Wednesday 3rd September 2025
(2 days, 18 hours ago)
Lords ChamberEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 129 Running list of amendments - 28 August 2025 - (28 Aug 2025)
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Employment Rights Bill, has consented to place his interest, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, before the formal Third Reading of the Employment Rights Bill, I will make a brief statement on its devolution status.
During the Bill’s development and parliamentary passage, the Minister for Employment Rights, Competition and Markets has regularly corresponded and engaged with his devolved Government counterparts. This has been supported by weekly engagement between officials. As a result, I can confirm that legislative consent Motions have been successfully agreed in both the Senedd Cymru and the Northern Ireland Assembly. The Scottish Parliament has also agreed an LCM that covers the majority of the Bill’s provisions.
However, we consider that certain amendments relating to the social care negotiating body, tabled in my name on Report and accepted by your Lordships’ House, also engage the consent process. Owing to the date that these amendments were tabled and the Scottish Parliament’s Summer Recess, it has not been possible for a further supplementary LCM to be secured by the time of this statement. Now that the Scottish Parliament has returned from recess, and noting that the Bill has the support of the Scottish Government, we are hopeful that the process around this supplementary LCM will progress swiftly.
More broadly, I am grateful to Ministers and officials in the Scottish Government, the Welsh Government and the Northern Ireland Executive for their positive and collaborative approach towards this legislation. We remain committed to sustained engagement with the devolved Governments for the remainder of the Bill’s passage as we look ahead to its implementation, the benefits of which will be felt across the United Kingdom.
Clause 162: Commencement
Amendment
Lord Burns
Lord Burns (CB)
My Lords, this is a tidying-up amendment and I hope it will not delay the House too long. It is consequential on the House’s decision on Report to leave out Clause 59 on members’ contributions to trade union political funds. The amendment leaves out a now redundant reference to it in the commencement clause. It introduces and involves no new issues. I beg to move.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lord, Lord Burns, for tabling this amendment, which I acknowledge is a simple tidying-up one, following changes made to the Bill on Report. It is non-controversial tidying-up amendment and therefore we are content to accept it.
Baroness Jones of Whitchurch (Lab)
My Lords, it has been a privilege to be responsible for the passage of this landmark piece of legislation since its arrival from the other place in March. The Bill is a cornerstone of our manifesto commitment to make work pay. It seeks to address outdated provisions and gaps in the current employment law framework and helps us turn the tide on the damaging trend of in-work poverty. It would benefit millions of people across the country, and this is particularly the case for those in insecure and low-paid employment. As just one example, over 2 million people on zero-hours or lower-hours contracts could benefit from the right to guaranteed hours and to payment for shifts cancelled, moved or cut at short notice. Alongside our newly published industrial and trade strategies, it will also help increase productivity and create the right conditions for long-term, sustainable and secure economic growth.
Throughout the Bill’s Second Reading, 11 days in Committee and four days on Report, noble Lords from across your Lordships’ House carefully scrutinised its provisions. While we may not have agreed on every issue, I believe we do agree on the importance of the Bill, as well as on the need to improve workers’ rights and level the playing field for good employers. Therefore, I am grateful for the pleasure of engaging with noble Lords inside and outside the Chamber, and I would like to thank all noble Lords whom I and my ministerial colleagues have spoken to for their time and wisdom.
To mention every Member of your Lordships’ House whom I have engaged with would risk taking almost as long as Committee did. While I will refrain from doing that, I would like to particularly thank a number of noble Lords. My first words of thanks must go to my noble friends Lord Leong and Lord Katz for their dedicated support from the Front Bench. Over the course of the Bill’s passage, we have collectively had over 50 engagements with stakeholders, including noble Lords and external bodies. My noble friends have been generous with their time and wisdom, and I owe them a great debt.
Similarly, I must give thanks to my noble friends Lord Collins of Highbury, Lord Hendy of Richmond Hill, Lady Smith of Malvern and Lady Merron, all of whom represented from the Dispatch Box in Committee. This represents a whole of government approach to bringing about long-overdue improvements to workers’ rights.
It has been a pleasure debating the Bill’s many clauses with noble Lords, including the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, who have continuously made the case on behalf of the Official Opposition, and the noble Lords, Lord Fox, Lord Goddard of Stockport, Lord Clement-Jones and Lord Palmer of Childs Hill, and the noble Baroness, Lady Kramer, who have made meaningful contributions on behalf of the Liberal Democrats. This includes contributions in relation to non-disclosure agreements, where I was delighted to see the amendments I brought forward on Report being accepted to introduce a world-leading framework on NDA protections. I would like to say how gratifying it is to see the noble Lord, Lord Fox, back in his place. I am sure I speak for all noble Lords when I say how thankful we are for his continued recovery to good health.
