunities, or a reluctance to hire new staff at all. The Office for Budget Responsibility has warned that these sweeping new regulations will likely have “material, and probably net negative, economic impacts on employment, prices, and productivity”. That, I fear, is masterly understatement. Crucially, the Government have missed one vital fact—competition between employers, not simply regulation, best protects workers’ rights. Employers who want the most productive, loyal and committed workers must offer better pay and conditions to attract and then keep them. This natural market dynamic encourages fairness and opportunity far more effectively than heavy-handed mandates. This Bill would distort competition by imposing complex rules and costs that distract businesses from focusing on growth and innovation. Instead, they will divert precious resources into managing compliance and legal risk, and into erecting barriers rather than enabling opportunity. Ironically, this will lead to fewer businesses competing for talent and therefore fewer jobs being created. The Government claim that these rules will improve job security and working conditions, but the reality is that the increased costs and risks will force many small businesses to rethink their hiring plans altogether. The FSB says so. They will either hold back on creating new jobs or cut existing ones, and some will reduce wages or cut hours to survive. The intended protections risk backfiring, making work less secure and less rewarding. Ultimately, the costs imposed by the Bill amount to a stealth tax that will fall directly on the workers themselves—an opportunity tax. Employers faced with higher compliance costs, the risk of costly tribunals and the restrictions on flexibility will have little choice but to pass these expenses down the chain. This means lower wages, fewer hours and fewer job opportunities, ensuring, paradoxically, that work simply does not pay. I will say a quick word on my noble friend Lord Leigh’s Amendment 106. This Government like a consultation, but they have been unable to name any business they have consulted in relation to Part 1. My noble friend’s amendment is therefore elegant in its simplicity. It channels the Government’s enthusiasm and corrects their omission. I will support it if he chooses to divide. Finally, I remind the noble Lord, who I think is answering, that the noble Lord, Lord Howard, asked a very good question. Lest he has forgotten it, I would like to re-ask it.

My Lords, I am grateful to all noble Lords who have spoken in this debate. Amendment 94 from the noble Baroness, Lady Noakes, would exempt specific groups from all or some of the provisions within Part 1. Since the 1980s, UK reforms have stripped back workers’ employment rights and turned the country into an outlier among advanced economies. The UK’s productivity has stalled more sharply than in other economies, with millions trapped in low-paid, insecure and poor-quality jobs. What is the result? Less money in working people’s pockets. We are now paying the price. Millions of working people cannot afford basic living costs. In one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom; motivation is vanishing. Average salaries have barely increased from where they were 14 years ago. The average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crash, yet executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times the pay of the median UK worker, up from 50 times in the late 1990s. This is not sustainable, not fair and no way to build a healthy, productive economy. The UK must stop treating worker protections as a drag on growth. They are the foundations of it. More than 2 million people could benefit from guaranteed hours and rights to payment on zero-hours contracts. More than 9 million people would benefit from protections against unfair dismissal from day one. Up to 1.3 million employees will get a new entitlement to statutory sick pay. These new rights, entitlements and protections provide a baseline minimum standard for security and dignity at work. They should not be something the Government of the day can freely take away. Furthermore, exempting any category of person that the Secretary of State deems fit will ultimately create a two-tier system of employment rights based on the politics of the day. While I understand the noble Baroness’s intentions, I reiterate that these provisions were manifesto commitments. Business confidence is at a nine-year high, according to the Lloyds Business Barometer—

Oh!

Noble Lords opposite may laugh but this is the Lloyds Business Barometer, which I am sure many noble Lords across the aisle will know—with a second consecutive rise in workforce projections for the coming year. Deloitte recently ranked the UK as the joint top destination for investment.

18:45:00

This Government had to take difficult decisions to restore stability to public finances. This has resulted in four interest rate cuts, wages growing faster than inflation, and inward investment and living standards growing across the country. Economic activity is also at a record high. Some 384,000 more people are in employment since last summer, and we are shielding some 250,000 retail, hospitality and leisure properties from paying full business rates.

I turn now to Amendment 159. Operating in every region, sector and international market, we are committed to supporting SMEs and the 12.7 million people who work for them. But the idea that SMEs cannot afford day-one rights does not reflect the full picture. Fundamental rights from day one, such as protection from unfair dismissal, sick pay and flexible working, create a more stable and motivated workforce. Fair treatment is not just good policy; it is good business. Stress, depression and anxiety led to 17.1 million lost days in 2022-23, the equivalent of something like £5.2 billion of lost economic output. High staff turnover, poor morale and burnout are far more costly than simply doing the right thing and upholding the fair treatment of workers.

SMEs already rely on loyal, adaptable staff, and offering day-one rights will help retain them and support productivity. This is not about burdening small businesses; it is about raising the floor so that decent work is the norm and not a privilege. Many SMEs already treat their workers fairly without being forced to do so. The law should reward that standard and not allow bad actors to cut corners. Fairness should not depend on company size. If a business model relies on denying basic rights, it is not a sustainable business but exploitation.

The huge amounts of government support already available were outlined in Committee. Looking forward, we will also publish a small business strategy paper later this year. This will set out our intentions to support small businesses across key areas, including thriving high streets. We will make it easier to secure finance, access overseas and domestic markets, reward entrepreneurship and build business capabilities.

Turning to these reforms, we have now published the Bill’s implementation road map, and I recommend that all noble Lords across the aisle read it. The road map provides clarity for all employers on how and when we will engage and consult on the implementation of measures post Royal Assent, as well as when measures will take effect. We are taking a measured and phased approach to implementation to ensure that reforms are practical, workable and sustainable. This will give employers the time and space to adapt systems, train staff and update policies where necessary.

Employers, workers and other stakeholders will be further supported by guidance that we will produce. We are committed to exploring how this guidance can best meet the needs of SMEs. Boosting productivity, improving workers’ well-being and creating a more level playing field for good employers would grant significant benefits worth billions of pounds a year. It would not be appropriate to exclude small businesses from these benefits or create a two-tier workforce.

I turn now to Amendments 105 and 106, tabled by the noble Lord, Lord Sharpe of Epsom. We are steadfast in our commitment to Britain’s farming industry. The Government are investing over £5 billion over the next two years, the largest ever allocation to support sustainable food production in the UK’s history. With regards to Amendment 105, consideration of the issues around seasonal work is already built into Part 1 of the Bill.

I refer now to the question of the noble Lord, Lord Roborough, on the issue of the review. I will ask my colleagues at Defra and will write to the noble Lord, to ensure that he gets a reply to his question. The matter of suicide is sad, unfortunate and troubling. We need to get to the bottom of this. I will make sure that the noble Lord gets an answer from the department concerned.

In relation to the right of guaranteed work, the provisions allow guaranteed-hours offers to take the form of an offer to enter into a limited term contract, where it is reasonable to do so. The provisions detail that it is reasonable to enter into a limited term contract where, for instance, the qualifying worker will be needed only until an event has occurred or until a specific task has been completed. This will allow for the use of a limited term contract for seasonal work in such circumstances.

By way of just one example, which is also pertinent to Amendment 107, if a fruit picker qualifies for a guaranteed-hours offer, that offer could be to enter into a limited term contract which would expire either once a task as a fruit picker is completed or once the picking season has ended.

As set out in the recent road map publication, we will begin consulting on the implementation of many of the Bill’s key measures this autumn, including regulations on guaranteed hours. We will welcome responses from all stakeholders, including those with an interest in seasonal workers from all sectors, such as farming, hospitality and retail. All relevant factors, including impacts on seasonal workers, will be taken into account when making secondary legislation. Amendment 105 is therefore unnecessary.

While I understand the principle behind Amendment 107, it is fundamental that our make work pay reforms apply across all employers. These new rights, entitlements and projections provide a baseline minimum standard for security and dignity at work.

Amendments 106, 155 and 184 concern consultation. We regularly meet with business representative organisations, whether it is the CBI, the FSB or the British Chambers of Commerce. They represent thousands of individual companies of all sizes, types and kinds. In fact, my noble friend the Minister and I will be meeting the British Chambers of Commerce tomorrow. I will not even go into the political funds, as the noble Lord, Lord Leigh, mentioned, because that is for another day. I will not labour the point further. Small businesses remain at the forefront of our minds as we move closer to the implementation phase of the Bill. We have published our implementation road map, and we are committed to full consultation, including with SMEs.

Before I conclude, in answer to the point of the noble Lord, Lord Howard, about the tribunal, we are creating the fair work agency, which will take the load off, to a certain extent, the tribunal hearings. ACAS will help out before any cases are heard before the tribunal.

The noble Lord, Lord Sharpe, asked about business costs. As I said earlier, we have consulted with businesses extensively throughout the passage of this Bill, and many have come out in support of the Bill. The noble Lord asked for one example, and I will give it to him. Abraham Moon is a world-renowned, high-quality textile manufacturer—an SME based in West Yorkshire —which has welcomed the Bill’s ambition to level the playing field, noting that it ensures responsible employers such as Abraham Moon are not undercut by lower standards. It is a step forward for fairness, for business and for people. In conclusion, I ask the noble Baroness, Lady Noakes, to withdraw the amendment

Before the noble Lord sits down, he has put up a heroic defence based on a variety of statistics, but is he aware of the latest survey from the ICAEW—the chartered accountants? It is regarded as very representative, surveying over 1,000 companies of various sizes. The survey shows the fourth quarterly decline in business confidence and that the expectations for employment are at their lowest level since the third quarter of 2020.

My Lords, if the noble Lord starts throwing statistics around, I can throw statistics at him as well. As I said earlier, the Deloitte survey shows that the UK is the top destination for businesses. In fact, the Chancellor’s speech at Mansion House yesterday was very much welcomed by the City of London. All the financial services say that London will be the destination for fintech investment. Furthermore, KPMG’s recent consumer index says that people are feeling that they have more money in their pocket and are starting to plan holidays for the summer—good for them.

I am sure the Minister will want to be very clear on this. I think the Deloitte survey he refers to was in respect of inward investment only, probably because the UK is regarded as a cheap place, given what has happened to us in the last month, whereas the chartered accountant survey is specifically on business confidence, which has fallen every quarter for the last four quarters. One wonders what happened four quarters ago to prompt that.

We got into government one year ago, after 14 years. Business confidence was very low then, and at the same time unemployment was on the rise. At the end of the day, we are making progress. The figures will take time to change, but I am confident that confidence will grow. Inward investment is coming in, which means more investment in business and growth. Furthermore, the FTSE index reached the 9,000 mark yesterday. What does that say? People have confidence to invest in British companies, so let us not talk down the economy.

My Lords, I cannot let that pass. The noble Lord will know that the FTSE represents mostly foreign earnings. It is not a domestic index.

My Lords, I thank all noble Lords who have taken part in this debate, which has covered quite a lot of ground. I cannot pretend to be anything but disappointed in the Minister’s response. In fact, the first chunk of his response seemed to be some kind of lesson in the socialist view of life and had nothing to do with any of the amendments. While I respect the Minister’s own business expertise, he does seem to demonstrate that this Government do not understand business and do not understand the key to successful economic management. I was pleased to hear that my noble friend Lord Leigh of Hurley intends to test the opinion of the House. I hope my noble friends on the Front Bench will seek to do the same when we reach their amendments in their places on the Marshalled List. I was of course disappointed, but not surprised, that the Minister was not prepared to accept my generous offer of a reserved power to create exemptions to get the Government out of trouble in due course. I hope they do not come to regret their decision. You can take a horse to water, but you cannot make it drink. I have taken the government horse to water, and it has refused to drink. On that basis, I beg leave to withdraw my amendment.

Amendment 94 withdrawn.

My Lords, I am informed that there was an error in the results announced for the first Division today. The correct results were content 304, not content 160. Amendment 95

Tabled by

95: After Clause 26, insert the following new Clause— “Protected disclosures and the Office of the Whistleblower(1) The Employment Rights Act 1996 is amended as follows.(2) For section 43A (meaning of “protected disclosure”) substitute—“43A Meaning of “protected disclosure”In this Act a “protected disclosure” means any disclosure of information which is made in the public interest to persons specified in section 43C(1), and which is a qualifying disclosure under section 43C(1), which relates to one or more of the matters in section 43B(1) and which relates to a circumstance which has occurred, is occurring or may occur.”(3) In section 43B (disclosures qualifying for protection), for subsection (1) substitute—“(1) In this Part, a qualifying disclosure means any disclosure of information which relates to—(a) a criminal offence or regulatory breach;(b) the failure of any person including a relevant person to comply with a legal obligation;(c) a miscarriage of justice;(d) the endangering of the health or safety of any person;(e) damage to the environment;(f) mismanagement of public funds;(g) misuse or abuse of authority;(h) such other matters as may be prescribed in regulations made by the Secretary of State;(i) concealment of information or removal or deletion or destruction of any documents relating to the above matters.”(4) In section 43C (disclosure to employer or other responsible person), for subsection (1) substitute—“(1) The persons referred to in section 43A are—(a) the Office of the Whistleblower;(b) a relevant person;(c) a person who, in the reasonable belief of the person making the disclosure is a relevant person;(d) a person to whom it is reasonable for the person making the disclosure to make that disclosure.”(5) After section 43C, insert the following new section—“43CA Disclosure to the Office of the Whistleblower(1) The Secretary of State must, by regulations made by statutory instrument, within one year after the day on which the Employment Rights Act 2025 is passed, establish a body corporate called the Office of the Whistleblower (hereafter referred to as “the Office”).(2) The principal duty of the Office is to protect whistleblowers and have oversight of the process of whistleblowing.(3) The functions of the Office are to—(a) set minimum standards for whistleblowing policies, procedures and reporting structures;(b) monitor and enforce compliance with those standards; (c) provide an independent disclosure and reporting service;(d) provide support for whistleblowers;(e) bring actions for the offence specified in subsection (6) including action notices, redress orders and interim relief orders which may be appealed to the First-tier Tribunal;(f) prevent the exercise of Confidentiality Agreements and Non-Disclosure Agreements except where non-disclosure is for purposes of commercial confidentiality orto provide whistleblower anonymity.(4) For the purposes of this Act, a person is a “whistleblower” if they are a worker who has made, makes or is intending to make a protected disclosure or is perceived by a relevant person to have made, be making or intend to make a protected disclosure, related to their employment.(5) Any whistleblower who is dismissed from their employment may refer their case to the Office of the Whistleblower, regardless of whether whistleblowing is cited as a cause of their dismissal.(6) A person who intentionally or recklessly submits a whistleblower to detriment is guilty of an offence.(7) For the purposes of this section, the maximum amount of the fine shall be—(a) in the case of an individual, 10% of their gross annual income, not exceeding £50,000;(b) in any other case, an amount not exceeding 10% of the entity’s annual global turnover.(8) Cases arising from subsection (6) are to be heard by the Employment Tribunal.(9) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””Member's explanatory statement This amendment establishes the Office of the Whistleblower to protect whistleblowers, oversee whistleblowing processes, and enforce compliance with reporting standards. It also allows dismissed whistleblowers to refer their cases to the Office and expands the definition of protected disclosures to cover various public interest concerns, including criminal offences and mismanagement of public funds.

My Lords, I will not move Amendment 95, but I take a different position on Amendment 96. On Monday, the Government published their long-awaited Grant Thornton review of the existing whistleblower framework. Despite its narrow remit, the review is, frankly, jaw-dropping, and the Government have no choice now but to set in train fundamental reforms for the whole whistleblowing framework. It is in acknowledgement of the significance of that publication that I will not move Amendment 95.

19:00:00

While we wait for fundamental reform, we need immediate improvement to some of the worst features of the current system of supposed whistleblower protection. Amendment 96 would enable the Secretary of State to deal with spurious excuses to fire whistleblowers and enable them to require investigation by employers, where reasonable. The amendment was drafted by the noble Lord, Lord Wills, who cannot be here today. It is also signed by me and the noble Baroness, Lady Morgan of Cotes. It was spoken to warmly by the noble Lord, Lord Cromwell, on Monday, who is in his place, and I thank him. This is very much a cross-party amendment.

