Employment Rights Bill

Lord Goddard of Stockport Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Goddard of Stockport (LD)]

My Lords, I will be brief—not quite as brief as the noble and learned Lord, Lord Phillips of Worth Matravers, but I shall do my best, and I promise to keep away from the police and definitely the clergy. I had lunch with the right reverend Prelate the Bishop of Manchester, so I think I am safe for today.

While we agree that the current two-year qualifying period is too long, we are concerned about removing it entirely without a clear statutory probation period in place. This could leave businesses in a state of uncertainty, with a gap between the removal of the qualifying period and the introduction of the new probation framework. It risks inconsistency in employment tribunals, as claims will be judged under a system that lacks clarity until the probation period is formally established.

Amendment 49, in the name of the noble Lord, Lord Sharpe, would reduce the qualifying period to six months. Most other amendments in this group are consequential to ensure legislative consistency. We are gently supportive of this amendment, as it would reduce the timeframe for an employee with a plausible case to claim unfair dismissal, while allowing businesses time to correct genuine and non-pernicious hiring mistakes. If the noble Lord were to test the opinion of the House, we would support him on this occasion.

[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, this Government were elected on a manifesto to provide unfair dismissal protection from day one of employment—not two years, not six months, but day one. To deliver this commitment, we will remove the qualifying period for these rights.

The Government recognise that, from time to time, employers will need to fairly dismiss an employee for a fair reason. We expect that most employers already fairly dismiss employees, and the process need not be too arduous. Our changes will not prevent fair dismissal. An employee who has been working in the job for some time but whose performance has dipped will continue to have the standard protections against unfair dismissal. However, the Government believe that it is not right to expect employers to have to meet the same standards in the first few months of employment when they are assessing their newly hired recruit and deciding whether that person can deliver what the employer expects. This is why our policy creates a statutory probationary period, during which light-touch standards for dismissal relating to an employee’s performance and suitability will apply.

The noble Baroness, Lady Lawlor, asked what length the probationary period would be. As we have said previously, the Government’s preference is for nine months. We intend to consult on the duration and how the light-touch standards will operate. The current two-year qualifying period is designed not as a training period but a qualifying period before the individual can claim unfair dismissal. If the amendments tabled by the noble Lords, Lord Sharpe and Lord Vaux, were to be accepted, employees would still have the threat looming over them of being fired arbitrarily.

Amendment 51 preserves the policy in the Bill of exempting a dismissal due to a spent conviction for many qualifying periods—a point raised by the noble and learned Lord, Lord Phillips. I am pleased that the noble Lords agree with the Government’s policy, at least to that extent.

However, I can tell the noble Lord, Lord Vaux, that the Government do not believe in protection for some workers in some limited circumstances; instead, they believe in protection for all employees, benefiting 9 million people. The noble Lord spoke about the needs of young people looking for work. Of course we identify with that, and the Government are committed to supporting people as they take their first steps into the world of work or return to work. As the Prime Minister set out on the Get Britain Working White Paper in November 2024:

“Our country’s greatest asset is its people”.


As I explained in Committee, we are

“transforming the apprenticeship levy into a new growth and skills levy that will deliver greater flexibility”

for learners and employers

“aligned with the industrial strategy”.

This will include

“shorter duration and foundation apprenticeships in key sectors, helping more people to learn new high-quality skills at work, fuelling innovation in businesses across the country, and providing high-quality pathways for young people”.—[Official Report, 21/5/25; col. 305.]

We also intend to limit unpaid internships for those who are part of an education or training course. The law is clear that, if an individual is classed as a worker, they are entitled to at least the national minimum wage and anyone eligible must be paid accordingly.

Beyond enhancing learning on the job and ensuring that a fair wage is paid for young people’s work, we also believe that all employees should be provided with security of work through protections from being fired arbitrarily. It is no less distressing to lose a job at the start of your career than at any other point in the years that follow. However, the Government recognise that employers use probationary periods to assess new hires’ performance and suitability for their role. We will ensure that UK businesses can hire with confidence.

