Employment Rights Bill

Consideration of Lords message
Monday 8th December 2025 Commons Chamber

Consideration of Lords message

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Before we move to consideration of the Lords message, I can confirm that nothing in the Lords message engages Commons financial privilege.

Clause 1

Right to guaranteed hours

18:55

[The Parliamentary Under-Secretary of State for Business and Trade (Kate Dearden)]

I beg to move,

That this House insists on its disagreement with the Lords in their amendment 1B but proposes amendments (a) and (b) to the Bill in lieu of that amendment.

[Madam Deputy Speaker]

With this it will be convenient to consider the following:

That this House insists on its disagreement with the Lords in their amendments 23 and 106 to 120, does not insist on its amendments 120C, 120D and 120E, and proposes amendments (a) to (f) to the Bill in lieu of Lords amendments 23 and 106 to 120.

That this House insists on its disagreement with the Lords in their amendments 23 and 106 to 120.

That this House insists on its disagreement with the Lords in their amendment 48B but proposes amendments (a) and (b) to the Bill in lieu of that amendment.

That this House does not insist on its amendment 72C in lieu of Lords amendments 61 and 72, but disagrees with the Lords in their amendments 72D to 72H in lieu and proposes further amendments (a) and (b) in lieu of the Lords amendments.

That this House insists on its disagreement with the Lords in their amendment 62, but does not insist on its amendment 62C in lieu and proposes further amendment (a) to the Bill in lieu of the Lords amendment.

[Kate Dearden]

I am pleased to return to the Employment Rights Bill for the consideration of Lords amendments for a third time.

The Government’s plan to make work pay, on which we were elected and in which we committed to deliver the Employment Rights Bill, will bring employment rights legislation into the 21st century, extending the protections that many British companies already offer to their staff to all. By doing so, we will endeavour to end the unfair market competition in which some firms seek to beat their competitors not by better quality or increased value, but by cutting the pay and conditions of their workforce. That is why this Bill is truly pro-business and pro-worker, pro-growth and pro-competition, and contributes to the creation of a fair and flexible labour market.

This Bill is a win-win for employers, employees and a more competitive British economy. By delivering this change together, we will back businesses that do the right thing while giving hard-working people the job security and opportunities that they deserve. That is why we must press ahead with delivery. Too many workers are waiting too long to feel the benefits of these reforms, and too many businesses face the uncertainty of when this Bill will become law and want clarity on its implementation. The Government are seeking the support of this House so that we can secure Royal Assent and finally be able to move towards implementing change.

First, I will speak to the Government amendments in lieu, which relate to unfair dismissal. In late November, I convened a series of constructive conversations between trade unions and business representatives, and I am extremely grateful for the positive and productive contribution of both sides of industry to that dialogue. It is a testimony to their leadership, and I thank them for it.

I am pleased to report that we have come to a workable agreement with trade unions and business representatives on the unfair dismissal provisions. The Government’s amendments in lieu will reduce the qualifying period for unfair dismissal from 24 months to six months, while maintaining existing day one protections against discrimination and automatically unfair grounds for dismissal. The implementation road map sets out that the changes related to unfair dismissal will come into force in 2027. That is the timeline that businesses have been working towards.

It is also important to limit the time that employees must wait for their rights to be strengthened while implementing changes in a way that is manageable for business. That is why I am pleased to tell the House that the six-month qualifying period for unfair dismissal protections will be brought in from 1 January 2027.

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

My hon. Friend has done a remarkable job with this Employment Rights Bill. However, it would be remiss of me not to ask her a question. The new deal for working people stipulated quite clearly that employment rights from day one were sacrosanct, then a manifesto pledge in 2024 said categorically to the British people that we would have day one rights for working people. Why has that changed?

[Kate Dearden]

My hon. Friend will know that this Bill is extremely close to my heart, as it is close to the hearts of many Members in the Chamber today. It is something I have worked on for many years alongside trade union colleagues and, of course, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner). Achieving the best possible deal for working people is the reason I am in this job, and it is why I wanted to ensure that trade unions were consulted at every step of the way, along with the excellent business leaders who are crucial to delivering the growth our country desperately needs. Our amendments in lieu will deliver on our promises for working people up and down this country, while ensuring that the Bill is not stuck in parliamentary limbo for another year.

19:00

[Chris Vince (Harlow) (Lab/Co-op)]

I thank the Minister for the work she has personally done on the Bill. I think we would all agree that it has been stuck in limbo for some time, and we very much want to get it through. I met representatives of the Union of Shop, Distributive and Allied Workers last week—not people at the top of the ladder, but the shop stewards who are literally on the shop floor. They are really keen for the Bill to get through as soon as possible and they feel that these measures provide the right compromise. Does the Minister agree?

[Kate Dearden]

We reached this agreement with the unions in the room, and no one knows better than them what their members need. This is a significant step forward to put the Bill into practice.