Amendment 96

Moved by

96: After Clause 26, insert the following new Clause— “Regulations to protect whistleblowers(1) The Secretary of State must, by regulations, make provision to—(a) extend the circumstances in which an employee is considered unfairly dismissed after making a protected disclosure, and(b) require employers to take reasonable steps to investigate any disclosure made to them under section 43C of the Employment Rights Act 1996.(2) Regulations made under subsection 1 apply to any employer with—(a) 50 or more employees,(b) an annual business turnover or annual balance sheet total of £10 million or more,(c) operations in financial services, or(d) vulnerabilities in other respects to money laundering or terrorist financing.(3) When making regulations under subsection (1)(b), the Secretary of State must set out in statutory guidance what “reasonable steps” should include.(4) The Secretary of State must make regulations under this section within six months of the day on which this Act is passed.(5) Regulations under this section are subject to the negative resolution procedure.”Member's explanatory statement This new clause requires the Secretary of State to make regulations strengthening whistleblower protections by broadening unfair dismissal grounds and obliging certain employers to take reasonable steps to investigate protected disclosures.

On this amendment, I wish to test the opinion of the House.

2|19:01|248|150|Division on Amendment 96|Amendment 96 agreed.||0|0

19:13:00

Amendment 97

Moved by

97: After Clause 26, insert the following new Clause— “Serious childhood illness pay and leaveThe Secretary of State must, by regulations made by statutory instrument subject to the affirmative resolution procedure, amend section 171ZZ16 (entitlement) of the Social Security Contributions and Benefits Act 1992 and section 80EF (neonatal care leave) of the Employment Rights Act 1996 so that the provisions in those sections extend to parents caring for a child up to the age of 16.”Member's explanatory statement This amendment introduces a right for parents to be absent from work for a prescribed period, and to be paid during that period at a prescribed rate, to care for a child between the ages of 29 days and 16 years who is receiving, or has received, specified types of medical or palliative care.

My Lords, I will speak to Amendment 97 in my name. First, I thank the Ministers for taking the time to meet to discuss this important matter, and specifically the noble Lord, Lord Katz, and his team, for meeting over the weekend. This is a simple amendment about protecting the families of sick children. It is being called Hugh’s law. Hugh died of cancer at the age of six. His name is now etched into this amendment, not as a symbol but as a legacy. I would like to thank Hugh’s parents, Ceri and Frances, for being here again today. They are sitting in the Gallery, as they did in Committee. Since Hugh’s death, his parents have devoted their lives to ensuring that no other family has to endure the trauma of watching their child suffer through endless treatments, sleeping on hospital floors with their life on pause, and without financial protection, job security or peace of mind. I cannot imagine anything worse than watching your child die and having to make the choice between being with them or potentially losing your home. This is an important time not just for parents but for siblings. I know that my noble friend Lady Finlay of Llandaff, who is unfortunately not able to be in her place today as she is attending a funeral, would have wanted to talk about the trauma and impact on the wider family situation. In the time it will take us to complete this stage of the Bill, more than 1,000 parents across the UK will be told that their child has a life-threatening illness. Some will be in hospital for weeks; others, tragically, will never leave. Unlike most of us here today, Hugh’s parents do not have to imagine that moment; they have lived it. They know the unbearable fear, the crushing helplessness, and the impossible choice between work and being at their child’s bedside. They are campaigning for this because they know that the current system fails these families. It leaves them exposed, unsupported and forgotten by a framework that recognises the needs of newborns but not of children like Hugh, who were older than 29 days when they fell ill.

19:15:00

This amendment is not radical; it is reasonable and humane. It offers up to 12 weeks’ paid leave for parents of a critically ill child who is over 29 days old. That is all, and it is long overdue. At present, no parent is entitled to any financial support in the first 90 days of their child’s illness. After 90 days, they can apply for disability living allowance, which would help with the costs of caring for their sick child; but even then, successful DLA applications can take up to 20 weeks to be approved. Of the families surveyed by It’s Never You, 90% believed that immediate financial support would have made a critical difference to the hardships they faced following their child’s diagnosis and treatment.

This amendment seeks to build on important progress made through the Neonatal Care (Leave and Pay) Act 2023, which was only meant to be a starting point. Under that Act, eligible parents of babies admitted to neonatal care within the first 28 days of life who require a hospital stay of seven continuous days or more are now entitled to up to 12 weeks of statutory leave with pay. This leave is in addition to existing maternity and paternity entitlements.

The noble Baroness, Lady Merron, previously stated:

“No parent should have to choose between being with their vulnerable newborn or returning to work … We are giving parents peace of mind so they can focus on their family”.

This amendment aims to do just that. It prevents parents having to make the impossible choice between their child’s health and employment. Instead, it provides the financial support necessary to vulnerable parents in devastating situations. I beg to move.

My Lords, I rise briefly to offer the strongest possible Green support for this amendment, and the support of many others who cannot be here today. The noble Baroness, Lady Grey-Thompson, has outlined the reasons for this amendment very clearly, and I am just going to make a couple of additional points. In many cases, the ability of parents to be at their child’s bedside acting as an advocate is crucial to ensuring that the child gets the best possible medical treatment. There is a profound inequality here if financial circumstances prevent parents being at the bedside, giving doctors and other carers information about their child’s health and the child themselves. This amendment would also enable the parent to maintain contact with the workplace. Rather than having to give up their job and deal with the mess later, there would be a continuing relationship that would hopefully work out for the best if the child comes home and things go back to something like normal. I join the noble Baroness, Lady Grey-Thompson, in paying huge tribute to Ceri and Frances for the campaign they have run for Hugh’s law. As the noble Baroness said, this is very much a legacy. I have to say that I am very surprised, because this week the Government responded to a final plea to back it. I hope the Minister may be about to stand up and offer something different, but the email suggested that that is not what we are going to hear today. The briefing from the Hugh’s law charity points out that, with GoFundMe, people have to appeal to the public to fund their support for their sick child, meaning that they have to expose their suffering and pain. Unless funds are strictly designated to pay for medical treatment, the parents are then not eligible for any of the later government assistance that the noble Baroness set out, such as universal credit. If they have money from the public to support them, that cuts off government support. That is not covered in this amendment but is something that the Government should look at to make sure that, if a family in deep distress receives donations, that should not stop them getting other support. With those comments, I strongly support the amendment of the noble Baroness, Lady Grey-Thompson, and I know that many other Peers will, so I hope that we might hear something positive from the Government.

My Lords, I intervene briefly to thank the noble Baroness, Lady Grey-Thompson, for introducing the amendment. Anyone who heard the interview on Radio 4 this morning could not but have been moved by the circumstances that are the background to the amendment. I speak as one who had the experience of losing two young children. At the age of two and three, our children, Alun and Geraint, were diagnosed with a life-terminating condition. It was the week in which the 1974 election had been called and my wife and I had to decide whether I should remain working in industry at Hoover in Merthyr Tydfil or to stand. The question was how on earth we were going to face the circumstances in which both our boys would live perhaps for five, 10 or 15 years, but one thing was certain: both my wife and I could not continue to work. Caring for two boys who had learning disabilities and were gradually able to walk less and less, until they could not walk at all, was an emotional as well as a physical and, potentially, a financial challenge, which is where the amendment is relevant. We were unlucky, and the unluckiness was double, as I have described. My wife was also expecting our third child at the time and we did not know whether that child would be affected by this condition. Standing for election and being elected to represent Caernarfon in the House of Commons meant a 30% reduction in my salary. My wife, who was a professional musician—a harpist—would not be able to continue her career thereafter and would lose her earnings altogether. Had it not been for the availability of the then mobility allowance and attendance allowance, both of which it was possible to get at the highest level for both children, we would not have been able to employ someone to help us in order to give my wife some relief while I was down in London doing my work here. That situation continued. We had two other children, our daughter Eluned, who was born in the June following that February—she was all right and was not affected by the condition—and our son Hywel, who was born two years later, was not affected by it. So we were blessed by having two children who were not affected. But we saw what the reality could be of the financial pressures that come from that double disability. If it had not been for my parents living next door—my father had just retired, on a good pension—we could not have survived. We were subsidised by my parents, who were retired and in their 60s, and, putting that together with the attendance allowance and the mobility allowance, we could eke the money out and make things practical. I am telling your Lordships this by way of background—it is not something that I talk about very often in this House, but it is directly relevant to this amendment. There are countless families who face these circumstances without having the support that we were lucky enough to get. I am sure that people of all parties, across the House, want to build a system whereby no parents are put in a position where they cannot look after their child and keep enough money coming in to eke things out. I support the amendment and thank the noble Baroness, Lady Grey-Thompson, for bringing it forward. I wish the family who have been the motivation for this amendment every strength in the challenges that they face.

My Lords, I can add very little to what has been said, particularly by the noble Lord, Lord Wigley. I know that this House will be grateful to him for sharing a painful story. I took the Neonatal Care (Leave and Pay) Act 2023 through your Lordships’ House. It was a real honour to do so. As I have said, when I met the parents who were campaigning, they were not asking for the world—they appreciated the fact that businesses needed us to be proportionate as policymakers. Equally, they made a powerful case for the difference that that Act would make. I am hugely grateful to the noble Baroness, Lady Grey-Thompson, for building on that Act, and to Hugh’s family for their briefing and campaigning. I assure her of my support in the Lobby tonight.

My Lords, I support the amendment of the noble Baroness, Lady Grey-Thompson. I confess that at the beginning I was a little sceptical, not so much about the amendment but about the issue that the Government and every previous Government have faced of trying to control the benefits bill. It is not easy and, as this Government have just discovered, trying to remove two existing benefits has proved incredibly difficult. We are trying to reduce the percentage of our GDP that we spend and it is not easy if we cannot control benefits. The winter fuel payment and the disability payments have proved just how challenging this is. However, the amendment has my support because, as the noble Lord, Lord Wigley, has explained very plainly, of the impact that this situation has on families, probably more on middle-income families who have less in savings than on other people. It is a relatively small amount of money—at £187, it is not a massive amount—but it could make a real difference to people who are already in the distressing situation of trying to care for their family while a child is in hospital. The total cost to the Exchequer is around £6 million to £8 million—it does not run into billions of pounds. It is something that we and the Government could support. The amendment certainly has my support in this change to help parents at a time that they most need it and when a child most needs it, too.

My Lords, it is a pleasure to follow my good friend, and I pay tribute to the noble Baroness, Lady Grey-Thompson, for bringing forward this amendment, which I proudly support. I am sure that I speak for everyone in the Chamber in thanking the noble Lord, Lord Wigley, for sharing his experience in an unbelievably emotional and powerful speech. There has been much debate of late, as we have heard today, about the size and scale of the welfare state. There needs to be reform, as I think everyone accepts. The welfare state should be tough—indeed, it should be tougher—but it must also be compassionate to those who need it. I have not had direct experience and cannot comprehend the pain and agony of people who have been told that their children are seriously ill and require palliative care. There is then the impossible decision, as the noble Baroness said, of what to do about work. My noble friend Lady Wyld talked about the work she did, as we all did, and the amazing advances in neonatal care. This proposal is the next logical step —it builds on what we have already done. The campaign group It’s Never You has done research highlighting the impact on parents and children: almost 90% of parents had to reduce their working hours or leave employment, and almost 80% noted the understandable effects on their mental health. Many studies link a pro-family environment with benefits not only to families but to businesses by contributing to high employee satisfaction, reduced turnover and increased productivity. I know that there are those who have concerns about the growing size of the state. While this amendment is noble in itself, there are three other things to consider for those who may perceive it to be yet another endless cost among many. One is that the provision should be time-limited, considering a specific period in a poor family’s life. Secondly, it should be tightly defined to cover only up to a certain age limit, and specific care. Thirdly, and crucially, as has already been said, it is for those who cannot afford not to work, who will working and contributing again when the time is right. As the noble Baroness said, this proposal stems from the tragic case of a young boy called Hugh who, sadly, died at the age of six from a rare form of cancer. This amendment is thanks to his remarkable and in many ways heroic parents and their family, who have campaigned and gained such support across the country. Alas, as has been noted, since Committee hundreds of families will have been given the ghastly news about their children and suffered their own agony and pain.

19:30:00

I say respectfully to the Minister—and his words at a previous stage were very warm—that I hope that tonight, collectively, with the Government, we can come to a conclusion and find a way forward so that every family that faces this unthinkable choice finds that, finally, the state is on their side.

My Lords, I want to thank the noble Baroness, Lady Grey- Thompson, for introducing this amendment. I also want to thank the noble Lord, Lord Wigley, for the very powerful personal testimony he has given in this House. It is never easy; there is nothing more difficult for any parent than to walk the pathway of the serious illness or death of a child. In fact, at best it is often a very lonely pathway that lasts not simply until the time of the child’s passing, but for many years after. This is a very compassionate amendment, and I trust that the House will support it. I am happy to support it if the noble Baroness puts it to a vote.

My Lords, I speak for these Benches in support of Amendment 97 from the noble Baroness, Lady Grey-Thompson. Noble Lords will remember that it was regrouped, and I referred to it in an earlier debate, as so many of these issues are interlinked. Rightly, it introduces a right for parents to take paid leave “to care for a child between the ages of 29 days and 16 years who is receiving … specified types of medical or palliative care”. The amendment is a valuable addition that recognises the significant demands placed on families caring for seriously ill children. I was amazed when I discovered that our laws provide only for parents of babies under 28 days via the neonatal care Act. I found the speech of the noble Lord, Lord Wigley, very moving, and I thank him for sharing that sad history with us. This is a sad history, and we are just trying to put right the problems in some way. It has been referred to as Hugh’s law, after the child diagnosed with cancer, and I think that is how many of us will remember it. Amendment 97 would close the gap and create a stand-alone entitlement, modelled on neonatal leave, to ensure that no parent is forced to choose between their child and their livelihood. The proposal, according to figures I have, would cost between just £6 million and £7 million a year, yet the difference it would make to families in crisis is immeasurable. It is targeted and reasonable, and it is a compassionate step forward to protect some of the most vulnerable working families in the UK. It is a positive and complementary amendment, and I commend it to the House.

My Lords, I thank all noble Lords for their thoughtful contributions to this important debate. We are very grateful to the noble Baroness, Lady Grey-Thompson, for having raised what is a profoundly important issue, one that deserves very careful consideration by your Lordships’ House. As my noble friend Lord Wigley reminded us, serious childhood illness places unimaginable strain on families, and it is not just a case of emotional turmoil. There are so many practical challenges as well, including hospital visits, overnight stays, unexpected emergencies and a need for sustained and focused care that no working parent can possibly schedule around. I am pleased to say that many good employers already recognise this: in the most extreme circumstances, they show compassion and flexibility, ensuring that parents are not forced to choose between caring for a seriously ill child and retaining their job. At the heart of this is not only compassion but continuity. A child battling serious illness often requires a parent at their side, not occasionally but consistently. Without job protection and some form of financial support, the very people whom we would expect to be there—parents—may find themselves unable to be so. Of course, any new entitlement must be, as the noble Lord, Lord Hogan-Howe, reminded us, designed carefully, with due attention to cost, clarity and implementation. Whereas on these Benches we do not take a fixed position on the amendment itself, I welcome the fact that it prompts us to engage seriously with a difficult but crucial area of employment and social policy. I thank all those who have contributed to this important debate, and I hope that the Government will take from it not only a recognition of the challenge but a willingness to explore how it might be best addressed in law.