I also pay particular tribute to the contribution of the noble Lord, Lord Goddard. While of course the wisdom of the noble Lord, Lord Fox, could never be replaced, the noble Lord was a worthy and often entertaining substitute. I am also grateful to my noble friends Lord Hendy, Lord Brennan of Canton, Lady O’Grady and Lady Lister for their valued contributions in relation to seafarers, bereavement leave, trade unions and parental leave, respectively.
Baroness Warwick of Undercliffe (Lab)
My Lords, I am conscious that this is Third Reading and I fully support the Bill, but I wanted to take this last opportunity to ask for greater clarification in relation to Clause 30 and its applicability to higher education providers across England, Wales, Scotland and Northern Ireland. This is an issue I raised in Committee.
I thank my noble friend the Minister for her helpful response in Committee and in the subsequent letter that she wrote. I know that she shares with the sector an interest in ensuring that the Bill does not impose undue burdens on the HE sector, given the key role played by universities in the delivery of the department’s industrial strategy. Universities wholeheartedly support the enactment of the Bill and will be working to ensure fair employment practices are maintained and strengthened. However, as autonomous institutions, universities, unlike other organisations in the public sphere, will be requested to absorb the additional costs that this legislation imposes. In advance of the Bill becoming law, and ahead of the consultation process, I seek further clarity and assurances on behalf of the higher education sector on three specific issues.
First, in her letter, my noble friend indicated that the code would specify to which bodies and to what value of procurement activities Clause 30 would apply. It is possible that the procurement activities of universities are exempted due to their nature and value. Can she elaborate further on this and allay any outstanding concerns in the lead-up to the consultation process? Secondly, it is still not clear whether pensions will also be subject to the “no less favourable” terms, which could result in considerable additional burdens for institutions where there are legacy arrangements in place. Thirdly, there is uncertainty over whether the provisions in Clause 30 would be retrospectively applied. Decisions on both these areas could make a material difference to the extent of financial impact experienced by the higher education sector.
I recognise that these are likely to be significant subjects in the consultation, but if my noble friend is able to provide any reassurances in advance of this process, it would be very much welcomed. The sector is so critical in delivering the skills needed for the UK’s successful future and the hopes and aspirations of communities across the UK.
Lord Goddard of Stockport (LD)
My Lords, I rise, I hope for the last time, as temporary spokesperson for the Liberal Democrats, as my noble friend Lord Fox’s spectre has arrived behind me—and he is a sight to behold.
I begin by thanking various Ministers—the noble Lord, Lord Leong, and the noble Baronesses, Lady Jones and Lady Smith, to name but three of many—for the time and patience given to me and our team. They always made time and effort to help me understand not only the process but the logic and reasoning behind the objectives of the Bill, and I genuinely thank them for it. I also thank our political adviser Adam Bull, who had the almost impossible task of turning a helpful Back-Bencher supporting my noble friend Lord Fox and his team into an overnight Front-Bench spokesperson leading our group following my noble friend’s accident. I have no idea how he pulled it off, but somehow he convinced me it was possible and we gave it our best shot, along with my noble friends Lord Palmer, Lord Clement-Jones and Lady Kramer, attempting to be reasonable and proportionate throughout the passage of the Bill.
We on these Benches broadly support the Bill and have said on many occasions that it was long overdue, and we acknowledge the Government’s mandate for this legislation. However, we believe that it could and should be refined to work better for workers and for industry, and urge the Government not to disregard the changes that have been proposed, passed and sent back to the other House without extensive consideration and consultation.
Lord Sharpe of Epsom (Con)
My Lords, I also express my gratitude to noble Lords on all sides of the House for their excellent contributions throughout our deliberations on this Bill. Their expertise, knowledge and careful scrutiny have been invaluable. I also thank the Ministers for the briefings and meetings, and indeed for the extensive correspondence by letter, that they provided during the course of these proceedings. I also thank the Bill team and the Ministers’ private offices. Further, I place on record my thanks to the Public Bill Office for its diligent work on amendments and to all the staff in your Lordships’ House who, as the Minister said, enabled our debates to continue sometimes late into the night with such professionalism. I also extend my thanks to our researchers on these Benches, Abid and Henry, who have been fantastic throughout.