[Jim Shannon (Strangford) (DUP)]

Under Lords amendment 1, the duty would be shifted to the employee to request guaranteed hours, as opposed to it being down to the employer to offer hours. That means that the employee can request hours, and then the employer can cancel them at the last minute. Can the Minister reassure me that provision will be made to protect workers, ensuring that if they are given hours, they are compensated in the right way?

[Kate Dearden]

I will speak to zero-hours contracts later in my contribution. This is about rebalancing power —giving workers access to guaranteed hours if they need and want them.

Let me return to the unfair dismissal protections that we will bring in from 1 January 2027. Our intention is to adopt a commencement approach that would extend protections immediately from that date to employees who already have six months’ service or more. For example, under this proposal, someone employed from today will gain protection against unfair dismissal on 1 January 2027. That is almost a full year earlier than under the current law. Other employees will gain protection once they reach six months’ service; for example, someone who starts work on 1 November 2026 will qualify for protection from unfair dismissal on 1 May 2027—International Workers’ Day—which is 20 months earlier than under the current law. This approach was taken in 1999, when the qualifying period was reduced from two years to one. This approach will prevent a two-tier system, in which some people would remain on a two-year qualifying period while newly hired employees were subject to a six-month qualifying period.

The commencement of the unfair dismissal provisions will be set out in commencement regulations, as is standard practice. I am happy to commit to making those regulations early next year, implementing our commitment to commencement on 1 January 2027. This change will benefit millions of working people, who will gain greater security at work, and it will offer businesses and employers the flexibility to ensure new hires can do the job, get the skills to match, contribute to business success, and build a stable and secure working life.

To further strengthen these protections, the Government amendments will also ensure that the unfair dismissal qualifying period can only be varied by a future Government through primary legislation, and will remove the compensation cap. I know that some businesses have expressed concern about the agreement to lift the compensation cap; I can tell the House that we want to remove the scope for employment tribunal cases to be more complex and convoluted than they need to be. We need a tribunal system that works for employees and employers alike—one that is not gummed up by process and unnecessary delay nor bedevilled by bogus claims. Our aim is to make the tribunal system work more effectively and efficiently for all, so that those judged to have been unfairly dismissed get the compensation they deserve, the system works to resolve cases more speedily and unfounded claims are dismissed more urgently.

As we review the tribunal system, in the spirit of partnership, we will work with businesses and trade unions to create a tribunal process that is fairer and faster. No committed employee should lack the protection they deserve, nor should any reasonable employer fear the consequences of an unsubstantiated claim. For several other employment rights, the amount of compensation that can be awarded by a tribunal is limited by cross-referring to the unfair dismissal cap, so our amendments will ensure that these consequential issues can be considered and dealt with effectively through secondary legislation.

We know that security of work is critical for working families, and we are also acutely aware of the challenges businesses face. That is why we are committed to open and constructive dialogue with all stakeholders. If these changes are to create the conditions for lasting, fair and flexible labour laws, dialogue and co-operation must be our watchwords. I hope the other place can attach similar importance to that co-operation, and that it will let this Bill—the product of a general election mandate and the good will of both business and trade unions—proceed to Royal Assent. These discussions and the workable compromise highlight the importance of participation, and I urge those listening to today’s debate to engage with the consultations set out in the implementation road map.

I will now speak to the Government amendments in lieu that relate to zero-hours contracts and the right to guaranteed hours. We have tabled amendments that will create a statutory duty to consult on the length of the initial reference period and the length and timings of subsequent reference periods before exercising the relevant powers. These amendments will ensure that vital stakeholders can have the opportunity to contribute before the lengths of the reference periods are determined by regulations that work for worker and employer alike. By delivering this change with the input of stakeholders, we will provide a fair and balanced approach.

Let me turn to the Government amendments in lieu of Lords amendment 48B, which relate to seasonal work. In order to help address fluctuating demand, the Bill allows guaranteed hours offers to take the form of limited-term contracts where reasonable. The Government have tabled amendments that place a statutory duty on the Government to consult before making any regulations to specify what counts as a temporary need. This means that before any such regulations are introduced, employers, trade unions, and other parts of civil society with an interest in seasonal work, will be fully consulted.

I will now address the issue of political funds and the related Government amendments in lieu of Lords amendments 72D to 72H. The Government remain committed to the repeal of the Trade Union Act 2016. That includes reinstating the long-standing practice that existed for 70 years before that Act, whereby new union members are automatically included as contributors to a political fund unless they choose to opt out. This will return us to arrangements that worked well for decades, removing bureaucratic red tape on trade unions that works against their core role of negotiation and dispute resolution in the interests of working people. We have heard the concerns about how opt-out notices would take effect, and we believe our amendments will refine that process.