My Lords, this has been a powerful debate on Amendment 97, which seeks to introduce financial support and leave for the parents of seriously ill children, and I thank all noble Lords who participated in it. I pay particular tribute to the noble Lord, Lord Wigley, for sharing his painful and very personal story. It is clear that, even after a fair number of not just years but decades, the indelible mark of the pain that he and his partner and the rest of his family went through is still with him. On behalf of the whole House, I thank him for sharing that story. I begin by thanking the noble Baroness, Lady Grey-Thompson, for bringing this extremely important issue to the attention of your Lordships’ House. I pay tribute, as, I am sure, does every noble Lord who has spoken in this debate, to the excellent work done by Ceri and Frances Menai-Davis and their charity, It’s Never You, which provides vital support to the parents of seriously ill children. Ceri and Frances set up this charity in memory of their late son, Hugh, who died tragically in 2021 after battling a rare form of cancer. It’s Never You has worked with the noble Baroness, Lady Grey-Thompson, to draft this amendment, and I know that Ceri and Frances have campaigned hard on this proposal to honour the memory of their son Hugh and to provide support to parents who face the same tragic circumstances that they did. It is of course vital that parents be able to spend time at the bedside of their sick child without the fear of loss of employment or financial difficulties adding to a situation that can already be mentally overwhelming, isolating or physically draining, as the noble Baroness, Lady Grey-Thompson, set out so well. One can only imagine the trauma of being in such a terrible situation. I say that one can imagine, but perhaps one can never really fully understand unless one is in that situation. I know that this challenge has been raised previously in your Lordships’ House and in the other place, and I want to emphasise that the Government are keen to continue to look at the issue with the noble Baroness, Lady Grey-Thompson, and It’s Never You. As the noble Baroness said, I have personally met Ceri and Frances several times already, and I have been struck by their selfless determination and resolve to provide for other parents what they did not have. We intend to continue this engagement. I want to ensure that parents of sick children are not ignored or left behind. However, we do not believe that incorporating this amendment into the Bill would achieve this end, despite the very best of intentions with which it has been prepared. I will highlight three reasons for this. First, we are concerned about the approach of amending the Neonatal Care (Leave and Pay) Act, which was taken through your Lordships’ House by the noble Baroness, Lady Wyld, as she set out a moment ago. Although the amendment rightly seeks to provide much-needed care to older children, it risks unintentionally undermining some fundamental principles of neonatal leave and pay, which were designed with the specific situation of newborns requiring medical care in mind. Much of the eligibility criteria for the leave and pay entitlements in the existing Act, for example, are connected to birth-related forms of leave, such as maternity and paternity, that simply would not apply to parents of other children. Similarly, the specific definition of “neonatal care” in the current Act has been carefully constructed through extensive consultation. Again, this amendment would require that to be overhauled, risking creating a gap in existing support. Secondly, more detailed analysis is required to fully understand the total cost implications of this proposal. We need to understand how many parents may be eligible for support across England, Wales and Scotland, as well as the estimated take-up, familiarisation and business costs. Initially, external estimates suggest that the cost of this amendment could be in the low millions—the noble Lords, Lord Palmer and Lord Hogan-Howe, referred to that specifically—based on data from England only. However, those figures are likely to represent only a small proportion of all parents who may be eligible for support. The actual cost could be significantly higher, depending on how serious illness and other eligibility criteria are defined. Therefore, the overall financial impact will depend on the final definitions and scope used to determine eligibility. Thirdly, it is also right that the Government consider other suggestions of support that have been put forward by parents who are put in this incredibly challenging and difficult situation, such as the right to a career break to enable parents to take an extended period of time out of work to provide care for a seriously ill child, as has been highlighted by Conservative MP Mark Francois in the other place and his constituent Christina Harris. It is right that the Government explore all proposals before proceeding to legislate in order to ensure good law—indeed, a workable law—and the very best outcome for parents, which I think we all, across the House, agree is needed. The Government appreciate that there is a significant challenge to be addressed here, but more work needs to be done to understand the best approach and costs of tackling it. For instance, the noble Baroness, Lady Bennett of Manor Castle, raised GoFundMe and the way successful fundraising campaigns interact with the benefits system. That is undoubtedly an area that needs to be understood. As the noble Lords, Lord Hogan-Howe and Lord Hunt of Wirral, said, we need to understand the costs, and to have clarity and full consideration. More work needs to be done to understand the best approach and the costs of tackling this issue and addressing it properly. However, I want to be very clear that we are listening, and I have been moved—as we all have—to hear of the distress caused by the incredibly challenging situation of serious childhood illness and the financial strain that comes with caring for a sick child. The noble Lord, Lord Gascoigne, asked for a way forward, and I hope noble Lords will take what I am about to say in the spirit intended. I make a commitment to the noble Baroness, Lady Grey-Thompson, and to Ceri, Frances and It’s Never You, that we will consult on support for parents of seriously ill children, including the proposal for Hugh’s law, to gain views from all interested parties on the specifics of the support. We are doing this at pace—the consultation will run next year in 2026. We wish to continue working with It’s Never You, the noble Baroness and all noble Lords who are interested—having heard the debate this evening and the strength of opinion across the House—on this extremely important matter, as we further explore this proposal. It is appropriate that we consult publicly and provide space to hear a range of views to ensure that we arrive at the most appropriate policy outcome. We want to do something that is right. We want to make sure we have a solution that sticks, is workable, and provides the support that so many parents need—indeed, that Ceri and Frances needed but did not have. It is important that we do not rush into it but have a considered approach. I therefore ask, while we undertake this consultation, that the noble Baroness withdraws Amendment 97.

My Lords, I thank all those who have contributed to the debate this evening and, very specifically, the noble Lord, Lord Wigley, for sharing his deeply personal and moving experience. What we sought to achieve with the amendment has been discussed at length. I appreciate that, but it was over many meetings. We asked several weeks ago for guidance if there were technical concerns. We got a response yesterday, which was very helpful, but I note that there is no indication within it that the amendment is inoperable, nor that these concerns could not be dealt with through the offer of a tidying-up amendment or, potentially, an alternative text at Third Reading. I welcome the opportunity to continue to discuss this and I do not wish to delay the House any further, but I wish to test the opinion of the House.

3|19:45|100|136|Division on Amendment 97|Amendment 97 disagreed.||0|0

19:56:00

Amendment 98

Moved by

98: After Clause 26, insert the following new Clause— “Right to be accompanied by a certified professional companion(1) Section 10 of the Employment Relations Act 1999 (right to be accompanied) is amended as follows.(2) In subsection (3), after paragraph (b) insert— “(ba) a person who has been reasonably certified in writing by a professional body as having experience of, or as having received training in, acting as a worker’s companion at disciplinary or grievance hearings, or”.(3) After subsection (7) insert—“(8) In this section, “professional body” means any organisation which is authorised by regulations made by statutory instrument.”.(4) In section 42 of the Employment Relations Act 1999 (orders and regulations), after “3,” insert “10(8),”.”Member’s explanatory statement This new clause would expand the right to be accompanied by a certified companion at disciplinary and grievance hearings. It would also give the Secretary of State the power to authorise such bodies by regulation, subject to the affirmative procedure, thereby ensuring parliamentary oversight.

My Lords, currently only a fully certified trade union representative or a colleague has the statutory right to accompany an employee to a hearing. In practice, this leaves the vast majority of workers in the UK—77.7%—to navigate proceedings alone or, worse, to be accompanied by an inappropriate companion, who may frustrate the process or cause inadvertent detriment to the worker’s case. We all receive briefings from numerous organisations, which contribute to our debate. The last one I received today was on this issue, so I read it to see how I could incorporate it in my speech. It was from the TUC and said that only the trade unions could possibly represent people, which confirms my words and adds weight to this amendment. An amendment to the Bill is desperately needed to guarantee that all workers, regardless of their membership of a trade union, enjoy the right to be accompanied by a dedicated and trained companion during workplace disputes. This would ensure transparency, fairness and due process, as trained companions ensure that both employees and employers have a robust safeguard against unfair treatment and misunderstanding. This sensible amendment would give rights to people who are very often not in a trade union-recognised organisation. The trade unions can still represent, but they do not have to be the only people to represent. This amendment, I feel, fills that gap. I beg to move.

My Lords, Amendment 99 seeks to remove the restriction that only trade union representatives or a work colleague may accompany an employee to a disciplinary or grievance hearing. I thank the noble Lords, Lord Sharpe of Epsom, Lord Ashcombe and Lord Londesborough, for supporting what is a modest and practical but important change to employment law. It would give workers the right to be accompanied to a hearing by someone they trust, somebody of their choosing—perhaps a family friend, a carer or a person from the relevant industry. It is about fair play and equal treatment, ends a one-size-fits-all effective union monopoly and is simply empowering and modernising. My amendment is similar to Amendment 98 proposed by the noble Lord, Lord Palmer, which would expand the list of those who could accompany workers to include trained and certified companions. I support the principle behind the noble Lord’s proposal but fear that its certification regime is unnecessarily complicated, could result in delays and inconsistencies and could create bureaucratic barriers, especially for staff cohorts such as young employees unfamiliar with the bureaucratic paraphernalia of such procedures.

20:00:00

My amendment 99 takes a simpler, fairer path that lets the worker decide who accompanies them. There is no regulatory ambiguity; it just creates a clear new worker’s right. However, where the noble Lord, Lord Palmer, and I agree is on the fundamentals, particularly on the need to update the law. The original part of the employment law that we are talking about was enacted in the 1990s, when trade union membership was significantly higher than it currently is, but this one-size-fits-all approach is wholly out of step with the modern world that we are living in.

Significant reference has already been made to today’s reality that not every employee is represented by a trade union and that, of the 20% or so who are, the majority are in the public sector. Nearly 80% of workers, therefore, are not trade union members, including care workers, teaching assistants, agency staff and cleaners—people in roles that are often low-paid, insecure and lacking representation. Widening the scope of the right to be accompanied in the way that the amendment proposes would empower those workers.

Why are people not in unions? Sometimes in our Committee debates, the inference has been that the only reason that workers are not in a union is because of wicked anti-trade union laws or perhaps evil Tory government policies, but I would say that it is rather more complicated. In just the past week, the Labour Peer, the noble Lord, Lord Winston, a lifelong member of the British Medical Association, resigned from the BMA over its handling of strike action. Meanwhile, the Cabinet Minister championing this very Bill, Deputy Prime Minister Angela Rayner, has reportedly been suspended from her own union, Unite, in a dispute over her membership and the Birmingham bin strike. Whatever the merits of either case, they demonstrate that even the most senior, well-connected, pro-union individuals can find themselves without the support of a union.

Then there is the thorny issue of what happens when trade unions increasingly ape the activism of student unions, often to the consternation of their members. Last week, Professor David Hirsch posted a devastating critique of his own academic union. I give noble Lords a taster of what he said:

“I was a founder member of UCU and I was a member of AUT before that, but I am resigning today”.

He tells us that UCU has become

“by far the most toxic, bullying, antisemitic space I have ever been in”.

The final straw for Professor Hirsch was UCU’s statement standing up for recently proscribed Palestine Action.

What do you do when your own union acts in lockstep with your employers or HR on grievances with a political undercurrent? Nurse Sandie Peggie, an intensive care nurse with 30 years’ experience—I have mentioned her before—was suspended from her role because she objected to getting undressed in front of a male resident doctor who identifies as a woman. Nurse Peggie is now suing her own union, the Royal College of Nursing, for its failure to defend her because it supported the NHS trust’s trans-inclusive policies, so she could hardly have the RCN as adequate representatives accompanying her. As an aside, Nurse Peggie at last won her employment tribunal when the NHS Fife trust dropped its charges of gross misconduct allegations, having wasted a huge amount of taxpayers’ resources—that happened only last night, so congratulations to her.

In another case highlighted by Edapt, which offers edu-legal support for school staff, Higgs v Farmor’s School, a teaching assistant was called into a disciplinary hearing lasting six and a half hours. The school brought a lawyer. Kristie Higgs faced a possible end to her employment and her reputation, and asked if she could bring her father for support. That request was refused; the law did not permit it. The employer was eventually found to have unfairly dismissed Mrs Higgs, but one part of her story shows how unfair all this is. Because Mrs Higgs was not in a union, she was left alone opposite a lawyer and her bosses and was unsupported. She was told that she could bring a colleague but, as others have noted, surely any colleague working with her might be fearful, knowing that Mrs Higgs was being disciplined for expressing opinions about sex and relationship education at her son’s school—not even the school she was employed at. If you, as a colleague, accompanied her at a grievance hearing, you might fear that your school’s senior leadership team might assume that you shared her opinions and then you might be disciplined too.

In one final example, a judge called on Parliament to act. In the case of Leeds Dental Team Ltd v Rose, Ms Rose, a non-unionised worker, asked to bring her solicitor to her disciplinary hearing. The employer refused —the law backed the bosses again. Had she been a union member, she would have been able to bring the union solicitor. Instead, she faced the hearing entirely alone. The judge even commented on this, calling the situation harsh and making it clear that the worker was seriously disadvantaged. The judge said his hands were tied by the wording of the law and concluded that change would need to come from Parliament. Amendment 99—or Amendment 98—would answer his call.

While the Government constantly kick challenges to this Bill down the road to post hoc consultations or regulations, that will not work here. The restrictions in the Employment Relations Act 1999 mean that this issue requires primary legislation to empower workers to exercise their rights.

To conclude, I hope that I can take the Minister at her word when she stated on Monday that this Bill would

“raise the minimum floor of employment rights”.—[Official Report, 14/7/25; col. 1603.]

If that is true, we must ensure that all workers stand on that floor, not just those who have chosen to join a trade union. How can it be just or fair that two workers facing identical disciplinary proceedings have radically different statutory rights, simply because one is a member of a union and the other is not, for a multitude of reasons that I hope I have demonstrated. This is the very two-tier attitude to workers and the very approach that the Minister has been so keen to counter. I therefore hope that, on this very sensible and practical matter, the Government will accept either or both of these amendments.

My Lords, I shall speak to these amendments, to which I have added by name. What we are dealing with here is a basic question of fairness. Currently, the law recognises the importance of accompaniment at disciplinary and grievance hearings, yet it narrowly limits who that companion can be. Unless an employee has a supportive colleague or is a trade union member, they face these often-daunting proceedings alone. This creates a two-tier system, as the noble Baroness, Lady Fox, mentioned. How can it be right that two workers in the same workplace facing the same process are given different statutory rights based solely on their union membership? This is not a hypothetical issue. In reality, 78% of UK workers are not in a trade union, which means most cannot count on the support of a trained companion in these hearings. I have no objection to trade unions; I am not a trade unionist myself, but I reject the idea that statutory rights should be tied to union membership. I have yet to hear a convincing argument and defence of the current system. This is why I support these amendments. Both aim to fix this imbalance in different, practical ways. Amendment 98 in the name of the noble Lord, Lord Palmer, would widen the scope of acceptable companions. It would empower the Secretary of State to propose certifying bodies—for example, Edapt in the education sector—to approve trained companions, with Parliament having final say through secondary legislation via the affirmative procedure. This approach ensures fairness. Amendment 99 in the name of the noble Baroness, Lady Fox, goes further, removing restrictions altogether and allowing the employee to choose their own companion. This gives power back to workers, who are best placed to decide who can support them. We return to the core issue of fairness, which seems to have cropped up many times throughout this Bill—not only fairness for workers navigating difficult circumstances but fairness for employers, too, who would benefit from clearer, smoother processes and reduced risk of costly litigation. Ultimately, these are not radical proposals. The amendments are sensible adjustments that reflect the modern workplace and the real choices workers are making. As the Government’s document Next Steps to Make Work Pay rightly states, “all workers should be able to enjoy fair rights and benefits”. I hope that the House agrees.

My Lords, I have added my name to Amendment 99 in the name of the noble Baroness, Lady Fox of Buckley, which, to me, smacks of common sense, while also acknowledging that Amendment 98, tabled by the noble Lord, Lord Palmer, is a step in the right direction. For those of us who have conducted disciplinary and grievance hearings—as an employer, I have conducted my fair share over the years—these are often stressful, time-consuming and sometimes very divisive, not only for the employee but often for the employer, the manager and the other team members who are involved. An officious approach, in which only a trade union official may accompany the worker into the meeting, makes this situation, if anything, more adversarial, more us versus them and, in my view, less likely to lead to a sensible compromise that works for both parties. This is particularly the case for small and micro-businesses in which trade union representation is lower and the worker very often does not have that option. To widen it out to other members, colleagues, friends or even family members, as Amendment 99 states, seems to me a sensible move.

My Lords, I want to take this opportunity to correct what I think has been a mischaracterisation of the TUC briefing, which makes it very clear that the right to be accompanied includes, yes, trade union reps but also workmates. I also want to correct what is a misunderstanding of the spirit of the right to be accompanied, which was very much about dealing with grievances, disciplinaries and procedures within a workplace. Hence, when a union is recognised by the employer and the worker is a member of the union and chooses their union rep to represent them, that is a good thing. Our experience is that that is about resolving issues at an early stage. Likewise, a worker may choose a workmate to represent them—somebody inside the organisation who can take a practical, common-sense view of dealing with a grievance and disciplinary procedure. During the debates on the Bill, we have heard a lot about the worries of ending up in employment tribunals, disputes being protracted and lawyers and others who maybe want to make a pretty penny from representing workers in trouble. Noble Lords will find that many employers, like workers, want to keep resolution of those issues within the workplace because that is often the quickest, more effective and cheapest way that everybody concerned can sort out problems when they arise. Surely it is in resolving issues that we should all share an interest.