The noble Lord, Lord Sharpe, talked about social mobility. We recognise that good employers take a chance on what we might call “rough diamonds” up and down the country. The valuable time that employers take to support new hires by developing their skills and their talents on the job is not recognised often enough. The statutory probationary period will enable this, with light-touch standards for fair dismissals. We have said explicitly that our intention is to provide for a less onerous approach for businesses to follow to dismiss someone during their statutory probationary period for reasons to do with their performance and suitability for the role. Of course, that will apply equally to healthcare employees.

The noble Lord, Lord Sharpe, talked about potentially increasing the number of tribunals. Provided that the employer can show that the reason for dismissal was fair, they should have no concerns about the outcome, as nothing is really new from the current situation.

The noble Lord, Lord Hogan-Howe, asked about police officers. I understand that they are excluded from the existing legislation, as they would be from the Bill. In that sense, there is no change.

Noble Lords have raised the issue of a cultural fit, which, of course, can mean many different things. “Not a good fit” is often used euphemistically to refer to attributes such as an employee’s work ethic, their level of commitment to the job, or how they interact with their colleagues. In many situations, these reasons will fall into the category of dismissal for conduct or capability, to which the new light-touch standards will apply. If the cultural fit is linked to a protected characteristic then of course dismissing someone for that reason could lead to discrimination claims, and the Bill does not affect that.

Beyond these reasons for dismissal, which clearly fall within the conduct and capability category, the Government will carefully consult on what other kinds of “some other substantial reason” dismissals should also be subject to those light-touch standards. The Bill contains a power for the Government to define what a “some other substantial reason” dismissals “relating to the employee” should mean. As I have noted, the intent is to define what relates to an employee’s performance and suitability for their role. We will welcome employers’ and trade unions’ input on that important issue. However, these amendments would remove the Government’s statutory probationary period to enable light-touch standards for fair dismissals for the first nine months of employment.

Noble Lords asked about consultation. We have already consulted on the proposals, and we are continuing to engage with trade bodies and trade unions prior to publicly consulting later this year. The Secretary of State for Business and Trade issued a letter to stakeholders on Thursday 26 June, which outlined the fundamental principles that are guiding the Government’s development and implementation of day-one rights to unfair dismissal protections and invited stakeholders to engage on the detail of the policy. Should your Lordships be interested, I have now placed a copy of that letter in the House Library. I should also say to the noble Baroness, Lady Neville-Rolfe, that the road map shows that these day-one rights, including protection from unfair dismissal, will not be introduced before 2027.

In the meantime, these amendments would not deliver on the Government’s manifesto commitment to introduce a day-one right against unfair dismissal, leaving many newly hired employees without robust employment protections. I therefore ask noble Lords not to press their amendments.

Finally, my Amendment 52 is simply a minor technical amendment that corrects a cross-reference in Schedule 3. With that, I ask the noble Lord to withdraw Amendment 49.

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[Lord Goddard of Stockport (LD)]

My Lords, the amendments in this group relate to the Bill’s provisions on fire and rehire. I think there is a consensus across the House that the most outrageous cases of fire and rehire should be outlawed. The particular case and example is P&O Ferries, which was not so much fire and rehire, but just fire: nearly 800 staff were dismissed without consultation or notice. Nevertheless, it serves to highlight the urgent need for stronger protection for workers and clear restrictions on the use of fire and rehire.

The series of government amendments in this group clarifies that distinction through the introduction of restricted variations that would permit contract negotiation to proceed in limited circumstances. Government Amendment 72 sets up the condition of restricted variation which, in short, it defines as the removal or weakening of entitlement relating to pay and broader terms and conditions. This approach reflects the intentions behind my Amendment 75, which would allow contract variations where they are not detrimental to employees’ terms and conditions and do not concern paid hours. I am glad that the Government have reconsidered the operability of these provisions, and we are happy to support these amendments to the Bill.

[Lord Hunt of Wirral (Con)]

My Lords, I agree with the noble Lord, Lord Goddard of Stockport, that, as we warned when we discussed it in Committee, Clause 26 was, as originally drafted, quite simply unworkable.