Under the pre-2016 legislation, an opt-out notice could only take effect on 1 January of the year after it was given. Under the Government’s amendment, opt-out notices will now take effect on either 1 January of the following year or on a day specified or determined by the rules of the union, whichever comes first. We are aware that in practice, prior to 2016, unions generally gave effect to opt-out notices before the subsequent 1 January date anyway; amendment (a) in lieu affirms that flexibility in the legislation. We have also tabled amendment (b) in lieu, which places a statutory duty on the Government to issue guidance within three months of the clause coming into effect. That guidance will set out the kind of provision that unions should include in their rules about the timing of giving effect to opt-out notices.

Finally, I will address the issue of industrial action ballot thresholds and related Government amendments in lieu of Lords amendment 62. As I have said, this Government want to end disputes and conflict in the labour market; we also want more trade union members to have a say in decisions about escalating disputes where they arise. We will repeal the 50% threshold and—as we have previously stated—align this with the establishment of non-postal balloting, including e-balloting, so that decisions about industrial action keep pace with the communication channels of modern life.

Our amendment (a) in lieu cements that intention by requiring the Secretary of State to have regard to any effects of the introduction of non-postal balloting, including e-balloting, on the proportion of those entitled to vote in industrial action ballots who actually do so. In having regard to the effects of e-balloting, the Government will monitor and assess the practical impact of non-postal balloting on rates of participation in industrial action ballots, so that we will be confident that modernising the means of balloting increases member participation. In addition, we have tabled amendment (b) in lieu, which will place a statutory duty on the Secretary of State to lay a statement before Parliament that demonstrates how the Government have had regard to non-postal balloting before making regulations to repeal the 50% threshold.

I urge hon. Members to support the Government motions before the House today, including our amendments in lieu. Together, they form a package that strengthens workplace rights, reflects the value we place on fair and flexible labour markets, and demonstrates the Government’s willingness to listen to concerns and act on them. We place a premium on dialogue and compromise as key components in modern labour relations; we want to consign the narrow, partisan, party political prejudice of previous decades to the dustbin of history, and build instead a modern industrial relations framework that values partnership, dialogue, flexibility and fairness for all sides. Our amendments in lieu fully reflect that approach, and in that light, I commend them to the House.

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Colleagues should note that the debate will have to conclude by 7.55 pm, so only a couple of Back-Bench Members will get in. A speaking limit of eight minutes will apply to Back Benchers. I call the shadow Secretary of State.

[Andrew Griffith (Arundel and South Downs) (Con)]

Two weeks ago, the Chancellor stood at the Dispatch Box and delivered a Budget that contained not a single measure to support growth. Today, in moving the motion to disagree, the Minister has signed the warrant for a war on jobs. She is at the Dispatch Box representing the Government, but everyone knows that it is the former Deputy Prime Minister, the right hon. Member for Ashton-under-Lyne (Angela Rayner), who is calling the shots. We discovered this morning that Labour Together is already auditioning for the Prime Minister’s replacement. Perhaps the Minister has an outside chance at the job, but my money is probably more on the right hon. Member for Ashton-under-Lyne. Perhaps the Labour party could have its first female Prime Minister just before the Conservatives have our fourth. Given all that job insecurity, it is no wonder that Labour Members seem so keen on employment rights.

This is not a Bill for employment rights; it is a charter for a jobless generation. Thanks to measures in the Bill, thousands of young people will struggle for opportunities because the rungs of the ladder have been sawn off. Since Labour entered office, 144,000 payrolled jobs have been wiped out. Manufacturing, the oil and gas sector, construction and hospitality are all unable to make ends meet due to high energy and employment costs. The unemployment rate has been higher every month of this Government. Half the jobs lost belong to the under-25s.

[David Pinto-Duschinsky (Hendon) (Lab)]

rose—

[Andrew Griffith]

I will happily give way if the hon. Member wants to talk about the jobs lost in his own constituency.

[David Pinto-Duschinsky]

Will the hon. Member acknowledge that employment under this Labour Government is higher than it was under the last Conservative Government, with an average of 75%? Will he therefore apologise for his comments?

[Andrew Griffith]

Under the Conservative Government, we improved the number of people in work and unemployment fell to a record level. Since the current Government have taken office, unemployment has been higher every single month. Half the jobs lost belong to the under-25s. Does anyone want to talk about the youth unemployment rate under this Government? It is now 15%, and the number of young people not in education, employment or training has gone up by 25,000 on their watch—before the impact of this disastrous Bill.

The Government claim to support workers, but their first legislative achievement will be to make more young people unemployed. How could any Member of the House possibly support that? So, who is the Bill really for? As I have said before, the clue is in the text: it mentions maternity rights just three times, but it mentions the word “union”—no Labour Members have declared their interests—478 times. It includes: the union right to roam; scrapping the turnout threshold on union strike ballots; more paid time off for union reps; and automatic deductions of union political funds. It also orders businesses to hand out Government-written pro-union propaganda.