I rise to say simply that, in my experience, I have found that employees want to bring with them family members, often parents—particularly women want to bring a parent—and I am not sure that this will allow that anymore.

I thank the noble Baroness, Lady Fox of Buckley, and the noble Lord, Lord Palmer of Childs Hill, for their amendments and their introductions. I speak strongly in favour of these amendments, which address a crucial gap in the rights currently afforded to workers. At its core, this is about fairness, autonomy and dignity; it is about giving working people real choice and a real voice when it matters the most. As we have heard, under the current law, a worker facing a disciplinary or grievance hearing has the right to be accompanied, but only by a fellow worker or a trade union representative. What of the workers who are not in the union, which, as the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lord Ashcombe pointed out, is most of them? What of those who work in small businesses, where asking a colleague to attend is uncomfortable or perhaps even counterproductive? What of those sectors in which peer support simply is not realistic? We must not confine workers to a narrow and outdated list of whom they are allowed to bring into the room at a time of maximum stress and uncertainty. As the noble Baroness, Lady Fox, so powerfully illustrated with her real-world examples, that causes problems. This amendment would bring common sense, compassion and modern flexibility into law. This is about worker autonomy, trusting people to decide whom they need in the room with them. If we are truly to modernise employment rights, either amendment should be accepted.

20:15:00

My Lords, this has been a useful debate on Amendments 98 and 99, tabled by the noble Lord, Lord Palmer of Childs Hill, and the noble Baroness, Lady Fox of Buckley. On Amendment 98, the law already provides that when workers are invited to attend a disciplinary and grievance hearing, they are entitled to bring a companion who is either a fellow worker, an official employed by a trade union or a workplace trade union representative who the union has reasonably certified as having received training in acting as a worker’s companion at a disciplinary or grievance hearing. As we have heard, and perhaps in response to the critique by the noble Lord, Lord Ashcombe, employers can allow workers to be accompanied by a companion who does not fall within the above categories. Some workers may have a contractual right to be accompanied by persons other than those listed—for instance, a professional sports body, partner, spouse or legal representative. As my noble friend Lady O’Grady of Upper Holloway helpfully reminded us, the existing legislative provisions seek to keep disciplinary and grievance procedures internal to workplaces to better ensure that the heat is taken out of the situation and that they are used as conciliatory opportunities to resolve tensions and maintain a good employer-worker relationship. As my noble friend said, this could involve a workmate who knows the context of the situation, understands the employment —and probably both parties to the grievance—and can provide real insight to the situation and focused support. The inclusion of professional bodies, which may include legal representation in the legislation, may jeopardise the involved parties’ ability to engage in amicable conversation, with the concern that discussion may be significantly restrained as a result, with neither party willing to accept fault. The Government are rightly concerned that this will result in an increased likelihood of a failure to reach a suitable outcome for both the worker and employer. As my noble friend Lady O’Grady said, we want systems in place that are quicker, cheaper and more effective at reaching resolutions. However, this in turn, as part of the proposal, would increase the cost of hearings for both parties, as the processes and the meetings themselves become more protracted and reduce the chances of a mutually beneficial outcome. The involvement of legal representatives may be particularly costly for smaller businesses, which may not have legal resources readily available—we have heard much already today, if not in previous debates in Committee and on Report, about that issue. Additionally, the introduction of legal expertise at these hearings may limit the ability of ACAS to mediate an ongoing dispute, as legal arguments may already have been heard during an internal hearing. It is worth noting that an amicable solution between the parties is the fastest way to deliver justice and the amendment may have the inadvertent effect of increasing the likelihood of tribunal claims being made, although of course that is not its intention. Of course I understand that certain organisations, including those that provide legal services, would benefit. However, as previously noted when discussing similar amendments, an employer already has the existing ability to nominate an organisation to accompany their workers if they set this out in the workers’ terms and conditions. This is a solution in search of a problem. ACAS estimates that there are 1.7 million formal disciplinary cases in UK organisations each year. It is rare that I ever say this, let alone from the Dispatch Box, but I agree with the noble Baroness, Lady Fox of Buckley, in that the approach taken by the noble Lord, Lord Palmer, in his amendment would be unduly cumbersome. It would complicate a law that has been in place for over 20 years and, if accepted, will require that the employer checks secondary legislation for every case to see who is a responsible body and whether the individual has been certified as having been trained. These are additional administrative burdens that the Government are keen to avoid. Indeed, the Opposition Front Bench has been keen to point out when they see fault in our proposals in other places—erroneously, I should add. On Amendment 99, tabled by the noble Baroness, Lady Fox of Buckley, the Government believe that strong trade unions are essential for tackling insecurity, inequality, discrimination, enforcement and low pay. If Amendment 98 was a solution in search of a problem, Amendment 99 is an opportunity for the noble Baroness, Lady Fox, to bash a problem, in her view—namely, trade unions. I am a former trade union official. I have also worked in a number of private sector roles as a manager. Unions are a good part of our industrial landscape, as we have heard across the House. I join with others across the House in saying that it would better if more people were members of trade unions. They are far from perfect, but although the cases that the noble Baroness raises undeniably raise issues about the trade unions she talked about, they do not undermine the day-to-day work of many trade unions and, in particular, of trade union reps. In the workplace, day in, day out and across the country, they work with employees and businesses to make workplaces safer, to ensure that employees are properly educated and skilled, and to help those employees access their rights at work, which we deem fair and necessary. Trade unions have an important role to play in supporting workers during the process of a disciplinary or grievance hearing. Union officials allowed to accompany a worker, as prescribed in the existing framework, must be certified as having received training in acting as a worker’s companion at disciplinary and grievance hearings. By opening this role up to anyone the worker chooses, the amendment risks introducing individuals into the disciplinary and grievance hearings process who are not familiar with the workplace in question or, indeed, with the employment rights framework. As I noted when speaking to the previous amendment, this is again likely to lead to a reduced likelihood of successful mediation of these disputes. The role of the recognised union representative allows the relationship between the employer and representative to be developed over time, thus increasing the likelihood of an amicable solution that does not go to a full legal process. This amendment could lead to the involvement of a family member or friend in disciplinary grievance proceedings, which may, in practice, cause more problems than solutions, given the sensitive nature of such a personal relationship. In closing, it is unclear to the Government where the demand for expanding this right is coming from and which workplaces specifically would benefit. In the consultations we have undertaken in government and prior to being elected, with both businesses and trade unions, the need to expand this right has not featured from either side in the workplace.

I think the Minister may have answered his own question there, because if the consultation was with trade unionists about whether there was any need for non-trade unionists to go in, then they would give you one answer. I want to clarify one thing: it is true that I have never been a trade union official, but I have been a rank and file trade union member for decades. I am not anti-trade union, but I do not think the world stops and starts at trade unions. I want to ask the Minister whether he understands that, at the moment, the statutory right to be accompanied by a trade union official is not in-house. The way the law is phrased is that any trade union official, even one from a union that you have never joined and from a completely unrelated sector, can accompany you—that is the way the law is. I wanted to know whether that is fair or whether that wording could change. What is wrong with, say, a Citizens Advice caseworker or what have you? The numbers of people who are in the trade unions just do not tally for people to be accompanied fairly at the moment. Unless there is an 80% increase in trade union membership, it is obviously two-tier and discriminatory at present.

To respond to the first point the noble Baroness made, perhaps I did not enunciate clearly enough, but I said that in the consultation the demand for change did not come from either trade unions or employers.

This is the final word. This is not a trade union rights Bill; this is the Employment Rights Bill. It is casually known as the workers’ rights Bill. There are millions of workers who are not in trade unions for a variety of reasons, including your own Minister Angela Rayner, as I just noted. I simply suggest that when you ask employers or trade unionists whether there is a demand for this then rank and file workers are being ignored. I suggest that you acknowledge and empower them.

My Lords, I just want to put the record straight, because we have heard much about the Deputy Prime Minister not being in a union. She is in a union. She is in the union called UNISON and has been for a number of years. I did not want noble Lords to go home tonight thinking that no one would represent the Deputy Prime Minister.

I thank my noble friend Lady of Nichols of Selby for that helpful clarification. I thought that was the case, but I am glad that she made it. She is in a far better position than I am to talk about UNISON and its membership. In response to the noble Baroness, Lady Fox, I want to be clear that this issue has not come up in all the consultations we have undertaken, with a wide variety of stakeholders. It is not that I am saying, “We talked to some trade unions and, guess what, they’re quite happy with the status quo”. Genuinely, this issue has not come up. Simply, this is not an issue for workplaces. That is why I described it—

Does the Minister understand that there is a two-tier system here? If you are a trade unionist you can have somewhat more professional attendance than somebody who is not a trade unionist. That is what is important.

To be clear, if there is a recognised trade union or you are a member of a trade union then you can take a trade union representative, but you also have the right to be accompanied by a workmate. If you are a member of a trade union, you do not need to take that trade union representative along; you could have a workmate come along. If responsible employers want to have more flexibility, they can write this into their terms and conditions. There is nothing to stop people doing that. That is why I suggested, to again use the phrase, that the solution to such a problem is not something we really need to respond to in the legislation because it might create unintended consequences and, in terms of the amendment from the noble Lord, Lord Palmer of Childs Hill, unfair administrative burdens on employers. Therefore, I ask the noble Lord to withdraw Amendment 98.

My Lords, we have had some very interesting comments here from various people. I remind noble Lords that all we are saying is that people should have a choice. They could have a trade union representative, fine, but 77.7% of people are in firms that do not have a trade union. But if there was a trade union, that is fine. The alternative is that, as the noble Baroness, Lady O’Grady, said, you could have a fellow worker. But the point of the amendment is that we are saying that the workers need to have a trained person to represent them. It can be a trade unionist—that is fine—but, if it is not, it will be like when a person goes to the solicitor at the end of the road and gets him to represent them on a complicated issue: he is the wrong person to represent them on that issue. You have to have someone who has some training. The trade unionists have the training, but they do not represent everybody. We are saying that the person who is seeking help should have someone who is trained. I thank the noble Baroness, Lady Fox, for what she said; I gather, from having spoken to her, that she will support the amendment in my name. Bearing in mind the lateness of the hour, I would like to test the feelings of the House.

4|20:30|202|138|Division on Amendment 98|Amendment 98 agreed.||0|0

20:40:00

Amendment 99 not moved.

Amendment 100

Moved by

100: After Clause 26, insert the following new Clause— “Statutory parental leave: length and pay(1) The Secretary of State must lay a comprehensive review of all statutory parental leave before Parliament by no later than 1 January 2027.(2) Within six months of the publication of the review set out in subsection (1),the Secretary of State must by regulations increase the rate of pay for statutory parental leave and pay available to fathers and second parents in the first year after their child is born.(3) By 1 January 2030, the Secretary of State must by further regulations provide for at least six weeks of non-transferable paid leave to be paid to fathers and second parents in the first year after their child is born. (4) Regulations under subsection (3) must be set as a minimum at the level of—(a) 90% of a father’s salary, or(b) the level of median gross full-time employee earnings in the United Kingdom, defined by the ONS Annual Survey for Hours and Earnings,whichever is lower.(5) Regulations under this section are subject to the affirmative resolution procedure.”Member’s explanatory statement This amendment seeks to improve the length and pay of leave for fathers in line with recommendations from the Women and Equalities Select Committee report ‘Equality at Work: Paternity and Shared Parental Leave’.

My Lords, I am grateful to the noble Baroness, Lady Lister, and the noble Lords, Lord Palmer and Lord Hampton, for their support, and all noble Lords who have spoken in this Chamber or outside of it in favour of improving leave for new fathers. I also have Amendments 101 and 102 in this group, the arguments in favour of which have not changed since Committee, but for reasons of time I shall focus on Amendment 100. Since Committee, the Government have launched their review into parental leave. At the launch, the Business Secretary acknowledged the arguments that I am making today, saying that only about one in three new dads takes paternity leave, mainly for financial reasons, and committed: “This review is our chance to reset the system and build something that works for modern families and businesses”. The Government say that they want to fix the system and that part of what is broken is the low level of paternity pay available. It is logical, therefore, that any solution would address this. That is all that my amendment seeks to do. First, my amendment would ensure that there are no further delays to this work. Given that it was meant to be completed within the Government’s first year, it is reasonable for the amendment to commit the Government to its new timeline of completing the work 18 months from now. However, for a review to be of any value, it must lead to action, so this amendment commits the Government to improving paternity leave once the review is completed, reaching a minimum of six weeks at 90% of pay, with a cap, by the end of this Parliament, in line with the key recommendation of the Labour-chaired Women and Equalities Committee, which has considered this issue carefully and in detail. Such a commitment does not pre-empt the review. If the purpose of the review is to improve the system that we have, then this is the number one way in which it needs to change. It leaves open the question of how to do this, whether through increasing paternity leave or changing shared parental leave, so that it actually works for families. However, there is no point to a review if it does not lead to change. The reason I am pressing the Government so hard for action—not just warm words—is that, each year we delay, more than half a million fathers and second parents are welcoming a new baby into their family without the ability to properly bond with their child or support their partner. Working on this amendment, I have spoken to too many fathers who have been heartbroken at having to return to work when they could see their partner struggling, physically after a c-section or traumatic birth or mentally with the brutality of postnatal depression. I have also spoken to fathers whose own mental health has suffered, leaving them struggling to meet their obligations to their family and to their employer, as well as safeguard their own well- being. The first year of a child’s life is one of the highest risks to relationship breakdown, and yet we give families just two weeks to adjust to the arrival of a new baby. The social policy reasons for improving paternity leave go on and on. More engaged fathers in the early weeks and years lead to more engaged parenting in the long term, affecting children’s outcomes socially and academically. I acknowledge the concern at the heart of the Bill about its impact on employers and growth. I have spent the weeks since Committee engaging with businesses and business organisations. I will not pretend that all businesses welcome this proposal without any reservations. They have to think about the impact it will have on covering absences, their productivity, their other staff and their bottom line. But despite these concerns, they have all seen the value in improving paternity leave for their employees, who are able to make the transition to parenthood more successfully, but also for their business in terms of recruitment, retention and productivity of employees. That is why those who can afford to already offer enhanced leave to fathers. More than 180 organisations in the UK already offer at least six weeks at 100% of pay. Smaller businesses, reliant on a government rebate from the statutory scheme to cover the costs, cannot afford to expand their offer without that support. That means the cost of any expansion to paternity leave must be covered by the Government and therefore the taxpayer. In the current fiscal context, that is not something I take lightly, but we have overwhelming evidence that the benefits will outweigh the costs. Increasing paternity leave to just six weeks at an adequate rate of pay leads to a significant change in caring dynamics within a couple when they have children. That shift enables more women to make the choice to return to work or to work more hours.

20:45:00

Women’s employment rates drop from around 90% before having children to 75% afterwards. Of course, it is down to every family how they choose to balance work with childcare, but the evidence is that our current system is constraining those choices. In countries that have six or more weeks of properly paid paternity leave, women’s labour market participation is four percentage points higher. Not only will that make a significant contribution to economic growth but the increased tax revenue has the potential to offset up to four-fifths of the cost of the government rebate to business.

The wider economic benefits have been estimated to be worth up to £2.68 billion a year. I know the Treasury can be sceptical about such calculations, but when Jeremy Hunt expanded childcare provision down to children nine months or older, the benefit of increased labour market participation, mainly from women, led the OBR to estimate that it would increase GDP by up to 0.2% a year—the biggest single upward estimate to growth based on a government policy decision that the OBR had made in its history.

Of course, the Government know all this already. I hope that means they can commit today that the review will lead to action. That is all I am asking on behalf of the 600,000 fathers and second parents welcoming a new baby each year. If they cannot commit to reaching six weeks at 90% of pay by the end of this Parliament, to support families and businesses, I intend to test the opinion of the House. I beg to move.