As we reminded noble Lords throughout Committee, the clause was far too broad. It would have captured entirely routine contractual changes, such as simple variation in work location, and treated them as fire and rehire cases. That approach was not only impractical but potentially damaging to employers and employees alike. We therefore welcome the Government’s decision to bring forward amendment that define the concept of a restricted variation. This brings much-needed clarity to the legislation. Although I would not go so far as to say that the clause now flies, it is at least comprehensible.

The Minister quoted Unite. May I quote Unite back at him? It has just issued a statement saying that it condemns the Government’s amendments, which in its own way suggests that progress is being made. The Minister would be well placed to consider the rather detailed brief that Unite has delivered, condemning the way in which the Government are now reworking Clause 26. It suggests that progress is being made and all our warnings are coming to fruition. One now has to wonder, I suppose, whether the realisation dawned when someone in Whitehall spotted that the original drafting could have torpedoed the Government’s own plans to relocate 50% of senior civil servants out of London.

Of course, these amendments, while helpful, have added layers of complexity. Look at what Clause 26 now represents: it is a recipe for going to Peers such as the noble Lord, Lord Hendy, and asking, “What does this mean?” There is so much here that is very difficult to understand; these amendments have added layers of complexity. The fire and rehire provisions are probably slightly more workable now—I say this slightly optimistically—but, my goodness, they are intricate. No wonder the Government are preparing to consult on the matter in the autumn; that consultation will be crucial.

I quote another major figure: Mike Clancy, the general secretary of Prospect. He has warned that

“the government must be careful it doesn’t inadvertently create a veto against all contractual change”.

Surely that is the risk. Among the restricted variations now listed are reductions in entitlement to pay, changes to performance-based pay measures, alterations to pensions, variations in working hours or shift times, and reductions in leave entitlements. These are precisely the sort of changes that businesses, particularly smaller ones, often need to make—not recklessly, but to adapt, restructure or just survive during periods of financial strain. So we urge the Government to conduct this consultation with care. The views of employers must be front and centre. The impact on small and medium-sized businesses must be fully understood. Yes, constraints matter, but so do incentives. If we are serious about improving employment practice, we must not just punish the worst but support the best.

As amended, this clause is better, but we look forward to hearing from the Minister how he will respond to the many criticisms that have been made.

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[Lord Roborough (Con)]

My Lords, it is a pleasure to follow my noble friend Lord Howard of Lympne and indeed all noble Lords who have made such compelling arguments for the amendments in this group. I rise to support Amendment 107 in the name of my noble friend Lord Sharpe of Epsom, to which I have added my name. I again refer the House to my registered interests, particularly as a dairy and livestock farmer and as a forester.

The farming community needs help after the run of negative actions taken by this Government: the slashing of delinked payments, followed swiftly by the cut-off in sustainable farming incentives with no notice, contrary to previous promises. That leaves a large number of farms with negligible environmental payments, incentivising the intensification of their farming operations, undermining their businesses and undermining nature restoration. To that is added the more general burden placed on all businesses of increased employer national insurance contributions.

Farmers’ long-term planning has been thrown into chaos by the reduction in inheritance tax reliefs on agricultural and business property. It is a burden that farming businesses simply cannot afford and will lead to the sale and break-up of many of these on the death of a family member, with families also losing their homes and businesses as a result.

In the run-up to the introduction of the reduced reliefs in April 2026, the financial incentive for elderly or terminally ill farmers and business owners to take their own lives increases. In Committee, I was grateful to the Minister, who is again in his place today, for his promise to speak to his ministerial colleagues at Defra and the ONS about keeping accurate and timely data on farmer and business-owner suicides. I ask him again today: what has been the result of those discussions? How can the Government assess the impact of this measure on suicide rates if they simply rely on out-of-date and insufficiently granular ONS data?