Strikes will become far more common. But don’t take do not take my word for it—[Interruption.] The Secretary of State is chuntering from a sedentary position, but perhaps he would like to listen to his colleague the Health Secretary, who just last week said that he had “had it” with the unions and that

“the last thing patients need this winter is strike action”.

Back in July, the Health Secretary was citing the silent majority of doctors who did not vote for strike action. My colleagues in the other place merely request that a strike ballot requires a turnout of 50% of the workforce. By rejecting Lords amendment 62, the Minister is allowing minorities to shut down hospitals, educational establishments and public transport while the silent majority of members are ignored.

We should take a moment to welcome the fact that the Government have U-turned on day one rights. After months of relentless campaigning, and a complete clear-out of departmental Ministers, the Government finally listened. There is no shame in that—I told them it was unworkable, and business told them it was unworkable—it is just a shame that it took so long. Just hours before the U-turn, the Prime Minister’s official spokesman was telling journalists that the Government would overturn all attempts to water down day one rights. A Prime Minister without a backbone who does not know his own mind has caused a year of uncertainty for employers and workers alike.

[Mr Connor Rand (Altrincham and Sale West) (Lab)]

On that point, will the hon. Member give way?

[Andrew Griffith]

I will happily talk about the Prime Minister’s lack of backbone.

[Mr Rand]

The shadow Secretary of State speaks of uncertainty for workers. I gently point out that Conservative Ministers promised more than 20 times to deliver an employment Bill, and having broken their promise to working people, perhaps he would like to talk a bit more about that and about the constituents in insecure work he speaks to, for whom his Government did nothing, while this Government act.

[Andrew Griffith]

I say respectfully to the hon. Member that if acting is to raise unemployment, to cost young people their jobs, to ensure that employers are not hiring and to have the worst graduate market for a generation, then bring that on. If that is what he came here to do, I would be surprised at that.

19:15

Let us keep the U-turn in perspective: it removes just one paragraph on just one page, so instead of a 330-page bad Bill it is now a 329-page bad Bill. Instead of the chainsaw that was needed, the Government have wielded a pair of toddler safety scissors.

There is more. The removal of long-accepted caps on awards that can be made by employment tribunals has been inserted with no impact assessment and no prior consultation. It is the most last-minute of last-minute additions—completely irregular, and disrespectful to this House and to the other place. It will be ruinously expensive for small businesses and in the public sector it will leave the taxpayer on the hook for huge payouts for managers’ failures at the expense of frontline services. The independent Growth Commission has reported today that that alone could have an additional £15 billion cost to the economy. I look forward to seeing what the Office for Budget Responsibility thinks of that when it next downgrades productivity.

As the Minister said, the employment tribunal already has a two-year-long backlog. This provision will make it a whole lot worse. Employers are all too familiar with being held to ransom by spurious claims. If people thought that one woman’s £50,000 payout after being compared in the workplace to Darth Vader was expensive, they should wait until the Chancellor finds out what her colleagues have been saying about her. Dan Pollard, a partner at law firm Charles Russell Speechlys, said:

“This development is frankly bonkers. The change would undoubtedly make the UK a significantly less attractive place to base staff within Europe.”

The measures in this job-killing Bill have been written with absolutely no understanding of how business actually works. Therefore, as well as voting against the motion that moves to infinite employment tribunal payouts, the Conservatives will today be voting in favour of flexible hours, in favour of seasonal work, against removing the turnout threshold on strike ballots and against a subscription trap for workers on union political funds that no Labour Members would accept in any other private sector domain.

The Bill is nothing less than a charter for national decline. It is a “back to the 1970s” Bill that will do precisely that. It sacrifices the job prospects of our children and grandchildren just to help rattle the donation tin with Labour’s union paymasters. The Government have U-turned once, admitting that their day one fantasy was a disaster, but changing one measure does not salvage this devastating Bill. The Minister must know the damage she is doing to business and the economy. The Secretary of State must stop bowing to the left on the Labour Benches, start listening to the job creators who provide the jobs we need, and shelve this unemployment Bill today.

[Angela Rayner (Ashton-under-Lyne) (Lab)]

To the shadow Secretary of State’s point, of course I declare an interest as a trade union member. Like millions of people who have been wanting this Bill for many years—as my hon. Friend the Member for Altrincham and Sale West (Mr Rand) said, the Conservatives failed to deliver following promise after promise—I am really pleased that we have got to this point. I am frustrated by the delay we have had, so I welcome what my hon. Friend the Minister said in her contribution, and I welcome her and the Secretary of State getting us this far. Hopefully, Conservative Members will no longer frustrate what was a key manifesto pledge for us.

We have seen the decline, and we can tell which side the shadow Secretary of State is on—it is clear. We have been really clear that we are pro-business and pro-worker, and there are many good businesses here in the UK who welcome the Bill and recognise the importance of giving people job security and fairness at work. If someone is on a zero-hours contract, they cannot plan for the future and do not know what is going to happen from one week to the next. That is not fair or reasonable for many workers in the UK. I say to the shadow Secretary of State that I met more businesses that absolutely understand that there has to be a fair balance. I think we have struck the right deal.