We take a slightly different view as to the Bill. We think it is a terrible Bill. It is terrible for workers, businesses—particularly small businesses—and the economy as a whole. There is no support from anywhere in the business community for this legislation. The Office for Budget Responsibility has made it clear that the worst is yet to come. Unemployment has risen every single month under this Government. The latest figures show that the rate is now set to reach 5%, which is the highest since the pandemic. That is not a blip—it is a trend. It is the direct result of misguided economic choices, and if this Bill proceeds, the situation will only deteriorate further.
The Chancellor has deepened the difficulties. Long-term borrowing costs have surged to their highest levels since 1998, undermining stability and confidence. The spending plans are incoherent; when set alongside the provisions of this Bill, the picture is nothing short of a looming economic disaster.
The Bill imposes nothing new except new costs and burdens on business. A recent survey conducted by Peninsula, the UK’s largest HR and employment law consultancy, revealed that 68% of respondents believe that this legislation will have a negative impact on business. More than half expressed concern about the increased likelihood of tribunal claims—an inevitability under these provisions, with so-called day one rights and the ill-thought-out restrictions on workplace culture. Even the Government’s own impact assessment confirms those risks.
The noble Lord, Lord Katz, confirmed by letter that the Government are funding provision for some 33,900 tribunal sitting days, yet the backlog already exceeds 50,000 cases. It does not take a genius to calculate that it would take a year and a half simply to clear the existing caseload before even beginning to address the new claims that will inevitably arise as a result of this legislation. Indeed, the Government’s own impact assessment accepts that the introduction of the so-called day one dismissal rights will increase claims by around 15%. So, while I commend the Government’s actions in recruiting new judges, the Bill still piles more pressure on to a system that is already creaking, creating delay and uncertainty for employers and employees alike. My noble friend Lord Young of Acton tells me that the Free Speech Union has a belief discrimination case before the employment tribunal that has been given a hearing date of July 2027.
One cannot help but observe that the Bill appears designed less to support workers or employers and more to resuscitate the relevance of trade unions. We have already seen the damaging consequences of the Government’s approach in the handling of the junior doctors’ dispute. By also reducing the threshold for workplace recognition to potentially as little as 2%, they are preparing the ground for a surge in unionisation, leaving small businesses, many of which have no experience of dealing with unions, completely unprepared.
We should be mindful of the darker history that accompanies union power. In the 1970s and 1980s, communities were torn apart by the toxic culture of so-called scabbing. Workers who chose, for reasons of conscience or necessity, to cross a picket line were branded as traitors and subjected to intimidation and ostracism. That tyranny of the minority silenced individual choice and left lasting scars on families, workplaces and entire towns. It is precisely that environment which this Bill risks rekindling, where the decision of a small fraction can dictate the livelihoods of the many and where those who simply wish to work are punished for it. One can only admire the courage of the union barons opposite for their own act of scabbing today in crossing the PCS picket line to be here.
At the same time, the Government’s own impact assessment is clear that the central economic challenge is productivity, yet what Ministers fail to acknowledge is that poor productivity is overwhelmingly found in the public sector, where entrenched union practices have eroded efficiency and soured industrial relations. Instead of addressing that, the Government now seek to import those very problems into the private sector through this legislation. That will undermine competitiveness, discourage investment and damage growth.
The Bill also takes a regressive step with regard to political funds. The Government propose that contributions to a union’s political fund should once again be made on an opt-out basis rather than an opt-in. This undermines the principle of genuine consent. It also raises serious questions of accountability and transparency. I note that the certification officer requires unions to disclose payments above a de minimis threshold of £2,000, and that many unions are already making only two or three such payments a year. Those transactions, one assumes, are recorded in their internal accounts, so it should be no more than a simple matter of cut and paste to include them in the statutory return. Why, then, was this described by the Minister in her exchange with my noble friend Lord Leigh of Hurley as a “notable administrative requirement”? Is this to be the His Majesty’s Government’s standard position on disclosure requirements for other organisations in future?
Reference has been made to practices prior to 2016, when opacity prevailed. Yet rather than strengthening transparency, the Government seem intent on encouraging concealment. That is an approach that stands in stark contrast to the regime applied to companies, which must provide full disclosure of political donations. Ministers argue that members can access the information through the usual democratic means of a voluntary organisation, but there is in truth no such process. There is no requirement for unions to provide this information to their members at all. If the Government are serious about transparency, they should be insisting on openness, not enabling the reverse.