On Amendment 107, the arguments in favour of granting farming an exemption from these Bill provisions have been well made in Committee, and I will hit only the headlines. Farming is almost uniquely exposed to seasonality in its harvesting operations, as well as the weather variability in the timing of those operations. Livestock farmers have to look after their animals every day and rely on casual labour to fill in gaps due to illness or scheduling issues. That requires flexibility in its engagement with seasonal and part-time or casual staff. There are penalties enough in weather unpredictability without introducing more through compensating staff for changing hours at short notice or having to compensate for sickness from day one. These obligations are simply unaffordable for farmers and unworkable in practice.

Farming operates on cycles that are unknown in other businesses. It is easy enough to assess the quality of work and the suitability of staff in retail, offices and manufacturing, even after the first day or so. However, most farming workloads are solitary, with little oversight. We know whether a new employee has drilled a field correctly, looked after animal hygiene effectively, checked weed growth around new trees without damaging the trees, or ensured that livestock is back in calf in the necessary window, only months after those operations are performed. Reducing probationary periods and leaving farmers exposed to human resource and litigation risks, potentially from day one, is simply not acceptable or workable.

As my noble friend Lord Deben highlighted in Committee, this is not a Government who have a background or experience in the farming or rural economy. That lack of experience is often evident, and I urge the House and the Government to listen to those of us who have that experience and to support this critical amendment. I hope to hear encouragement from the Minister that the Government are listening.

[Lord Goddard of Stockport (LD)]

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

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

[Lord Goddard of Stockport (LD)]

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

[Lord Hunt of Wirral (Con)]

My Lords, we are very grateful to my noble friend Lord Moynihan of Chelsea for his amendments. I thank the Minister and her team for the way in which they have entertained and thought through some of the key points made by my noble friend. As he rightly pointed out, collective redundancies are, sadly, not uncommon in cases of employer insolvency. In such circumstances, the role of the insolvency practitioner, which my noble friend has outlined so clearly, is both time-critical and highly constrained. The legal duties placed upon practitioners can come into direct tension with the obligation to consult collectively with employees, a tension that is not merely theoretical but is borne out time and again in practice.

I say to the noble Lord, Lord Goddard of Stockport, that the amendment does not seek gratuitously to diminish the rights of employees. My noble friend has drawn the Government’s attention to a genuine gap in the law, one that has become more acute in the light of the changes that the Bill introduces. As it stands, the duty to consult can place insolvency practitioners in an impossible position, bound by law to take urgent decisions to preserve value or manage a collapse while also facing legal jeopardy for failing to comply with collective consultation obligations that were not, and never were, designed with insolvency in mind.

We have to be realistic. Where a company is collapsing, consultation—however desirable—cannot always be carried out in the prescribed way. It is in nobody’s interests, least of all that of employees, to put insolvency practitioners in a position where they are forced to choose between compliance with employment law and their fiduciary responsibilities.

I believe that the Government should take my noble friend’s arguments seriously. This is not a theoretical concern; it is a matter of practical urgency. I therefore urge the Minister to reflect carefully on the implications of the clause and to engage with my noble friend’s proposal in the constructive spirit in which it is offered.

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Moved by

[Lord Goddard of Stockport]

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

[Lord Goddard of Stockport (LD)]

My Lords, this is a small group of amendments—only three—dealing with small businesses. I will briefly address my Amendment 111 and the other two. Simply put, we would require the publication of a code of practice applicable to small and medium-sized enterprises with the express intention of ensuring that the code must simplify employment law and the regime that the Bill will create, thereby enhancing the ability of SMEs with limited capacity to adhere to the principles of the Bill.

Amendment 166 in the name of the noble Lord, Lord Sharpe, would require the Secretary of State to undertake a review of the impact on small businesses. We support this amendment, as we believe that SMEs are suffering excessively from the consequences of some of the proposed legislation. However, we cannot support Amendment 194, which would repeal Parts 4 and 5 and Clauses 149 and 150 of the Bill at the end of the Parliament in which it passes. Quite frankly, we feel that this is nothing more than a wrecking amendment that would create provisions to be adhered to only for a short period of time before reverting back to pre-employment framework, thus causing real havoc in legislation.

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[Lord Leong (Lab)]

My Lords, I am grateful to the noble Lord, Lord Hunt of Wirral, for his contribution and to the noble Lord, Lord Goddard, for speaking to his amendment.