I welcome the changes that have been brought forward, especially to timescales. Of course, because of the complexities, the original deadline was October 2027. With the changes, which have been welcomed by trade unions and business, we can now bring that forward, so that, instead of the measures being frustrated, people can have the rights that they absolutely deserve and need.

In that context, on Lords reason 120F, Government amendments (a) and (b) in lieu, which reduce the qualifying period for workers to gain protection from unfair dismissal for six months, I know that Ministers faced difficult decisions and difficult discussions with employers and worker representatives, but I strongly believe that the work that has been done has been necessary and that we should now be able to move forward. I thank the Minister for her work on that.

To those in the other place, I say that there is now no more time to waste. Vested interests worked with the Tories and the Lib Dems—cheered on by Reform and backed by the Greens—to resist the manifesto on which we were elected. Now there can be no excuses. We have a mandate for a new deal for working people, and we must and will deliver it. That includes replacing exploitative zero-hour contracts with an offer of guaranteed hours. For low-paid workers, the security of knowing what they will earn is not just a “nice to have”; it is the basis on which they can plan their lives. I know that the Minister will have them foremost in her mind when considering the low-hours threshold and definition of regular work.

Those rights will operate not just on paper, but in practice. That is why we need robust fines for employers who illegally deny unions the opportunity to meet with workers or lawfully seek recognition. We must ensure that they cannot simply defy the law and shrug off a paltry fine.

It has been a battle to pass this Bill, but progress is always a struggle that we fight for. Its passage will be a historic achievement for this Labour Government. It will benefit working people now and in the future. Now is not the time to blink or buckle. Let us not waste a minute more. It is time to deliver.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

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

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

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

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

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

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

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

[Sarah Olney]

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

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

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

[Sarah Olney]

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

[Laurence Turner (Birmingham Northfield) (Lab)]

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

[Sarah Olney]

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

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

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

[Sarah Olney]

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

[Kate Dearden]

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

[Sarah Olney]

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

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

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

19:30

[Mr Rand]

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

[Sarah Olney]

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

[Andrew Pakes (Peterborough) (Lab)]

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

[Sarah Olney]

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

[Chris Bloore (Redditch) (Lab)]

Will the hon. Lady give way?

[Sarah Olney]

indicated assent.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

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

[Chris Bloore]

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

[Sarah Olney]

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

[Michael Wheeler]

Will the hon. Lady give way?

[Sarah Olney]

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

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

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

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

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

The speaking limit is now five minutes.

[Justin Madders (Ellesmere Port and Bromborough) (Lab)]

May I first declare my entry in the Register of Members’ Financial Interests and the donation from USDAW trade union, as well as my membership of the GMB and Unite trade unions? I declare an interest as someone who represented working people before I came into this place and as someone who wants to see this Bill come into law. I also declare an interest of someone who wants to see my constituents get some decent protections at work after so long.

This has to be it. This has to be the line in the sand. This Bill was introduced more than a year ago, and the delays have been so long—it was in the Lords for nine months—that even our modest statutory sick pay proposals are at risk of being delayed. The message to the Lords has to be, “This is enough.” This Bill was a clear manifesto commitment, and it pains me that we have had to jettison part of it to get it over the line. I understand why that had to happen, and I commend the Minister for finding a way through, because this legislation matters to my constituents. What she said about employment tribunals is important, too. We need to do an awful lot more work to ensure that people enjoy real justice.

The Lords cannot keep coming back because they do not like what is in this Bill. It is a promise we made to the British people, and we have to deliver on it. We have to let democracy win. If the Lords block the Bill again, let them explain to the 7 million people who still have to go into work when they are ill that they cannot get the day one SSP rights because the Bill has been delayed. Let the Lords explain it to the father whom they have denied day one rights to paternity leave, if he has a child after April, by blocking the Bill again. Let the Lords explain why we cannot have a fair work agency, which is something even the Tories used to promise they needed to deliver. Let us meet every day until Christmas, if the Lords block this Bill again. Let us keep going back. Let us show some steel. Let us show that we will not let this Bill lie in the sand for too much longer. If the Lords complain about having to work extra hours, let us advise them to join a trade union.

[Johanna Baxter (Paisley and Renfrewshire South) (Lab)]

Does my hon. Friend agree that this Bill is the foundation for good industrial relations in this country and the best uplift to workers’ rights in a generation? Does he therefore agree that it is surprising that not a single Scottish National party Member is in the Chamber to debate workers’ rights in this country?

[Justin Madders]

We can always have a dig at the SNP, but the real enemies have been the Greens, the Liberal Democrats, the Tories and the Reform Members who have voted against this Bill consistently. They are the ones who have brought us to this point.