I feel that I should also inform the House that, for reasons best known to itself, an organisation called the General Federation of Trades Unions has invited me to various events at the Trades Union Congress conference. The programme contains, among other things, a session on what is described as “Employment Rights Bill #2”. Some might say that such a Bill would administer the coup de grâce after the firing squad of this Bill. It also features a session entitled, “¡Viva La Solidaridad! Stand with Latin America Against Trump”. I confess that I laughed when I read that. That is not serious politics; that is infantile and pathetic. If the TUC truly wished to offer international lessons, it might instead examine the havoc that socialist leaders and their trade union counterparts have wreaked on Latin American economies, particularly where solidarity has too often meant shared poverty, collapsing currencies and vanishing investment. We on these Benches are rightly focused on the future of British businesses and their employees, and the TUC should do the same.
I would also like to highlight Clause 30, concerning the right to be accompanied, which was tabled by the noble Lord, Lord Palmer of Childs Hill.
Lord Fox (LD)
The noble Lord, Lord Sharpe, has reminded me of what I have been missing while I was in a hospital bed in agony. Can I remind him that the Companion says:
“Any remarks should be brief and should not … reopen debates at previous stages of the bill”?
Lord Sharpe of Epsom (Con)
I am delighted that the noble Lord, Lord Fox, is back in his place. It is always a pleasure to be on the receiving end of his wit and repartee. He will be very pleased to know that I am winding up. Also, I am complimenting one of his colleagues—he ought to have waited.
Clause 30, tabled by the noble Lord, Lord Palmer of Childs Hill, was agreed on Report with cross-party support. Like other noble Lords across the House, we urge the Government to keep this provision in the Bill. It offers greater choice and protection for workers. To remove it would be a backward step that would disproportionately harm vulnerable groups, including disabled workers, young people and members of some ethnic minorities. That would be anti employment rights. I trust that Ministers will not seek to undo it.
For all its faults, I am glad that we have been able to make some improvements to this Bill as it leaves your Lordships’ House: retaining the 50% threshold for strike ballots to protect workplace democracy; introducing a right to request guaranteed hours; and ensuring clarity by setting out a clear probationary period and reference period for workplace dismissals, giving employers the certainty that they need. We hope that the Government will consider these amendments carefully in the other place and even take this opportunity to rethink the entirety of the Bill.
Lord Balfe (Con)
My Lords, I will probably not find a lot of favour on this side with what I am about to say. I remind the House that I am the honorary president of BALPA, the pilots’ union, a union that does not go on strike and does not regard militant industrial action as an achievement. A dispute that leads to a loss of work for our employees is a failure, not a success. I also remind the House that 30% of trade union members vote for the Conservative Party. People might say, “Well, there’s something wrong with them”, but I do not think that there is. The truth of the matter is that there is very little politics in trade unionism. Through several years, I have sat on the executive of BALPA, and we just do not discuss politics. Occasionally, things come up where we have to comply with some regulation or other and there may be a discussion, but the discussion is probably about the cost of complying. One of the things that I have noticed is the huge growth in legal fees that the union is dishing out. We are the nearest that the legal profession has got to a recruiting agency. We always seem to be paying KCs a lot of money to get us round the law. I am not aware that our union has ever broken the law.
I hope that we will move forward and regard this Bill as the starting point of a consensual approach to industrial relations. We are all basically on the same side. I mentioned that 30% of trade unionists vote Conservative. In the pilots’ union, it is over 50%. They are not impressed with this “Punch and Judy” approach to trade union legislation in recent years.
I appeal to all the House, the Government and the Opposition to work to get a consensual basis for trade unionism. I look across and I see my friend Brendan, the noble Lord, Lord Barber, who did enormously good work at ACAS, and that is the sort of organisation that we need. It attempts to smooth out the problems that we have in industry. At the end of the day—yes, I am going to wind up—our employees want a wage and our employers want a successful business. We recognise that. This should help to build that up, and I certainly hope that it will. I wish the Bill well.
Baroness Noakes (Con)
My Lords, we have certainly improved the Bill during its passage, but it remains a very bad Bill. It is bad for business, which means it is bad for the economy, and it is just terrible for people who want jobs.
It is also a dreadful time to be making such significant changes. The economy is stressed. The Bank of England has failed to tame inflation, and we now have the highest rate in the G7. Speculation abounds about how big the black hole is in the Chancellor’s Budget preparations. Bond markets can see that our economy is in trouble and they have hiked gilt yields to levels not seen since 1998. Sterling is on the slide. It feels like the 1970s all over again.
Businesses are still reeling from the impact of the national insurance increases on top of the significant increases in minimum wage rates. This is already taking its toll. The Resolution Foundation said last month that it reckons the unemployment rate will have increased to 5% this month.
Almost all the employment data are negative. Payroll numbers are down, job vacancies are down, the PMI employment index is down and economic inactivity is up. Against that background, creating new employment rights and going back to 1960s trade union legislation is not far short of suicidal for the economy.