Amendment 194, tabled by the noble Lord, Lord Sharpe of Epsom, seeks to repeal Parts 4 and 5 of this Bill, as well as Sections 149 and 150 at the end of this Parliament. In Committee, we debated at length the merits of Part 4 and 5 of the Bill, as I am sure we will again next week, as the noble Lord, Lord Hunt, mentioned. Parts 4 and 5 are key to delivering the biggest upgrade in workers’ rights in a generation, so I do not wish to repeat myself to your Lordships’ House tonight.

Amendment 166, also tabled by the noble Lord, Lord Sharpe of Epsom, proposes a review process that effectively duplicates what we are already doing. As I have outlined previously, the Government already have robust monitoring and evaluation plans in place. The Government’s impact assessment sets out how we will review the Bill and any secondary legislation that follows, including effects on small businesses, which we know are vital to the economy. The recently published road map shows that implementing this Bill will take several years and its full effects will not be realised until long after Royal Assent. Significantly advancing a post-implementation review would not allow for an effective assessment of its impact, including on small businesses.

On Amendment 111, moved by the noble Lord, Lord Goddard of Stockport, this Government know the importance of making sure that employers of all sizes are supported in preparing for employment rights reforms. As set out in our road map, the Government are committed to ensuring there is sufficient support and guidance for employers of all sizes. As set out in paragraph 24 on page 8 of the road map, we will be working closely with ACAS and others to develop codes of practice and guidance on measures where these are needed. We have committed to ensuring time is built into our implementation plans to allow stakeholders, including many small businesses, to familiarise themselves with changes in law, codes of practice and guidance. Many of the measures in the Bill build on existing legislative provisions which already have guidance and codes of practice. When we make changes to regulations, we will also work to update relevant guidance and codes of practice as a result.

We know one of the main places that people turn to for reliable, accurate information on legal requirements is GOV.UK. Work is currently under way to ensure that our digital content is usable, easy to navigate and accessible for all stakeholders. In addition, we have engaged, and will continue to do so, with stakeholders of all sizes to understand what support will be useful for them in implementing these changes.

The noble Lord’s amendment is unnecessary and duplicative. An additional code of practice on top of the guidance and support that the Government have already planned risks causing confusion among stakeholders as to where they should turn for clarity and certainty. I therefore respectfully ask the noble Lord, Lord Goddard, to withdraw Amendment 111.

[Lord Goddard of Stockport (LD)]

I thank the Minister and the other speakers in this small group. Although it is three minor amendments and it is 11 o’clock at night, for us, and, I think, for the Conservatives, small businesses are the heartbeat of the economy in this country. We will keep nagging about small businesses, and we want clarity and certainty.

Yes, codes of practice are great. I have read the road map; it is very interesting. I understand the direction of travel with the road map. It requires patience, trust and a little bit of honesty about what is deliverable in time periods. The road map is a good thing, and I recommend people to read that road map.

Small businesses need to know now the impact of this proposed legislation. Asking for reviews of that, after a period of time, does not seem unreasonable to this group. We are not being awkward for the sake of being awkward, we are just trying to protect small businesses and small companies that are, quite frankly, bewildered. They do not have a political view on the Employment Rights Bill. They are bewildered as to how someone can come in and affect how they try to make a small profit and a small living.

We will continue to probe, not forcing votes for the sake of votes. I speak to Ministers regularly, probably more with these Ministers than on any other Bill—apart from the football Bill, perhaps, with the Minister who is sat next to the noble Lord. The Ministers have been really helpful and supportive, and I appreciate that. I think they understand where we are coming from on this—we are not trying to be obstructive, but we are just trying to tease out a little bit more detail and promise of certainty for people. At the moment, life is difficult, and to put more uncertainty in front of people who are trying to do the things the Government want them to do—grow their business, employ more people and create GVA—those things have to be compatible with the things they are trying to do for the employees. On that basis, I will stop wittering on, and I withdraw my amendment.

Amendment 111 withdrawn.