[Edward Morello (West Dorset) (LD)]

Will the hon. Member give way?

[Justin Madders]

I will not give way anymore, because we have not got much time. I will pick up on what the Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney) said about compensation. I accept what the Minister said at the Dispatch Box. I hope that when the Lib Dem spokesperson checks back, she will be able to instruct her Lords that this measure was part of the deal and they should not block the Bill any longer. It is also telling that she has only spoken to businesses, not trade unions, about what was agreed. That shows which side the Liberal Democrats are on.

It has to be pointed out that unfair dismissal compensation limits are not operated that often. Most people’s claims are much lower than that. Most people who have been unfairly dismissed who would benefit from the measure tend to be much older workers who sadly do have not any employability in the job market. They are the ones who will benefit from the uplift in compensation, not bad water bosses, because to qualify people have to be unfairly dismissed. I suspect many water bosses would struggle to show that they had been treated unfairly.

Let us ensure that we get this legislation delivered and maintain vigilance across the whole agenda. That means proper meaningful access, not people being stuck in a shed somewhere far away from where the workers are, and serious fines linked to turnover for those who do not play by the rules. It means no loopholes and proper deterrents on fire and rehire so that companies do not think it is even worth going there. We do not want to see those P&O scenes repeated anywhere. It also means holding firm on some of the nonsense that we are still hearing today about zero-hours contracts. People seem to have a problem with fixed-term contracts and zero-hours contracts being completely different things. There has been a lot of conflation there, I am sad to say.

What comes next is important, because the Make Work Pay agenda is not just about this Bill. Let us get this Bill over the line and delivered, and let us get all the important regulations implemented, but there are so many other important things that we need to tackle in our workplaces in this country, particularly, bogus self-employment. That is going well beyond the gig economy; in fact, it is an epidemic, and it is important that we tackle it. The Bill will level the playing field, allowing good employers to compete fairly, and create more security at work. Employing people with proper terms and conditions may even lead to a greater tax take.

Further down the line, we must tackle unfair dismissal law, which is half a century old and desperately needs updating, but that is for another day. We have debated the Bill for over a year, and it is about time the Lords accepted the democratic mandate and accepted that we must deliver it. Let us get it over the line, and let us start delivering for working people in this country.

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

I wish to draw attention to my entry in the Register of Members’ Financial Interests, my membership of Unite, and the kind support of ASLEF and the GMB for my election campaign.

This Employment Rights Bill is our promise to working people on its way to being fulfilled, thanks in no small part to my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) and my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders). I am glad to see that Ministers have tabled amendments that reflect the constructive negotiations between themselves, unions—including my former employers at the TUC—and business associations, because that is how we roll in the labour movement. We get round a table, we talk, we come to a deal and we move forward. That is the right way to do things when people do not agree.

To be clear, unions negotiated this deal with the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Halifax (Kate Dearden), and it has my support. Today I will not let the best be the enemy of the good. Cutting the qualifying period for unfair dismissal from two years to six months will benefit 6.35 million workers—disproportionately, young workers, ethnic minority workers, and an astonishing 36% of hospitality workers. New figures based on Government data have been produced today to tell us about the impact that the Bill is going to have. Removing the cap on unfair dismissal compensation means that workers will be able to get what they deserve, and bad bosses cannot price in the cost of ignoring the law.

I was also glad to hear my hon. Friend’s clarity about the timing. Our opinions have not changed, and our opinions on the principle have not changed. What is needed now is practicality to ensure that the Bill moves forward—and as we take it forward, Members should be sure to notice who opposes it. I would expect nothing less of the Tories. I would expect the Lib Dems to remember their total opposition to the Trade Union Act 2016, including their opposition to changes in the political fund rules and their opposition—at that time, but apparently no longer—to the undemocratic ballot thresholds that create a higher bar for trade unions than for anyone else in society. I would gently remind their spokesperson, the hon. Member for Richmond Park (Sarah Olney), that the right to request worked so well for flexible working that flexible working does not work—we are having to fix it with this Bill—and yet she proposes to bring in an unworkable right to request, instead of a guaranteed right to a decent hours contract. I will take no lectures from the Greens—what a shame that they are not here—who are letting their peers vote whichever way they want on something as important as this. As for Reform UK, they pretend to be the representatives of working-class people, but vote against their interests at every turn.

I say to those in the other place: it is time to pass this Bill to make work pay and to deliver the rights that were promised in our manifesto and voted for—the rights that millions have waited far too long to see.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I draw Members’ attention to my entry in the Register of Members’ Financial Interests in relation to support from trade unions, of which I am proud.