The Government say the Bill will cost £5 billion, adding to employment costs. Most of that will fall on the SME sector. That is bad enough, but the bigger problem is that the Bill will work against economic growth. Instead of job creation, we will have more job destruction.
In the other place, the Government have an opportunity to accept the modest changes that your Lordships’ House has made to the Bill. Those changes are moderate and will not remove all the Bill’s harmful effects, but I hope that the Government will at least take this opportunity to modify the impact of the Bill.
Lord Londesborough (CB)
My Lords, I think we have spent 13 days in this Chamber scrutinising this critical Bill. I salute the Ministers and Front Benches for their stamina and perseverance. The Bill has tested the patience of noble Lords on all sides of this House, so I will not test their patience further by going over the same arguments we heard during Committee and Report—very often the same arguments. I will simply raise one overriding question expressed by the FSB, the CBI, the ICAEW, the British Chambers of Commerce and, indeed, pretty much the whole private sector. They are asking, in light of the Bill, how committed the Government really are to delivering on their overriding number one mission—real, sustainable economic growth —and how the Bill will impact on the two crucial ingredients behind growth: job creation and, as we have heard, productivity.
On job creation, vacancies have now fallen to an effective 10-year low when you exclude the exceptional pandemic years. The Bill looks set to accelerate that downward trend. On the need for greater productivity across our 30-million workforce, employers are currently paying, on average, 5% annual wage increases for close to zero productivity gains. The Prime Minister and Chancellor have hailed this as an achievement, putting more pounds in workers’ pockets, but I am afraid that it is as illusory as it is inflationary, and will only contribute to ever-widening black holes.
The Bill will, as the Government admit, push up even further the costs of employment and damage the risk/reward equations behind recruitment, probation and employers’ ability to conduct those crucial performance reviews for staff. That is bad news for productivity, and I fear it will not go unnoticed by investors.
Baroness Jones of Whitchurch (Lab)
My Lords, first, I will respond to my noble friend Lady Warwick about Universities UK’s concerns. Given the stage of the parliamentary passage that the Bill has reached and the fact that the House has agreed that Clause 36 should stand part of the Bill, the clause will not be considered further during ping-pong. But as my noble friend knows, I have written to her on this issue, and the letter is available for all Members to read. We fully recognise the need not to impose disproportionate burdens on smaller procuring organisations such as universities and, to this end, we intend to consult in the autumn on the detail and scope of the two-tier code. The consultation will consider the extent to which certain public authorities, including higher education providers, are required to follow its provisions. While I cannot comment on whether we can carve out particular sectors before this consultation, I can assure my noble friend that we will carefully consider the issues, particularly applying to higher education providers.
Secondly, I thank the noble Lord, Lord Goddard, for his kind comments. I think it is fair to say that we have enjoyed working with him.
I am sorry that we have ended on a note of discord in this debate. I thought that we had, up until this point, had very courteous discussions around all this. The fact that there are relatively few issues remaining between us is a sign of the enormous work that this House has done over the last few months on this issue. I hope that, because there are so few areas of continuing disagreement, we can reach a conclusion on this Bill very quickly.
I do not want to rehearse the debates that we have had again. Listening to this debate this afternoon, it is a miracle that only 10 or so issues are still outstanding because it feels as if we are back at square one. But I feel that we made some progress during the course of the discussions.
When we came into office we inherited an economy that was on its knees and employment rights that were way out of date. We have been working and continue to work to address these issues. We are doing it in all sorts of ways. The small business strategy that we launched over the summer, the industrial strategy and the trade strategy are all designed to make the UK a place to do business with on an international basis and where jobs will be protected in the future.
On the state of the economy—because I have been provoked on this—in the three months to June, GDP grew by 0.3%, meaning the cumulative growth this year has already exceeded the OBR’s forecast for the whole of 2025. Since the start of the Parliament, 380,000 jobs have been added. Britain has become the most attractive place to invest in the world, joint top with India following its deal with the US. The FTSE 100 index smashed through the 9,000-point mark this July, with sustained growth throughout last month. Middle market businesses are growing at their fastest rate since the last election, according to research from NatWest. Confidence among UK businesses has grown, with 54% of companies feeling positive about the current environment, according to the Lloyds Business Barometer. I could go on.
We are positive about the opportunities ahead for our economy and, in that context, we are positive about the jobs that will be provided. They will be good jobs where people feel that they have a stake in their employment and a positive future. I am sorry we ended up on that discordant note, and of course I am sure we will come back and continue to try to iron out the remaining points of difference. In the meantime, I beg to move.