My Lords, I am grateful to the noble Baroness, Lady Penn, for building on the amendments that she and I tabled in Committee. I will speak to Amendment 100, to which I have added my name, but will not repeat the case I made in Committee. No doubt my noble friend the Minister will say that the amendment is unnecessary now that the Government have published their review of parental leave and pay, and that we should not pre-empt that review. I understand that and preface my remarks by saying how much I welcome that review, which I think will meet the warning of the Women and Equalities Committee that it must not lead “only to tinkering around the edges”. We are promised a comprehensive review, and comprehensive and fundamental it needs to be if it is to live up to the Prime Minister’s claim that it represents a landmark moment. This amendment serves a purpose in holding the Government’s feet to the fire by putting their own timeline into legislation. Really, six weeks of paid leave for fathers at the same rate as statutory maternity pay is the minimum we should expect. A recent policy briefing from the Institute for Policy Research at the University of Bath concluded that this change would represent an “important first step in delivering change” and would be crucial to improving fathers’ take-up of the leave. It suggested that “based on evidence from other countries the labour market benefits are judged to be most likely to materialise in case of sequential rather than simultaneous take-up of some of the leave by fathers”— in other words, allowing the mother to return to work if she so wishes while giving the father the chance to take sole responsibility for the care of their child while she is at work. The amendment leaves open whether the additional four weeks would be part of paternity or parental leave. Personally I prefer the latter as it is more likely to encourage sequential take-up by separating out the caregiving function of parental leave from the health and safety function of maternity/paternity leave. One of the very encouraging aspects of our debate in Committee was the dads’ army from around the House supporting a better deal for fathers. While the prospectus for the government review is very positive, I thought it could have gone further to include greater gender equality as one of its objectives, reflecting the clear messages from your Lordships’ House that a better deal for fathers would help fathers to be fathers and improve mothers’ labour market position. I was pleased to read that the Secretary of State, Jonathan Reynolds, told the Times: “I would like it to be culturally very much accepted, that as a new dad you would be wanting to spend some proper time at home. I think that would be really positive for society as well”. His reference to culture was important. Indeed, in the debate on the Statement, Minister Mather talked about the cultural shift that we need to see. It is important that the review looks at how the Government and others can encourage such a cultural shift. One of the lessons from the Nordic experience is that for changes in parental leave to have their full effect, there needs to be cultural change in the workplace, among employers in particular. I welcome the fact that the call for evidence states that the Government would like to test whether the objectives set for the review are the right ones. This suggests an admirable open-mindedness, and I hope therefore that the Government will be open to adding the objective of greater gender equality to the benefit of both women and men. There is a practical question about the review. We have heard that it will take 18 months followed by the publication of a set of findings and a road map, including the next steps of taking forward any potential reforms to implementation. It is not clear to me whether there will be further consultation on the proposals at this stage. Can my noble friend please clarify that? If there is to be a further round of consultation, when do the Government envisage any reforms finally being implemented? I hope it will be possible for the Government to make a practical commitment so that it will not be necessary for the noble Baroness to call a vote.

My Lords, in the absence of my noble friend Lord Hampton, who added his name to this amendment but is unable to be here, I will speak in support of Amendment 100. I will be brief as the noble Baronesses, Lady Penn and Lady Lister, have already set out the case for the amendment so comprehensively and so powerfully. I am more than likely to get parental and paternal confused at some point in my speech, but I will try to avoid that. Sadly, I am well beyond the age when increased paternal leave might be relevant to me, and even grandpaternal leave would be unlikely to help. The amendment addresses an important issue, not least when the UK has the least generous paternity leave in Europe. Many men currently lack either the option or the financial resources to take an adequate period of leave to learn parenting skills, support their partners and bond with their new children. There is no point at all in making leave available if many families cannot afford to take it. The Government’s review into parental leave and their desire to improve the system are welcome but, as the noble Baroness, Lady Penn, has said, the review must lead to action. We have heard evidence of the financial benefits for businesses, as well as the economy as a whole, and I will not repeat those, but in addition there are significant social benefits, including better mental health outcomes, better relationships between family members and more engaged and loyal workers. All those benefits would come at a relatively modest net cost. The amendment starts from the Government’s own aims and sets out the action needed to achieve them through regulations to deliver a new paternal leave regime in terms of the length and rate of pay for statutory paternal leave, in line with the recommendations of the Women and Equalities Select Committee and within a clear timescale consistent with stated government goals. As we have heard, that does not pre-empt the findings of the very welcome review. The amendment seems to represent a win for the Government, for the economy, for society and, above all, for individual families—mothers as much as fathers, and their children. I very much hope to hear a positive response from the Minister.

My Lords, I support Amendments 100, 101 and 102 in the name of my noble friend Lady Penn and I declare my interest as the father of a six-month old son. This package of amendments has the potential to transform the lives of families, children and fathers. Polling this year by the charities Dad Shift and Movember found that 45% of new fathers experienced multiple symptoms of depression in their child’s first year. We do not speak of this as a national mental health emergency, but it is. Fathers are not just facing financial pressure; they are being denied time to bond with their children, to adjust to fatherhood and to share care equally with their partners. It can be deeply isolating. I think of my own experiences as a new father. Mother and child should rightly be the priority for healthcare professionals. I am not saying that fathers should be the priority, but they should not be seen as the enemy either. Not once on any visits to or from midwives or community caregivers did anyone ask how I was coping. What do fathers say would make the biggest difference? Not counselling, not hotlines, but time. Some 82% of surveyed fathers say the single most effective thing the Government could do to improve their mental health is to increase paid and protected paternity leave. Longer paternity leave is associated with better mental health in fathers. Studies show that fathers who are present from the earliest days develop deeper emotional bonds with their children and become more engaged parents over the long term. As we have heard, this disparity does not hurt just fathers; it hurts mothers too. Evidence confirms that countries with higher levels of paternity leave experience lower levels of maternal postnatal depression. When fathers share the load, mothers recover more fully, return to work more easily and experience fewer long-term career penalties. The current disparity hurts children. A 2025 study in the American Journal of Preventative Medicine found that children of fathers with poor mental health are more likely to develop behavioural problems at school. So, this is a childhood developmental issue, a school issue, and ultimately a public spending issue. We have heard the arguments that this is pro-business, so I will not repeat them now in the interest of time, but the mental health crisis among men is real. Suicide remains the leading cause of death for men under 50 in the UK. We do not know how many of those male deaths by suicide involve fathers, because the ONS does not collect that data. My question for the Minister is: will this data be collected as part of the review? If we are serious about tackling the male suicide epidemic—not just treating it but preventing it—this is one of the most direct and evidence-based tools at our disposal. Fatherhood should not begin in burnout and guilt; it should begin with time, presence and love. I urge noble Lords to support these amendments.

My Lords, I shall speak to Amendment 100. I was born in 1967. My mother received a less than generous 12 weeks of paid maternity leave. I was born with a condition that required me to have physiotherapy twice a day every day for the first two years of my life. To save me having to go to the hospital every single day, my father volunteered to be trained in that physiotherapy, and he was not entitled to time off to do that. He did it anyway and he is the reason why I am able to stand straight in this Chamber today. Paternity leave would have been thought of as some kind of dangerous idea in those days, no doubt. When our children arrived at the beginning of this century, my wife got extended leave—paid leave of course. I was a young and ambitious Minister at the time, keen to please my then boss, the First Minister, so I took no leave at all. Even then, there was no talk of paternity leave; you were expected to get on with it. I missed out on the early months of my children’s life in our family—something they, as teenagers, often reminded me of, usually asking for money at the same time. I cannot support the amendment because it is too prescriptive, in my view, but it seeks to address important issues. I ask my noble friend the Minister to consider these three questions in her response. I very much welcome the review the Government have announced, and we know that its timescale will be some 18 months. When is the review due to start? Will any documentation be published beforehand so we are able to see the remit and terms of reference of that review? Will those documents be laid before Parliament? We are a long way behind the European norm when it comes to paternity leave. We owe it to so many families up and down the length and breadth of this land to continue to address this issue, and I look forward to the response from my noble friend the Minister.

21:00:00

My Lords, I will speak very briefly to support Amendment 100. My noble friend Lady Penn and other noble Lords have made the case for this amendment clearly and compellingly. We have heard that better paternity leave can help increase women’s labour force participation and about the other benefits to the economy, and I would just like to add one more. It would also help to narrow the stubborn gender pay gap, which was still at 13.1% in 2024. I hope that all noble Lords would support narrowing that, but at our trajectory we will not reach gender parity for several decades without systemic change. If this amendment passes, it can be part of that change. Analysis of OECD data shows that countries that have more than six weeks paternity leave have a four percentage point smaller gender wage gap than those that do not. I hope that noble Lords from all sides will support this amendment.

My Lords, I add my support for Amendment 100 from my noble friend Lady Penn. I will be brief. The thing that struck me most about my noble friend Lord Harlech’s comments is that when I first returned to work after the birth of my first child, having taken two weeks’ paternity leave, I went back with a feeling of guilt. If this amendment does anything, it takes away that guilt that many new fathers feel after the birth of their first child and their return to work.

My Lords, I support Amendment 100 from my noble friend Lady Penn. I want to focus on the societal and class element of this. I come from a community that has some of the poorest social outcomes in the whole of Europe. One of the features of my community is the lack of a father in the home. I have watched my community struggle for multiple generations with the reality of that—poor educational outcomes and lots of prison attendance by fathers and by children who are unattended. This is an opportunity to reverse many of the social challenges that we face, in one fell swoop. If the Government are serious about addressing child poverty and helping the poorest working communities in this country, levelling up paternal leave would be such a profound thing to do. I have been a youth worker for over 38 years and one of the things that I ran was a single parent group with over 200 members. When you spoke to the young men involved, they all talked about a lack of connection to their family. If we can help to repair that, we can start to get into why our children fail so badly in school, why they spend so much time in prison and why their behaviour is so challenging in a school environment. The Government have a real opportunity to do this here. The economic impact of not doing this is significantly more than the tiny difference it will make economically to do it. This is a real opportunity for the Government to make a real impact for the poorest communities in this country. I beg that it happens.

My Lords, I, too, support my noble friend. In my view, these proposals are long overdue. When my children were born in the 1990s, paternity leave was not even part of the conversation. Much has changed but the statutory provision for paternity leave, currently just two weeks, still reflects a significant imbalance in the pursuit of gender equality. I am fortunate to work for the same employer— Marsh Ltd, the insurance broker—as I did at that time. It now offers 16 weeks’ paternity leave, to be taken within the first year after the child’s birth. We have heard that the UK ranking in international standards is low. For many fathers, especially as household costs rise, taking time off is simply not financially viable, even if permitted. Better paternity leave benefits everyone: fathers; mothers; the child; the other children, if there are any; and, in the long term, the economy, as we have heard. Although I recognise that the four months offered by my company may not be realistic for all, particularly SMEs, we must aim for a fair balance between the business realities and family needs. Research shows that around six weeks of leave is the point at which the broadest benefits are achieved, as proposed in Amendment 100. I believe that this is a reasonable balance and would make paternity leave viable for most fathers.

My Lords, I have signed this amendment in support of the noble Baroness, Lady Penn. I will not add to what many noble Lords have said, but I want to deal with one point. The noble Lord, Lord Jones, talked about being too prescriptive. We need such prescription to help new fathers. The idea that this is mind-boggling is ridiculous. It would extend paternity leave from two weeks to six weeks, at 90% of pay. We are not talking about a revolution. We are talking about a modest increase to make some connection between fathers and their children in their very early years. It is needed, because the UK has the least generous paternity leave in Europe. It is good for fathers, bonding and mental health. It supports mothers, with a more equal division of care, and it is good for children’s development. It supports business, because employees will be happier, more contented and not stressed with trying to get back to the family home and their young children. This is not revolutionary. This is a modest step forward. I was delighted to be able to sign the amendment of the noble Baroness Penn, which we on these Benches support.

My Lords, I am grateful to my noble friend Lady Penn for bringing forward this amendment, which raises matters of genuine importance to families, working parents and, frankly, society as a whole. The arguments that my noble friend has made for extending non-transferable paid leave for fathers and second parents is a serious and well-intentioned one. A more balanced system of leave can play a role in promoting gender equality, increasing participation in the labour market and supporting children in their earliest years. As my noble friend explained, it is therefore good for fathers, mothers and children. I wholeheartedly agree that we should continue to review and refine our parental leave system so that it remains fit for the realities of modern working life. The commitment in proposed new subsection (1) to a comprehensive review is, in itself, a sensible and comprehensive step. I note that this was a manifesto commitment that should have been completed by now, yet the Government are only just starting it. Given the Government’s enthusiasm for consultation, that seems curious to say the least. We must recognise and acknowledge the broader context in which we find ourselves. The Employment Rights Bill, as it stands, already promises to impose significant new obligations on businesses, at a time when many are still struggling with the increase to employer national insurance contributions, the Government’s constant U-turns, inflation and ongoing global economic uncertainty. Frankly, the Government have asked a great deal of British businesses in the last year—too much, in the view of many—and the effect of these measures has been entirely negative, undermining growth, reducing our competitiveness and rapidly stifling job creation, especially at the margins. If the Government were to think again and accept some of our perfectly reasonable amendments—on the right to request an unfair dismissal, for example—it would be easier to argue in favour of amendments such as this, which could be implemented after careful consultation with business. While the intentions behind this amendment are commendable and there is certainly room for discussion about the long-term evolution of paternity and shared parental leave, without wider changes from the Government to their most damning plans, this is not the time, nor the Bill, in which to make these commitments. However, I hope the Government will continue to engage seriously with the questions and the comprehensive arguments advanced by my noble friend, and that we will revisit them in a context that allows for a comprehensive economic and perhaps demographic evaluation, along with genuine and meaningful consultation with businesses of all sizes and shapes, and indeed wider society as a whole.

My Lords, this has been an important debate on the issue of parental leave and pay. It has been wonderful to hear consensus on how important some of these fundamental issues are to individuals and to our society. I thank the right reverend Prelate the Bishop of Newcastle, the noble Baroness, Lady Penn, and my noble friend Lady Lister for their prior engagement on these important issues. The noble Baroness, Lady Penn, spoke eloquently and with conviction on these matters. I assure her that it is a conviction that I and the Government share. We need to reform our confusing patchwork of parental leave and pay rights so that they are fit for a modern economy and deliver the wider societal benefits that noble Lords have raised in this debate. The Government are committed to making life better for families and we know that the current system needs improvement. This is why, through this Bill, we are making paternity leave and parental leave day-one rights, meaning that employees will be eligible to give notice of their intent to take leave from the first day of their employment. This brings these entitlements in line with maternity leave and adoption leave, simplifying the system. We are removing restriction preventing paternity leave and pay being taken after shared parental leave and pay to further support working parents in accessing these entitlements. Crucially, the changes in this Bill are not the limit of our ambitions. Moving specifically to the amendments, Amendment 100 was tabled by the noble Baroness, Lady Penn. While I appreciate what the noble Baroness is attempting in her amendment, I regret that the Government cannot accept it. Let me reassure her that work is already under way to deliver on the spirit of her amendment. Since Committee, the Government have delivered on their manifesto commitment to launch their parental leave review. In doing so, they have listened carefully to concerns raised by noble Lords and stakeholders as to the details and scope of that review. To answer the questions from a number of noble Lords, the published terms of reference make it clear that all current and upcoming parental leave and pay entitlements will be in scope of the review. The review gives us a chance to consider what we want the system to achieve, while giving due consideration to balancing costs and benefits to families, businesses and the Exchequer. As stated in the published terms of reference, we expect the review to run for 18 months. This will conclude with the Government producing a set of findings and a road map, including next steps for taking the reforms forward to implementation. In response to my noble friend Lady Lister, we will want to engage and consult with stakeholders throughout that process to inform the conclusions of our work. In response to my noble friend Lord Jones, the call for evidence is already live; it began on 1 July. I stress that the fact that the review is a manifesto commitment underlines the seriousness with which we are taking it and our obligation to act on its conclusions. However, we cannot predetermine the outcome of the review, nor can we justify the proposed cost increase without a thorough evidence-based assessment. This is why we cannot accept an amendment that would place a duty on the Secretary of State to lay regulations that would almost quadruple the rate and triple the length of paternity pay from current levels. Amendment 102 seeks to make paternity pay a day-one right for all employees by removing the current continuity of working requirements. I reassure all noble Lords that we understand the importance of fathers and partners having time away from work to support their partner and to be with their developing family. As we have heard, the Secretary of State at the Department of Business and Trade recently met with Dad Shift and others at the launch of the review to hear first hand about their campaign. We are determined to do everything we can to encourage proper shared parenting for the improved well-being of both the parents and the children involved. While we are removing the qualifying period for paternity leave to make it a day-one right, statutory pay remains conditional on an average earnings test and a requirement to work for the same employer for 26 continuous weeks. This is standard across all statutory parental pay work entitlements, including maternity pay. The only exception is maternity allowance, which is a benefit, not a work entitlement. Maternity allowance is designed to support health and recovery following childbirth for those who do not qualify for maternity pay.