I agree with my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) that this is a transformational piece of legislation, but it has been weakened. My motion would restore day one rights on unfair dismissal. I tabled a motion to reject the Lords amendments, since when the Government have tabled a motion to adopt a six- month qualification period. I commend the remarks of Lord Collins about issues relating to unfair dismissal. He said:

“These are areas clearly linked to our manifesto commitments, which the Government have an electoral mandate to deliver… we remain committed to delivering unfair dismissal protections… day-one protection from unfair dismissal will not remove the ability of businesses to dismiss people who cannot do their job or pass a probation period, but it will tackle cases of unfair dismissal in which hard-working employees are sacked without good reason.”—[Official Report, House of Lords, 17 November 2025; Vol. 850, c. 561-62.]

That was a very good speech, made just a short time ago.

19:45

After the Budget, the Government rapidly announced that they would not deliver their clear promise of day one protection. There may be debate about other manifesto pledges, but on this the breach is unmistakable. Shadow Ministers, now Ministers— including the Prime Minister—called day one rights the foundation of the largest uplift in employment protections for a generation, but that promise is now being set aside. We are told that the shift from two years to six months reflects a negotiated balance between unions and businesses, with Ministers standing back, but I do not accept that characterisation. Unions were effectively told to accept six months or face years of delay to every other day one right and to the fair work agency, while the House of Lords obstructed the elected Government’s programme.

The Salisbury convention applies. The unelected Chamber should not block mandates, and the Government should not capitulate to such pressure. Given a majority of this scale, the authority lies in this House. Ministers who can intervene overnight to save the steel industry—quite rightly—can intervene to honour a manifesto commitment. We on this side campaigned for the full package. We would vote for all provisions of the Employment Rights Bill, without any dilution.

[John McDonnell (Hayes and Harlington) (Lab)]

We have worked on this legislation for more than 20 years. I just want to put it on the record for my constituents that I wish to abide by the manifesto commitment of day one rights, and I believe it is breaking a promise not to do so. However, other matters will be consulted on now. Some in the House of Lords may take confidence from the Government’s acceptance of this; can we send them the message that we will not in any way compromise any further on this legislation, that we will dig in, and that, as my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) has said, we will sit for as long as possible, if necessary, to see it through?

[Andy McDonald]

I wholeheartedly agree with my right hon. Friend. I think that this episode highlights, again, flaws in the upper House, but even with the convention of double insistence, the concession goes too far.

[Ian Lavery]

My hon. Friend was one of the authors of the new deal for working people, which insisted that the most critical part of this Employment Rights Bill would be employment rights from day one. Does my hon. Friend agree with me on that point?

[Andy McDonald]

Absolutely, and no decent employer should fear any of these measures. Rogue employers were warned that exploitation and arbitrary dismissal would end, but under the compromise, a bad employer may still dismiss someone without reason or justification.

[Rachael Maskell (York Central) (Lab/Co-op)]

The point that my hon. Friend is making is that this is not about fair dismissal, but about unfair dismissal. Does he agree that the people who will experience the most discrimination will be disabled workers, young workers and ethnic minority workers?

[Andy McDonald]

That is absolutely right, but under this compromise, a bad employer may still dismiss someone without reason or justification. A worker could leave secure employment in good faith, only to be summarily dismissed with no protection or explanation, months into a new role.

[Richard Burgon (Leeds East) (Lab)]

On that point, will my hon. Friend give way?

[Andy McDonald]

No, I will carry on.

This debate has been muddied by talk of probation. We never proposed abolishing probation periods—they are proper and necessary—but no system should allow dismissal without cause for blatantly unfair reasons. At present, workers can still be dismissed without cause nearly two years into a job. Under this compromise, they can be dismissed almost half a year in, when they might have a mortgage to pay and a family to support. This climbdown casts doubt on the Government’s resolve and determination to deliver all the elements of the new deal for working people in full.

Worse still, emboldened opponents of the workers’ rights reforms will return for more. They will undoubtedly attempt to weaken the Bill through secondary legislation. Major businesses are already signalling that they will use consultations to soften, delay or carve out core protections. Their language of “burdens”, “balance” and “flexibility” is not commentary, but a co-ordinated push to reshape the settlement.

I say to my colleagues on the Government Front Bench that they should be bold and take heart. The thing that was missing from this Bill was the status of workers’ rights reforms. If we were to take courage in our hands and deal with that issue, we would resolve matters by collecting uncollected tax and national insurance to the tune of £10 billion per annum, as well as giving people security in employment. Think about the lack of a pull factor for people to go into the black economy.

If this legislation is to deliver a new deal for working people, this House must ensure that the back door is not opened to dismantling it. I urge Ministers, even now, to reconsider, because they are making a profound mistake.

[Kate Dearden]

I only have a few minutes, so I will try to respond as quickly as I can to comments from colleagues across the House. I thank everybody for their reflections today.

To respond to the shadow Minister, I do not recognise the figures he mentions, and I urge hon. Members to reflect carefully on the figures that he mentioned in the debate. I would have thought that he had learned the terrible lessons from his former boss, Liz Truss, and I know my constituents are still paying the price for the impacts of her mini-Budget. He is now quoting the Growth Commission, which has Liz Truss as an adviser. I will leave it at that.