21:15:00

All these entitlements will be in scope of the parental leave review. This gives us the chance to consider what we want the system to achieve, while giving due consideration to balancing costs and benefits to families, businesses and the Exchequer. We therefore hope that the noble Baroness, and all noble Lords, understand the need to look at these issues in the round rather than on a piecemeal basis, as has been the case in the past.

Amendment 101, tabled by the noble Baroness, Lady Penn, and supported by the noble Lord, Lord Palmer, would commit the Government to introducing regulations requiring organisations that employ more than 250 people to publish information about their parental leave and pay policies. It is true that parental leave and pay policies are essential policies, not extras. They allow people to manage their professional and personal responsibilities and play a huge role in addressing wider societal and economic issues. We think that encouraging businesses to be transparent about their parental leave policies is the right approach at this time, rather than introducing further legislation. We want businesses to feel empowered to publish this information as soon as they can and for this to become the norm, benefiting both current employees and those looking for work.

Meanwhile, as we committed to in the plan to make work pay, through the Bill we are taking the first steps towards requiring large employers to publish action plans detailing the steps they are taking to narrow their gender pay gap alongside their gender pay gap figures. Beyond a simple reporting requirement, this presents a real opportunity to encourage organisations to give more consideration to the impact of their policies on the workforce and to be more transparent about their parental leave and pay policies, their workplace flexibility and broader pay and progression practices. In doing so, this policy will bring benefits to fathers, who equally stand to benefit from more family-friendly parental leave and pay policies. As I said, our hope is that this will help to make it the norm to provide this kind of information, benefiting both current employees and those looking for work.

We are taking a huge step forward with the parental leave review, and I hope that noble Lords have understood the seriousness with which we take those issues. On that basis, I ask the noble Baroness to withdraw her amendment.

My Lords, given the hour, I shall be brief. The Minister said that the Government have delivered on a manifesto commitment to launch a review, but the manifesto commitment was to complete a review by now. We should have seen the outcomes and be taking action, which is what my amendment seeks to do. The challenge is that this change is long overdue and there are hundreds of thousands of new fathers who need a firm commitment that change will happen in this Parliament. Not only that, but the Minister seemed to cast doubt on the fact that six weeks at 90% of pay is a reasonable and incremental change, as the noble Lord, Lord Palmer, pointed out. On that basis, I am afraid that the Minister’s commitments were not sufficiently reassuring, and I wish to test the opinion of the House.

5|21:19|124|131|Division on Amendment 100|Amendment 100 disagreed.||0|0

21:29:00

Amendments 101 and 102 not moved.

Amendment 103

Moved by

103: After Clause 26, insert the following new Clause— “Prohibition of unpaid work experience for a period exceeding four weeks(1) The National Minimum Wage Act 1998 is amended as follows.(2) After section 3(3) (exclusion of, and modifications for, certain classes of person) insert—“(3A) “No provision shall be made under subsection (2)(a) in respect of persons participating in a scheme designed to provide work experience for a continuous or non-continuous period which exceeds four weeks.””(3) After section 41 (power to apply Act to individuals who are not otherwise “workers”) insert—“41A Application of this Act to persons undertaking work experience (1) The Secretary of State must, in exercising the powers under section 41, provide that this Act applies to a person undertaking work experience with the same employer for a continuous or non-continuous period which exceeds four weeks.(2) The Secretary of State must make regulations in accordance with subsection (1) within a period of six months, beginning with the day on which the Employment Rights Act 2025 is passed.(3) Such regulations must provide that a person undertaking such work experience who has ceased to be of compulsory school age, but has not attained the age of 26, is eligible to receive the national minimum wage at the rate specified for workers of the person’s age.(4) In this section—“employer” has the meaning given to it by subsection 54(4) of this Act (Meaning of “worker”, “employee” etc.), and also includes any organisation which provides an individual with work experience;“work experience” means observing, replicating, assisting with and carrying out any task with the aim of gaining experience of a particular workplace, organisation, industry or work-related activity.””Member’s explanatory statement This amendment seeks to ensure that unpaid work experience cannot be used to avoid National Minimum Wage regulations.

My Lords, it is a pleasure to move Amendment 103 in my name. As this is the first time I have spoken on the Bill on Report, I declare my relevant interests as set out in the register as a member of the global advisory board of Endeavour plc and of the science and technology advisory committee of the Crown Estate, and I had a speaking engagement with the FCSA earlier this year. Amendment 103 is incredibly simple and extraordinarily important for all those young people who have the most appalling start to their career through finding themselves on the wrong end of an unpaid internship. This has been going for decades and it goes on in some of our smartest industries in the 21st century. The amendment is a reincarnation of a Private Member’s Bill that I brought forward in 2017. I am delighted to say that when I brought that Bill, which is now Amendment 103 to this Bill, it received full-throated support from the Labour Opposition, whom I thank. It also received full-throated support from the TUC and the noble Baroness, Lady O’Grady, whom I thank. The amendment simply seeks to give young people the right to have a positive experience—often their first—of entering the labour market. Unpaid internships are already illegal under the National Minimum Wage Regulations, but this amendment further clarifies and specifies what work experience is and, crucially, what it is not. It stops work experience being used as a cover for unpaid internships. When I drafted the amendment, my first inclination was to have work experience paid from day one. But after wide consultation with businesses and trade unions and across civil society, it was clear that four weeks was the right point to suggest that young people—indeed, any person—could do genuine work experience, overseeing, learning and replicating tasks. If that person is brought on board and is doing work from day one, they are protected by the National Minimum Wage Regulations and are entitled to pay. Work experience has a vital role to play in our society and, as the results of my consultation underpin, four weeks is the right point at which to set the limit. When the amendment was debated in Committee, when sadly I could not be present, a number of views were put forward that suggested there were difficulties with it because unscrupulous employers could simply have numerous rounds of four-week or part-of-four-week periods, but that is not accurate. The wording describes it as a “continuous or non-continuous period which exceeds four weeks”, so the drafting already caters for employers who might seek to get around it by having continuous periods of unpaid work experience. As one young person put it to me, you cannot pay the rent or pay for food with a glowing CV. Ultimately, it is just a question of talent. Why would we want businesses and organisations not to be able to take from the widest, broadest and most diverse talent pool to go into these roles? Some of these roles are at the classier end of the labour market, but it goes through all strata of the labour market. Surely these positions should be open to all on a fair and equitable basis. That is what this amendment would allow for. We have the ideal opportunity with this Bill to put this right. It seems more than extraordinary, with so many of the other issues that are covered in this not unsizeable Bill, that there is nothing on unpaid internships, nothing to protect those people who find themselves being exploited at the beginning of their career. I ask the Minister: if not this Bill, what Bill? If not this amendment, will the Government not bring forward some wording to end this pernicious practice, which still prevails in 21st-century Britain—a desperate, dispiriting, Dickensian practice that still goes on across our labour market? Why would the Government, alongside all their other measures, not take this opportunity to close this loophole? It would allow young people, or any person seeking to get their first foothold in the labour market, to have a positive, supportive work experience into paid employment. I very much look forward to the Minister’s response. I beg to move.

I thank my noble friend for introducing this important debate. As he has pointed out, the challenge is to strike the right balance. We must protect individuals from being exploited or drawn into extended unpaid roles that are in effect jobs by another name, but we also must avoid placing undue burdens on organisations whose motives are benign and whose placements offer genuine social and developmental value. I welcome the debate that the amendment has prompted, and I hope that as the Bill progresses, the Government will engage closely with stakeholders to ensure that any future regulations achieve the twin goals of fairness for individuals and viability for those offering valuable early opportunities.

I thank noble Lords for this short but interesting debate around Amendment 103 moved by the noble Lord, Lord Holmes of Richmond, which seeks to prohibit work experience for a period exceeding four weeks. With regret, as he said, the noble Lord was unable to join us in the Chamber in Committee when we debated this amendment, which was moved on his behalf very ably by the noble Viscount, Lord Colville of Culross, who I do not believe is in his place at the moment. The Government have always been clear that a fair day’s work deserves a fair day’s pay. You need only look at the Government’s track record on the national minimum wage and the provisions in this Bill to see how the Government are delivering on this commitment. I will reiterate what I have said on this issue previously because it is worth emphasising: the existing legislation is clear that aside from a very small number of exemptions, workers who are entitled to the national minimum wage should be paid accordingly. No ifs, no buts. These are the rules that our enforcement body enforces, and these are the rules that we expect businesses to abide by. Of course, the vast majority do, but those that do not undercut the responsible businesses unfairly, and we should all be agreed that this is not behaviour that we should tolerate. This means that an employer cannot call a worker an intern to avoid paying them. I want to repeat this very important point, not only for your Lordships’ House but for those who are listening to this debate outside: an employer cannot call a worker an intern to avoid paying them. If workers who are entitled to the national minimum wage are not being paid what they are due, there are protections in place so that they can receive what they are owed. The Government and His Majesty’s Revenue & Customs have raised and continue to raise awareness on workers’ rights, so that no one is left out of pocket. I have previously stated that the Government will be consulting on this issue soon. In fact, and in response to the noble Lord, Lord Holmes, I am pleased to be able to tell your Lordships’ House that this consultation will indeed begin tomorrow with a call for evidence. I do not believe that I am overstating the case when I say that all of us in this House care about this issue, in particular, ensuring that our young people have access to opportunities, regardless of their background, whether they can afford to work for free or where they are based in the country. The noble Lord, Lord Holmes, spoke powerfully on that basic right and I think that we are all in agreement with the principle. This amendment, while well-intentioned, risks creating loopholes, where existing workers who are entitled to the national minimum wage from day one could find themselves working for free for up to four weeks. I am sure that we would all agree that this is not right and not what any of us wants to see. Adopting this amendment could well lead to an influx of four-week roles appearing, with only those who can afford to work for free accessing them. We do not want to lock away valuable opportunities and create unintended consequences by rushing through this amendment. These issues are complex, which is why I reiterate that it is important that the Government consult on this issue first. To make clear, we are standing by our words in Committee. When we said that we would be starting the consultation “soon”, in this case, that means tomorrow. As I stated in our debate in Committee, the issues that the noble Lord, Lord Holmes, wishes to address can be dealt with most effectively outside of this Bill. I therefore ask him to withdraw Amendment 103.

My Lords, before the Minister sits down, does he have to hand the number of prosecutions that HMRC has taken under the NMW regulations in this instance? If he does not have that to hand, I would be very happy for him to write.

I do not have that information to hand. I am happy to write to the noble Lord with the detail. I take the opportunity to point out that the fair work agency that we are creating in this legislation will be responsible for enforcing this aspect of employment rights regulation as well as others. We would expect that work to be taken forward by the fair work agency. I undertake to write to the noble Lord with that detail.

My Lords, I thank all noble Lords who have taken part in this debate. As the hour is late, I will not run through them all by name. I am thankful to the Minister for his response. I very much look forward to the consultation tomorrow and, for now, I beg leave to withdraw the amendment.

Amendment 103 withdrawn.

Amendment 104

Moved by

104: After Clause 26, insert the following new Clause— “Statutory carer’s leave pay(1) The Social Security Contributions and Benefits Act 1992 is amended as follows.(2) After Part 12ZE insert—“Part 12ZFStatutory carer’s leave pay171ZZ25 Entitlement(1) Any person who satisfies the conditions in subsection (2) and any condition prescribed under subsection (3) is entitled in accordance with the following provisions of this Part to payments to be known as “carer’s leave pay”.(2) The pay conditions are—(a) that the person satisfies prescribed conditions as to carer’s leave;(b) that the person has been in employed earner’s employment with an employer.(3) Regulations may provide that a person is not entitled to pay in respect of carer’s leave unless, at the beginning of that period of leave, the person is in employed earner’s employment with the employer by reference to whom the condition in subsection (2)(b) is satisfied.(4) For the purposes of this Part “carer’s leave” means carer’s leave under section 80J of the Employment Rights Act 1996.171ZZ26 Entitlement supplementary(1) A person is entitled to payments of statutory carer’s leave pay in respect of any relevant period only if the person gives notice to whoever is liable to make the payments stating the days or half days in respect of which they are to be made.(2) Regulations may provide for the time by which notice under subsection (1) must be given.(3) The notice must be in writing if the person who is liable to pay the statutory carer’s leave pay so requests.(4) Regulations may set out the definition, type and manner of leave to be taken. (5) The Secretary of State may by regulations—(a) provide for amounts earned by a person under separate contracts of service with the same employer to be aggregated for the purposes of section 171ZZ25;(b) provide that—(i) the amount of a person’s earnings for any period, or(ii) the amount of the person’s earnings to be treated as comprised in any payment made to the person for the person’s benefit,is to be calculated or estimated for the purposes of section 171ZZ25 in such a manner and on such a basis as may be prescribed, and that for that purpose payments of a particular class or description made or falling to be made to or by a person shall, to such extent as may be prescribed, be disregarded or, as the case may be, deducted from the amount of a person’s earnings.(6) Where an employee is entitled to leave under this section the employee is entitled to leave during any period within 12 months, for which statutory carer’s leave pay is payable.171ZZ27 Liability to make payments(1) The liability to make payments of statutory carer’s leave pay under section 171ZZ25 is a liability of any person of whom the person entitled to the payments has been an employee as mentioned in subsections (2)(b) and (3) of that section.(2) The Secretary of State must by regulations make provision as to a former employer’s liability to pay statutory carer’s leave pay to a former employee in any case where the employee’s contract of service with the employer has been brought to an end by the employer solely, or mainly, for the purpose of avoiding liability for carer’s leave pay.(3) The Secretary of State may, with the concurrence of the Commissioners for His Majesty’s Revenue and Customs, by regulations specify circumstances in which, notwithstanding this section, liability to make payments of statutory carer’s leave pay is to be a liability of the Commissioners.171ZZ28 Rates and periods of pay(1) Statutory carer’s leave pay is payable at such a fixed or earnings-related rate as may be prescribed by regulations.(2) The Secretary of State may, by order, amend the fixed or earnings-related rate of pay as prescribed by regulations in subsection (1) above.(3) Statutory carer’s leave pay is payable in respect of—(a) such a day or half day within the qualifying period, or(b) such number of days or half days not exceeding the prescribed number of days or half days,as the person entitled may choose in accordance with regulations.(4) Provision under subsection (3)(b) must secure that the prescribed number of days is not less than half a day.(5) Regulations under subsection (3)(b) may permit a person entitled to receive statutory carer’s leave pay to choose to receive such pay in respect of non-consecutive periods.(6) Regulations may make provision where, for any purpose of this Part or of regulations, it is necessary to calculate the daily rate or half-daily rate of statutory carer’s leave pay.171ZZ29 Restrictions on contracting out(1) An agreement is void to the extent that it purports— (a) to exclude, limit or otherwise modify any provision of this Part, or(b) to require a person to contribute (whether directly or indirectly) towards any costs incurred by that person’s employer or former employer under this Part.(2) An agreement between an employer and an employee authorising any deductions from statutory carer’s leave pay which the employer is liable to pay to the employee in respect of any period is not void by virtue of subsection (1)(a) if the employer—(a) is authorised by that or another agreement to make the same deductions from any contractual remuneration which the employer is liable to pay in respect of the same period, or(b) would be so authorised if the employer were liable to pay contractual remuneration in respect of that period.171ZZ30 Relationship with contractual remuneration(1) Subject to subsections (2) and (3), any entitlement to statutory carer’s leave pay does not affect any right of a person in relation to remuneration under any contract of service (“contractual remuneration”).(2) Subject to subsection (3)—(a) any contractual remuneration paid to a person by an employer of that person in respect of any period is to go towards discharging any liability of that employer to pay statutory carer’s leave pay to that person in respect of that period, and(b) any statutory carer’s leave pay paid by an employer to a person who is an employee of that employer in respect of any period is to go towards discharging any liability of that employer to pay contractual remuneration to that person in respect of that period.(3) Regulations may make provision as to payments which are, and those which are not, to be treated as contractual remuneration for the purposes of subsections (1) and (2).171ZZ31 SupplementaryIn this Part—“employer” in relation to a person who is an employee, means a person who—(a) under section 6 is liable to pay secondary Class 1 contributions in relation to any of the earnings of the person who is an employee, or(b) would be liable to pay such contributions but for(i) the condition in section 6(1)(b), or(ii) the employee being under the age of 16;“employee” means a person who is gainfully employed in Great Britain either under a contract of service or in an office (including elective office) with earnings;“earnings” and “relevant period” have the meanings given to them by regulations;“carer’s leave” has the meaning given by the Carer’s Leave Act 2023 and the Carer’s Leave 2024 regulations.””Member’s explanatory statement This new Clause makes provision for a statutory entitlement to carer’s leave pay, including eligibility, rates of pay, employer liability, and the relationship with contractual pay. It seeks to make the length of paid entitlement equivalent to the unpaid entitlement provided for by the Carer’s Leave Act 2023.

My Lords, many noble Lords get up and say that they will make a short speech; mine will indeed be very short, because all I wish to say is that we debated this matter at length on a previous day. The amendment would establish paid carer’s leave as a statutory entitlement. I hope that this support for carers will have the support of this House, as these Benches will indeed be supporting Amendment 105, which talks about seasonal workers. They should both be supported. I would like to test the feeling of the House.

6|21:43|47|121|Division on Amendment 104|Amendment 104 disagreed.||0|0

Amendment 105

Moved by

105: After Clause 26, insert the following new Clause— “Definition of seasonal work(1) In making regulations under Part 1 of this Act, the Secretary of State must have regard to the specific characteristics and requirements of seasonal work as defined in subsection (2).(2) “Seasonal work” means work that—(a) is performed during a particular period or periods of the year,(b) recurs substantially in the same periods each year,(c) is directly linked to a predictable and temporary increase in demand for labour during those periods,(d) includes work in sectors where such patterns are common, including but not limited to—(i) agriculture and horticulture,(ii) the creative industries, including theatre and live performance,(iii) retail,(iv) hospitality, and(v) tourism and events, and(e) is entered into for a fixed duration not exceeding 26 weeks to meet the temporary demand.”Member’s explanatory statement This amendment introduces a baseline definition of “seasonal work” to clarify its recurring and time-limited nature for the purposes of the Act.

My Lords, I would like to test the opinion of the House.

7|21:54|184|123|Division on Amendment 105|Amendment 105 agreed.||0|0

22:04:00

Amendment 106

Moved by

106: After Clause 26, insert the following new Clause— “Consultation on Part 1(1) The Secretary of State must initiate a consultation on the effects of the provisions in Part 1 of this Act.(2) As part of the consultation under subsection (1), the Secretary of State must ensure that views are specifically sought from at least 500 small and medium-sized enterprises (SMEs).(3) The Secretary of State must lay before each House of Parliament, within 18 weeks of the initiation referred to in subsection (1), a report on the outcome of that consultation, including a summary of responses received from SMEs.”Member's explanatory statement This amendment requires the Secretary of State to undertake a consultation on the effects of the provisions in Part 1 and to ensure that at least 500 small and medium-sized enterprises (SMEs) are consulted as part of that process.

My Lords, the Labour Party manifesto promised consultation; it has not happened. The Minister, when batting away amendments promises consultation, and it has not happened. The SME community of this country is petrified about provisions in Part 1 of the Bill. They want to be heard, and I think noble Lords do as well. I wish to test the opinion of this House.

8|22:05|180|123|Division on Amendment 106|Amendment 106 agreed.||0|0

Amendment 107

Moved by

107: After Clause 26, insert the following new Clause— “Exemptions for individuals employed by a farm business(1) Sections 1 to 13, 23, and 26 of this Act do not apply to employment by a farm business.(2) For the purposes of this section— “farm business” means any business, undertaking or activity carried on wholly or mainly for the purposes of agriculture, horticulture or forestry, and includes—(a) the growing of crops, including cereals, fruits, vegetables and flowers;(b) the rearing or fattening of livestock or poultry;(c) dairy farming;(d) the management of woodlands where ancillary to agricultural operations;(e) land used for grazing, mowing or market gardening;(f) any business conducted on land that is occupied under a farm business tenancy within the meaning of section 1 of the Agricultural Tenancies Act 1995 or section 109(3) of the Agriculture Act 1947.”Member’s explanatory statement This amendment exempts all individuals employed by a farm business from the application of Sections 1 to 13, 23, and 26 of the Act.

My Lords, British farmers have been hammered by this Government. Requiring farmers to give guaranteed hours and day one rights on sick pay and unfair dismissal, as well as to make payments for cancelled shifts, is unworkable, so I would like to test the opinion of the House.

9|22:16|148|155|Division on Amendment 107|Amendment 107 disagreed.||0|0

22:26:00

Clause 27: Collective redundancy: extended application of requirements

Amendment 108

Moved by

108: Clause 27, page 48, line 13, at end insert— “(A2) Subsection (A1)(a) shall not apply where the employer is undergoing relevant insolvency proceedings.(A3) Where the employer is undergoing relevant insolvency proceedings, the duty to consult under this section shall not arise.(A4) For the purposes of this section, “relevant insolvency proceedings” means any formal insolvency process under the supervision of an insolvency practitioner, including but not limited to—(a) administration;(b) administrative receivership;(c) Company Voluntary Arrangement (CVA); (d) Creditors’ Voluntary Liquidation (CVL);(e) compulsory liquidation.”Member’s explanatory statement This amendment ensures that employers undergoing formal insolvency proceedings under the supervision of an insolvency practitioner are not subject to the collective consultation duties ordinarily required under subsection (A1)(a).

My Lords, in moving Amendment 108, I will speak to Amendment 109, also in my name. My declaration of interest is that I have worked in my career with hundreds of companies, many of which had to create redundancies at one time or another and a few of which had to go into liquidation. I am not an insolvency practitioner. The first of these amendments, Amendment 108, is a small but very important proposal. First, a disclaimer: I am not seeking to alter the vast majority of what is proposed under Clause 27, only that small minority of redundancy cases that occur when a company goes into insolvency. Also, I am not proposing any override of TUPE legislation, in particular in so-called pre-packs. I am proposing that on a non-partisan basis, we take advantage of the passing of this Bill to rectify a long-standing conflict between two separate laws—a conflict that often places insolvency practitioners in an impossible position. What is this conflict? It is between the provisions of the Insolvency Act 1986 versus the Trade Union and Labour Relations (Consolidation) Act 1992, the latter of which, as your Lordships know, today’s Bill seeks. The conflict has long existed; it is not a function primarily of the Bill we are discussing today. Let me explain briefly what it is. Insolvency practitioners are required to act quickly, so that value is not eroded. The 1992 Act, however, requires consultation of between 30 to 45 days, which would utterly frustrate the imperative to move swiftly. The liquidator is basically required to break one or the other laws, and always chooses to break the 1992 law—and will choose to break it as amended by this Bill, because the liquidator has to act speedily. A long consultation, whether 30 or 45 days, is always found to be impossible. As a result, ambulance chasers write offering “free money” to all employees because the law has been broken and therefore the provision comes in that penalty money should be paid to these workers. This does not happen in all cases—only when trade unions are involved or the insolvency is large enough for the no-win no-fee crowd to move in. Much of the money in bankruptcies then ends up in the hands of lawyers rather than any of the creditors. We should note that in most non-liquidation situations these stringent provisions make such penalty awards rare. An employer would be foolish to flout the requirements. It happens only in liquidation, where the liquidator is essentially forced to choose to flout one law or another.

22:30:00

I will offer briefly the relevant background to that important national institution, the Insolvency Service. In the UK, there are around 1,500 insolvency practitioners but only some 800 of these actively take appointments. It is one of the most highly regulated professions in the country. It has one of the most difficult exams to pass. To take the most recent example, in November 2024, of 172 applicants sitting both exams, only 10 of them passed. Partly because of this, more IPs are retiring each year than are qualified.

Insolvency professionals have to be a very tough-minded and resilient crowd because, of course, it is always difficult to deal with the harsh realities of insolvency. There are many bad actors in this space who go to great lengths to frustrate the insolvency practitioner. They take personal suits against the IP. They make multiple complaints to the professional body to try to divert the attention of the IP. There are long drawn-out wars of resistance from those trying to resist bankruptcy. IPs have very few funds with which to pursue the bankruptcy, let alone defend themselves against these depredations.

We need to ensure that we protect this important national institution. We should seek to make insolvency practitioners’ lives easier and more sensible when lacunae such as this are discovered. We need to understand that a collapse in this institution could create chaos in the corporate landscape, with a free-for-all and lawyers, creditors and bailiffs running riot. The well-known book, Why Nations Fail, points precisely to the collapse of institutions as the cause of national decline.

Let me give the recent bankruptcy of Go-Centric as an illustration of the precise reality of what happens in real life, rather than the imagined situation that Governments have been persuaded will be the case. Go-Centric, a Glasgow company, went bankrupt, owing some £5 million to employees, HMRC, trade creditors and others. Some £600,000 was owed to employees in redundancy, sick pay and so forth, and £637,000 was available, so the employees received all that they were due. However, in doing this, there was no consultation, so immediately ambulance chasers wrote to these employees saying, “We have some free money for you if you take the Government to the employment tribunal”, which they did. The employment tribunal awarded the 90 days’ penalty money, then the maximum that could be awarded—another £600,000 for these employees.

Governments are told that there will be mitigation by courts, but there never is mitigation. No one came to argue for mitigation—not the Redundancy Payments Service, which had to pay the money, and certainly not the insolvency practitioner; it was not their concern. HMRC, via the Redundancy Payments Service, was therefore out by £600,000, which meant that, in the end, the taxpayer was out £600,000. Under Clause 27 of the Bill, this taxpayer-funded amount would rise to £1.2 million. We should note that this is on top of the £600,000 that the employees received in redundancy money. That is the only occasion this would happen, because no employer would be so stupid as to incur these fines—only in a redundancy, where it is necessary to go against the law, as I have explained.

I have no personal interest in this matter, but, looking to get a bipartisan solution, I wrote to the Minister reviewing this dilemma. She very kindly offered to meet, as she has done throughout this whole period, and met with me, along with the noble Lords, Lord Leong and Lord Katz, and others, and subsequently sent a written response to my letter that made it clear that she recognised the problem but felt that no change was needed. In particular, her response stated that consultation could still take place, and that employers are allowed flexibility in the law which courts will take into account to make smaller rewards. Her letter also stated that what it referred to as the “Redundancy Protection Service”—it is actually the Redundancy Payments Service—will cap payments at 8%.

It was a kind and thoughtful response, but it seemed in several places to conflate insolvency practitioners with employers. The two are very different things. For example, the liquidator usually has no prior knowledge whatsoever of the company they are dealing with. Some half of the letter talked about employer obligations, but the employer is no longer involved once a liquidation is called in. In any event, as I discussed in the Go-Centric case, this response did not reflect the reality of what happens in a liquidation.

Insolvency practitioners have no reason to spend money attending employment courts, and much the same is true for the Redundancy Payments Service, so it is a free-for- in the employment court between the activists and the ambulance chasers. Whether because of this or not, I am told by insolvency practitioners that none of them has ever seen less than the full 90 days’ pay—which is soon to be 180 days—awarded on top of redundancy money. I cannot but believe that this is just a mistake.

The situation is complicated by the creation of the new fair work agency. It is poignant that we are discussing the creation of a new regulator the day after the Chancellor of the Exchequer described regulators as

“a boot on the neck of businesses”.

Do the Government at this end of the Corridor always talk to the Government at the other end? Will the new regulator make the situation even worse for insolvency practitioners? Can the Minister give assurances that this will not be the case?

To summarise, my amendment merely seeks to carve out insolvency situations from Clause 27. The liquidator will then not have to break the law; the law will, as a result, reflect reality; and the large majority of redundancies will not be affected.

Finally, while on my feet, I will speak to Amendment 109. In doing this very briefly, I feel myself to be acting on behalf of the Government’s Chancellor of the Exchequer, who, as I mentioned, said yesterday that regulation is

“a boot on the neck of businesses”.

Therefore, instead of having Clause 27 worsen the burden on business and increase the pressure of that boot with its 30 to 45-day delay before dismissals can take effect, I propose that the delay be reduced to 21 days. I beg to move.

My Lords, we on these Benches do not support these amendments. The obligation to consult collectively in redundancy situations is a vital safeguard for workers, providing them with a voice and an opportunity to understand and respond to proposed job losses. Reducing consultation rights, especially during the turmoil of insolvency, would leave employees even more vulnerable at a time of significant uncertainty. Similarly, cutting the notice period would deny workers essential time to plan, seek advice and make necessary financial and personal arrangements. We believe strongly that these protections must be preserved and not weakened.

My Lords, we are very grateful to my noble friend Lord Moynihan of Chelsea for his amendments. I thank the Minister and her team for the way in which they have entertained and thought through some of the key points made by my noble friend. As he rightly pointed out, collective redundancies are, sadly, not uncommon in cases of employer insolvency. In such circumstances, the role of the insolvency practitioner, which my noble friend has outlined so clearly, is both time-critical and highly constrained. The legal duties placed upon practitioners can come into direct tension with the obligation to consult collectively with employees, a tension that is not merely theoretical but is borne out time and again in practice. I say to the noble Lord, Lord Goddard of Stockport, that the amendment does not seek gratuitously to diminish the rights of employees. My noble friend has drawn the Government’s attention to a genuine gap in the law, one that has become more acute in the light of the changes that the Bill introduces. As it stands, the duty to consult can place insolvency practitioners in an impossible position, bound by law to take urgent decisions to preserve value or manage a collapse while also facing legal jeopardy for failing to comply with collective consultation obligations that were not, and never were, designed with insolvency in mind. We have to be realistic. Where a company is collapsing, consultation—however desirable—cannot always be carried out in the prescribed way. It is in nobody’s interests, least of all that of employees, to put insolvency practitioners in a position where they are forced to choose between compliance with employment law and their fiduciary responsibilities. I believe that the Government should take my noble friend’s arguments seriously. This is not a theoretical concern; it is a matter of practical urgency. I therefore urge the Minister to reflect carefully on the implications of the clause and to engage with my noble friend’s proposal in the constructive spirit in which it is offered.

My Lords, I am grateful to all noble Lords who have spoken. Amendments 108 and 109, tabled by the noble Lord, Lord Moynihan of Chelsea, would amend Clause 27. I thank the noble Lord, as well as the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for their engagement in this matter when we met. On Amendment 108, the clause as drafted does not alter how collective redundancy obligations apply to insolvent employers. It is right that, when employers know that their business is in trouble and redundancies will be necessary, they should be required to do as much as possible to collectively consult on those redundancies. That was the case before and it will be the case after this legislation comes into force, so nothing has changed. Employers should consult when they propose to make a qualifying number of redundancies, and they will face penalties if they do not. However, crucially, as my officials and I have discussed with noble Lords, those penalties are set by a tribunal, which will take into consideration the seriousness of the employer’s default, as well as any mitigating factors. The amount set out in legislation is a maximum award, but tribunals may award less where the employer or insolvency practitioner has taken all reasonable steps to consult for as long as possible in the circumstances. Section 188(7) of the Trade Union and Labour Relations (Consolidation) Act 1992 already affords flexibility for employers who cannot fulfil their collective consultation obligations. It allows employment tribunals to assess on a case-by-case basis whether there are special circumstances which make it not reasonably practicable for an employer to comply with their collective consultation obligations.