The Tories had 14 years to adapt to the way the world of work has changed, but they did nothing to tackle exploitative zero-hours contracts and barely acknowledged the existence of the gig economy. They saw the impacts of covid on our key workers and the limits of statutory sick pay, and decided to do nothing. The world of work has changed an enormous amount in the last 20 years, and the Conservative party seems to be telling us that the system is working as intended, but I say that it is not. I say it needs change, and it needs this Bill.

I thank my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) for her leadership, and for all her work on the Bill and on our wider package for working people. I know she is keen to see the time that employees must wait for fair rights to be shortened, and we share her desire for employees to benefit as soon as possible from this Bill, which is why it is so important that we get it on to the statute book and implemented as soon as possible. I thank her for her remarks and reflections today.

The Government amendments in lieu are a result of dialogue and compromise. Business and unions have preferred to go the extra mile to find solutions, rather than insisting on their own positions and disregarding all other perspectives. I thank my colleagues for their reflections, and I am pleased that we have been able to provide a workable agreement with trade unions and business representatives on the unfair dismissal provisions.

[Richard Burgon]

On that point, will the Minister give way?

[Kate Dearden]

I have two minutes left, so I need to proceed.

I have talked in detail about our intentions behind this legislation. I know that my hon. Friends’ suggestions are well intentioned, but I stress that, as a package, our amendments reflect the agreement reached between business representatives and trade unions in a collaborative and constructive process. We want to bring this Bill to a conclusion so that it benefits millions of British workers, who will benefit from the new rights that it will deliver from April next year. We are extending statutory sick pay and parental leave and setting up the fair work agency, so that it has the enforcement rights that it needs and businesses can start preparing for implementation with certainty.

I thank again all Members for their contributions today. Sadly, despite the persuasive arguments from my colleagues, I know that some Members from across the House will continue to oppose better rights for working people. However, after 14 years of the Conservatives letting workers’ rights rot, the economy stagnate and living standards fall, I am proud to be showing what Labour in power looks like: the biggest upgrade to workers’ rights in a generation; a relentless focus on growing our economy and making working people better off; and rising living standards in every corner of the country. Whereas Reform—its Members are not here— and the Conservatives show themselves to be two sides of the same anti-worker, anti-growth coin, Labour is fixing the foundations of our economy.

The Government are making work pay again in a way that suits the 21st century. This Bill restores the rights that have been lost in a manner that is fit for the future. It will create security and opportunity for everyone, no matter their background. It is of paramount importance that we get this Bill on to the statute book, so that it can start delivering for businesses and workers as soon as possible. I urge all Members on both sides of the House to carefully consider the amendments we have proposed, and I hope they feel able to support our position.

20:08

One hour having elapsed since the commencement of proceedings on the Lords message, the debate was interrupted (Programme Order, 15 September).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83G).

19:55

Division 381

Ayes: 327

Noes: 96

Resolved,

That this House insists on its disagreement with the Lords in their Amendment 1B but proposes Amendments (a) and (b) to the Bill in lieu of that Amendment.

Clause 23

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

Motion made, and Question put,

That this House insists on its disagreement with the Lords in their amendments 23 and 106 to 120, does not insist on its amendments 120C, 120D and 120E, and proposes amendments (a) to (f) to the Bill in lieu of Lords amendments 23 and 106 to 120. —(Kate Dearden.)

20:09

Division 382

Ayes: 300

Noes: 96

After Clause 26

Definition of seasonal work

Motion made, and Question put,

That this House insists on its disagreement with the Lords in their Amendment 48B but proposes Amendments (a) and (b) to the Bill in lieu of that Amendment.—(Kate Dearden.)

20:21

Division 383

Ayes: 395

Noes: 98

Clause 59

Requirement to contribute to political fund

Motion made, and Question put,

That this House does not insist on its amendment 72C in lieu of Lords amendments 61 and 72, but disagrees with the Lords in their amendments 72D to 72H in lieu and proposes further amendments (a) and (b) in lieu of the Lords amendments.—(Kate Dearden.)

20:34

Division 384

Ayes: 326

Noes: 162

Clause 65

Industrial action ballots: turnout threshold

Motion made, and Question put,

That this House insists on its disagreement with Lords amendment 62, but does not insist on its amendment 62C in lieu and proposes amendment (a) in lieu.—(Kate Dearden.)

20:46

Division 385

Ayes: 327

Noes: 162

[Ian Lavery]

On a point of order, Madam Deputy Speaker. When I intervened on the Minister earlier, I should have declared an interest with regards to my support from the trade union movement, of which I am extremely proud. For that, I humbly apologise.

[Madam Deputy Speaker (Caroline Nokes)]

I thank the hon. Member for having corrected the record and for putting his interests on the record.