22:45:00

This amendment would leave employees whose employer has become insolvent without the protections that are already in place, and that have been in place since the Trade Union and Labour Relations (Consolidation) Act 1992 entered into force. This would also lead to a two-tier system of rights whereby, if an employer was becoming insolvent, affected employees would not be afforded any collective consultation, meaning that they would have fewer rights than any other employee. This could be in situations where collective consultation is most important and impactful. It is right that employees who are made redundant, often in precarious circumstances, be prioritised and have access to sufficient remedies. Employees should not suffer to improve business value or in order to benefit other creditors.

This afternoon I looked at the R3 website, and one concern that it had with this amendment was that it would devalue a business’s value on an ongoing basis to a potential purchaser. Why should employees suffer because of that devaluation?

I apologise for intervening, but is the Minister saying that R3 stated that it was against this amendment?

The R3 website said that it was concerned about the amendment because it may devalue a company’s valuation on an ongoing basis because of the day-one rights accorded to employees. That is what it said on the website.

I do not want to detain the House, but I am in ongoing discussions with R3, and it has never said this. Is the Minister quite sure that it is not saying that it is concerned about the clause, rather than the amendment?

I may be wrong. Sorry: it is not the noble Lord’s amendment; it is the clause. I apologise for that. But it is the same thing: if it is against the clause, it is because it is concerned about the valuation of the business. My point is, why should the employees suffer because of the taking into account of day-one rights? On Amendment 109, I inform the noble Lord that the notification period in the current law aligns with the consultation period. This means in practice that whenever an employer begins a collective consultation, they must also notify the Secretary of State at that point. Setting these periods at different times could cause confusion for employers and increase the risk of non-compliance. The objective of the notification provision is that such notifications may be distributed to appropriate government departments and agencies that are best placed to support affected employees. This amendment would mean that those agencies would be less prepared to support large volumes of individuals who have been made redundant. We have had extensive engagement with employers throughout the passage of the Bill, and the notification timeline has not been raised as a concern. Therefore, this amendment is unnecessary. I take this opportunity to say to the noble Lord that we will engage with the Insolvency Practitioners Association, raise and discuss the issues that noble Lords have raised, and listen to what it has to say. With that in mind, I ask the noble Lord to withdraw Amendment 108.

I thank noble Lords for their patience in enduring at this late hour this somewhat arcane discussion. The noble Lord, Lord Goddard, emphasised the importance of consultation and, indeed, the essential nature of it, and said how vulnerable employees are. But they are not vulnerable in this particular circumstance; they have priority as creditors above all other creditors. If there is money, they will get it. If there is no money, they will get it from the Redundancy Payments Service. But why, having got their full amount of redundancy money, should they then scoop the pot and get three times as much because of a flaw in the law that will leave, for example, small trade creditors not receiving anything and possibly facing bankruptcy? That is not to mention the fact that a lot of this money will usually come from the taxpayer—ultimately, the source of funds for these penalty payments—via HMRC, where the Redundancy Payments Service is, thus increasing the deficit. It would create a mini black hole, if I could be so foolish as to mention that. My noble friend Lord Hunt of Wirral ably reinforced the need for this amendment. The Minister emphasised the importance of consultation. I understand that, but I believe Hansard will show that I have already dealt with most of the items in his response. I will not delay noble Lords any longer by going over that ground again, except to say once again that when he asks why employees should suffer, the answer is that they will not suffer. I hoped I had explained that. I am chagrined to understand that I have not. They have total priority above all other creditors in receiving their full redundancy payments. All I ask is, why should they, as a result of a glitch in the law, receive in total three times that much as a so-called penalty payment? They will not be paid by the employer because the employer will be long gone. They will not be paid by the insolvency practitioner, in facing the impossible task of obeying both laws at the same time. They will be paid mostly by us, first through HMRC and through it the taxpayer. The hour is late and so, if only on compassionate grounds, I beg leave to withdraw my amendment.

Amendment 108 withdrawn.

Amendment 109 not moved.

Clause 34: Extension of regulation of employment businesses

Amendment 110

Moved by

110: Clause 34, page 61, line 2 at end insert— “(A1) After section 5(1)(ec) of the Employment Agencies Act 1973 (general regulations), insert—“(f) requiring the Secretary of State to introduce regulations for employment businesses participating in employment arrangements to underpin recognised certifications and industry standards, particularly for businesses acting as payment intermediaries.””Member’s explanatory statement This amendment would ensure that the regulations the Government intend to bring forward for Payment Intermediaries (also known as umbrella companies) make use of the compliant part of the market's existing industry led codes and accreditations. It does not involve the creation of a new body or the creation of a new framework.

My Lords, I will be blessedly brief. I tabled a similar amendment on this issue in Committee to ask the Government, through the Bill, to introduce regulations to designate a body to bring clarity, consistency and fairness and, in effect, to level the playing field in this area of umbrella businesses, on which the Bill is curiously silent. These entities differ dramatically from other sectors of the employment market, the recruiter market and many other sectors of the economy in not having consistency and clarity of approach in how they are treated. My amendment in Committee suggested the designation of a body to address this issue. At that stage, it was taken by the Government and others around the Committee that I was suggesting the creation of an additional body. Not a bit of it. It was about the designation of an existing body rather than the creation of a new one. With this amendment on Report, I have moved that on and seek to ask the Government to introduce regulations to ensure that existing codes of practice in good standing—ways of operating that all bona fide businesses in this sector of the market already adhere to—apply to all umbrella businesses. This extraordinarily moderate amendment would bring fairness, clarity, consistency and a levelling of the playing field. I very much hope the Government will accept it. I beg to move.

My Lords, I thank my noble friend Lord Holmes of Richmond for his Amendment 110. What this amendment does is simple but important. It encourages the Secretary of State to ensure that in bringing forward regulations under the Employment Agencies Act 1973, they draw upon existing recognised certifications and industry standards. These standards, developed and refined by responsible actors within the market, offer a ready-made baseline for compliance which the Government can and should use. There is consensus that regulation of umbrella companies is overdue, but as we take this opportunity, let us ensure that the regulation is done well and in a way that is pragmatic, proportionate and effective. This amendment helps point us in that direction, so I hope the Minister can offer some reassurance that the spirit of the amendment will be reflected in the Government’s approach to umbrella companies.

My Lords, I am grateful to the noble Lord, Lord Holmes of Richmond, for tabling Amendment 110, which covers the regulation of umbrella companies. The amendment seeks to place an obligation on the Secretary of State to utilise pre-existing industry codes and accreditations as a basis for the regulation of umbrella companies. We recognise the important role accreditation and trade bodies play in sharing information and best practice with their customers and members. The work of these bodies in the umbrella company industry has had some success in driving up standards. However, this success has been fairly limited, and we would not want to assume that an organisation that is a member of an accreditation or trade body is necessarily compliant with everything. We therefore believe that now is the right time for the Government to step in to protect businesses that already do the right thing and also protect workers. Many in the umbrella company industry, and those who use umbrella companies, welcome regulation, especially as it will help to level the playing field. This includes public positions taken by the Freelancer & Contractor Services Association, Contractor Calculator, the Recruitment and Employment Confederation and several other bodies’ responses to the consultation run under the previous Government. We have been clear since Clause 34 was introduced to the Bill that the Conduct of Employment Agencies and Employment Business Regulations 2003 will be amended to apply to umbrella companies. The Government recognise that the regulations in their current form are not appropriate to regulate the activities of umbrella companies. That is because the regulations predominantly focus on entities providing work-finding services or supplying individuals to end clients, which, generally, umbrella companies do not do. Where umbrella companies do provide such services, they would indeed already be covered under the regulations. The Government have a statutory requirement to consult before any changes are made to these regulations, and as referenced in the recent roadmap publication, the consultation on umbrella companies regulation will be published this autumn. As part of the consultation process, the Government are keen to get views from trade unions, workers and industry bodies in the umbrella company sector. This will enable the Government to better shape policy development. Following consultation, an appropriate and proportionate umbrella company regulatory regime will be introduced in 2027. Once those regulations come into force, they will be enforced by the Fair Work Agency, which will take a risk-led and intelligence-led approach to its compliance regime. I hope this provides some of the reassurance that the noble Lords, Lord Holmes and Lord Sharpe of Epsom, were seeking, and for that reason I ask the noble Lord, Lord Holmes, to withdraw his Amendment 110.

I thank the Minister for his response. It is good to hear that the consultation is coming in the autumn, and we can only hope that is the early autumn and that following that, perhaps there can be some more pace, and it will not be put out to 2027. We also hope the Minister will consider what happens in the interim for all those businesses currently doing the right thing that are disadvantaged by being in a market where some others are perhaps not operating to the same standards and codes of practice. But for now, I beg leave to withdraw the amendment.

Amendment 110 withdrawn.

Amendment 111

Moved by

111: After Clause 34, insert the following new Clause— “Employment law code of practice(1) Within 30 months of the passage of this Act, the Secretary of State must publish a code of practice containing guidance for small and medium-sized enterprises on their legal obligations under this Act.(2) It is the purpose of the document to provide clarity for smaller and medium sized enterprises on compliance with the provisions contained in this Act.(3) The document must include, in particular—(a) an overview of the relevant legal duties placed on employers under this Act;(b) a practical framework outlining how such businesses can meet those duties;(c) guidance on best practice suitable to businesses of this size.(4) The Code of Practice may be updated by the Secretary of State as they see fit.”Member’s explanatory statement This amendment requires the Secretary of State to publish a statutory code of practice for small businesses in adhering to the employment and legal requirements of this Act.

My Lords, this is a small group of amendments—only three—dealing with small businesses. I will briefly address my Amendment 111 and the other two. Simply put, we would require the publication of a code of practice applicable to small and medium-sized enterprises with the express intention of ensuring that the code must simplify employment law and the regime that the Bill will create, thereby enhancing the ability of SMEs with limited capacity to adhere to the principles of the Bill. Amendment 166 in the name of the noble Lord, Lord Sharpe, would require the Secretary of State to undertake a review of the impact on small businesses. We support this amendment, as we believe that SMEs are suffering excessively from the consequences of some of the proposed legislation. However, we cannot support Amendment 194, which would repeal Parts 4 and 5 and Clauses 149 and 150 of the Bill at the end of the Parliament in which it passes. Quite frankly, we feel that this is nothing more than a wrecking amendment that would create provisions to be adhered to only for a short period of time before reverting back to pre-employment framework, thus causing real havoc in legislation.

23:00:00

My Lords, I thank the noble Lord, Lord Goddard of Stockport, for his important words when he talks about the impact of the Bill on small and medium-sized enterprises. The fact is that while the Government recognise the impact, they have not really taken enough time and trouble to identify the extent of that impact. The Government may argue that they cannot predict the future. We are not asking them to, but we are asking for greater effort in understanding the likely incentives that their policies will create and for a thorough, transparent review of the impact on small businesses. Only then can this House exercise proper scrutiny and ensure accountability. I will now deal primarily with Amendment 166 in the names of my noble friend Lord Sharpe of Epsom and the noble Lord, Lord Londesborough. The Regulatory Policy Committee has given the Government’s existing impact assessment a red rating. We have referred to this before, and the Government have never denied that rating. The rating means that they have failed to provide an adequate analysis of most of the Bill’s provisions. The Government talk about the Bill representing the biggest upgrade to workers’ rights in decades, and one that is long overdue. If that is indeed the case, we should expect a comprehensive, evidence-based analysis of its effect, in particular on small businesses, which make up 99% of all businesses in the UK. Amendment 194 is not a wrecking amendment. The fact is that the Government have provided no evidence of any tangible benefit from their proposed trade union reforms—we will deal with those in much more detail on our next day on Report. The Government optimistically suggest that the changes might improve industrial relations, but no one seriously believes that—I doubt that even the trade unions do. We have seen the chaos that these types of measures have caused in the public sector. Our worry is that the Government now want to import that chaos into the private sector. Even if strike days are reduced, it will come at a high price: unaffordable pay rises and extreme regulatory burdens designed to placate union demands. That will ultimately harm hiring, weaken competitiveness and make the UK a far less attractive place in which to invest. As for Part 5 of the Bill, the Government are proposing to hand sweeping powers to the new fair work agency without any meaningful safeguards. Will a minor accounting error mean that family-run businesses face raids from civil servants and property seizures? Will everyday employees with small workplace grievances, who simply want to resolve them informally, find themselves sidelined as the Secretary of State pushes their case to a tribunal, without their knowledge or consent? Let us be clear: when the Conservative Party wins the next general election, we will repeal these sections and restore a labour market rooted in growth and prosperity.

My Lords, I am grateful to the noble Lord, Lord Hunt of Wirral, for his contribution and to the noble Lord, Lord Goddard, for speaking to his amendment. Amendment 194, tabled by the noble Lord, Lord Sharpe of Epsom, seeks to repeal Parts 4 and 5 of this Bill, as well as Sections 149 and 150 at the end of this Parliament. In Committee, we debated at length the merits of Part 4 and 5 of the Bill, as I am sure we will again next week, as the noble Lord, Lord Hunt, mentioned. Parts 4 and 5 are key to delivering the biggest upgrade in workers’ rights in a generation, so I do not wish to repeat myself to your Lordships’ House tonight. Amendment 166, also tabled by the noble Lord, Lord Sharpe of Epsom, proposes a review process that effectively duplicates what we are already doing. As I have outlined previously, the Government already have robust monitoring and evaluation plans in place. The Government’s impact assessment sets out how we will review the Bill and any secondary legislation that follows, including effects on small businesses, which we know are vital to the economy. The recently published road map shows that implementing this Bill will take several years and its full effects will not be realised until long after Royal Assent. Significantly advancing a post-implementation review would not allow for an effective assessment of its impact, including on small businesses. On Amendment 111, moved by the noble Lord, Lord Goddard of Stockport, this Government know the importance of making sure that employers of all sizes are supported in preparing for employment rights reforms. As set out in our road map, the Government are committed to ensuring there is sufficient support and guidance for employers of all sizes. As set out in paragraph 24 on page 8 of the road map, we will be working closely with ACAS and others to develop codes of practice and guidance on measures where these are needed. We have committed to ensuring time is built into our implementation plans to allow stakeholders, including many small businesses, to familiarise themselves with changes in law, codes of practice and guidance. Many of the measures in the Bill build on existing legislative provisions which already have guidance and codes of practice. When we make changes to regulations, we will also work to update relevant guidance and codes of practice as a result. We know one of the main places that people turn to for reliable, accurate information on legal requirements is GOV.UK. Work is currently under way to ensure that our digital content is usable, easy to navigate and accessible for all stakeholders. In addition, we have engaged, and will continue to do so, with stakeholders of all sizes to understand what support will be useful for them in implementing these changes. The noble Lord’s amendment is unnecessary and duplicative. An additional code of practice on top of the guidance and support that the Government have already planned risks causing confusion among stakeholders as to where they should turn for clarity and certainty. I therefore respectfully ask the noble Lord, Lord Goddard, to withdraw Amendment 111.

I thank the Minister and the other speakers in this small group. Although it is three minor amendments and it is 11 o’clock at night, for us, and, I think, for the Conservatives, small businesses are the heartbeat of the economy in this country. We will keep nagging about small businesses, and we want clarity and certainty. Yes, codes of practice are great. I have read the road map; it is very interesting. I understand the direction of travel with the road map. It requires patience, trust and a little bit of honesty about what is deliverable in time periods. The road map is a good thing, and I recommend people to read that road map. Small businesses need to know now the impact of this proposed legislation. Asking for reviews of that, after a period of time, does not seem unreasonable to this group. We are not being awkward for the sake of being awkward, we are just trying to protect small businesses and small companies that are, quite frankly, bewildered. They do not have a political view on the Employment Rights Bill. They are bewildered as to how someone can come in and affect how they try to make a small profit and a small living. We will continue to probe, not forcing votes for the sake of votes. I speak to Ministers regularly, probably more with these Ministers than on any other Bill—apart from the football Bill, perhaps, with the Minister who is sat next to the noble Lord. The Ministers have been really helpful and supportive, and I appreciate that. I think they understand where we are coming from on this—we are not trying to be obstructive, but we are just trying to tease out a little bit more detail and promise of certainty for people. At the moment, life is difficult, and to put more uncertainty in front of people who are trying to do the things the Government want them to do—grow their business, employ more people and create GVA—those things have to be compatible with the things they are trying to do for the employees. On that basis, I will stop wittering on, and I withdraw my amendment.

Amendment 111 withdrawn.

Consideration on Report adjourned.