Employment Rights Bill

Lord Londesborough Excerpts

Committee stage
Monday 16th June 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Caine. She made some terribly important points; they are literally about matters of life and death.

I have added my name to Amendment 259, alongside the noble Lord, Lord Freyberg, and the noble Earl, Lord Clancarty. I apologise to the noble Earl for not having also signed Amendment 287; I certainly would have done so, had I caught up with it sooner. I previously backed a similar amendment from the noble Earl to an earlier Bill under the previous Government.

I declare my position as beneficiary of the Authors’ Licensing and Collecting Society, with which the noble Lord, Lord Clement-Jones, is associated. I published one book with the society last year, and I have another one coming out this year.

Amendment 259 is about unionisation and collective bargaining in the arts and cultural sector, and it calls for alternative, appropriate models for the sector. I hope the Labour Government see sense and come back in support of the amendment. They believe—I hope—in the values of collective bargaining and of workers being able to get together to fight for appropriate conditions, whether it is health and safety, pay or work security.

I declare another position—or, perhaps, a situation—in that, 20 years ago, I reviewed a lot of London fringe theatre on my own website. Speaking to some of the actors and the other creatives involved in those performances, I learned that the conditions under which they were employed, or hoped to get paid, were often very precarious. I very much doubt that that situation has improved.

The noble Lord, Lord Freyberg, spoke about the insecurity of Covid and what followed it. The Republic of Ireland saw that situation and took a step to deal with it: it introduced the universal basic income trial, which ran from 2022-24 and paid creative workers a weekly stipend of €325 for three years. We still have not had the formal impact assessment of that, but I have heard a great many anecdotal reports about the more stability and reduced stress for creative workers. Realised from anxiety, they had time and headspace to open up new possibilities and create trajectories. They spent time researching, experimenting and taking risks and really saw the benefits in their creative practice. What we are proposing here is not going as far as a universal basic income but is a collective bargaining approach that strengthens the position of creative workers within their sectors and organisations, particularly freelancers. This would surely be a positive step at least heading in that direction.

Finally, it might feel as if we are addressing something that has been an issue for a very long time. There is a very famous painting called the “Poor Poet”, done in three versions by the German painter Carl Spitzweg. It shows a garret room with a leaking roof. There is no fire or bed, only a mattress on the floor, and the poet is tucked underneath every bed covering because he cannot afford to heat his room. That has been a long-term stereotype, but it does not mean we have to continue that.

More practically, in the reality of Britain in 2025, many people cannot even manage to access conditions such as that. There is a real issue—and no one else has brought this up yet—about access to the creative sector being open to a wide variety of people from a wide variety of groups in our society, not just to people who can access the bank of mum and dad when things go a bit wrong and can afford to work as an unpaid intern for years. If we are going to have a creative sector that truly harnesses the talents of all our society, opens opportunities and—if I have to put it this way—is great for the economy, then surely all the amendments in the group, but particularly the amendments on collective bargaining and the freelance commissioner, would take us some steps down that road?

[Lord Londesborough (CB)]

My Lords, I address Amendment 287 on the creation of an office for a freelance commissioner in the name of my noble friends Lord Clancarty, Lord Freyberg and Lord Colville of Culross, who has managed to beat our limited motorway system but arrived just too late to speak, sadly.

I am somewhat conflicted about this thought-provoking amendment, in that I have argued at Second Reading and in Committee against the overreach of the Bill and its sheer complexity and burden on employers, especially for small and micro businesses. On the noble Baroness’s comment, I do not want to be seen to be adding baubles to the Christmas tree. However, I agree that year by year the arguments grow for the establishment of a freelance commissioner, partly because the number of freelancers is growing and will continue to do so. The current 2 million plus freelancers will easily rise to 3 million within the next 10 years in the UK alone as employers shed staff from payroll, weighed down by the combination of increased national insurance contributions, national minimum wages increasing much faster than the rate of inflation and all the new rules and regulations coming in this very Employment Rights Bill.

Just look at the recent and alarming drop reported last week by the ONS of 274,000 workers coming off payroll during the past 12 months. We do not yet have the data to track how many of them are transitioning to freelance or self-employment. Indeed, as my noble friends have pointed out, the data on this area of freelancing and self-employment is poor and not up to international standards, and that is a real problem when we are trying to assess exactly what their contribution is to the economy.

I am going to muddy the water slightly, but you could argue that there is a need for an independent commissioner for the self-employed. We have been talking about freelancers, but there are 4.2 million self-employed people, including freelancers, in the UK. Those numbers are going to increase given the impact of technology, digital communications, AI and, particularly, the practice of working from home. I accept that there are key differences between freelancers and many self-employed people, for example, sole traders or those running their own businesses or partnerships, perhaps with just one or two contractors, but freelancers, although independent and project-based, are also self-employed and are treated just the same way for tax purposes by HMRC.

I accept that freelancers and the self-employed are not as valued or appreciated by Governments of all parties as they should be. This was brutally exposed during the pandemic with furlough and other schemes. If we want to develop a proper entrepreneurial spirit and environment in this country, we should do much more to value and look after those who create their own jobs and face up to all the risks and jeopardy that that involves. That includes freelancers, not just in the creative industries, but in other sectors where they are prevalent, which are as diverse as construction, professional services and agriculture. The Government need to give Amendment 287 serious consideration and, while doing so, think through how the interests of all the self-employed, not just freelancers, should be represented.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lords, Lord Freyberg, Lord Clancarty and, particularly, Lord Clement-Jones, for their valuable contributions and amendments in this group and for the thoughtful way they have introduced them. I am very grateful for their tireless advocacy on behalf of the freelance workforce, who so often find themselves on the margins of employment policy. I will speak in particular to Amendments 301 and 302, tabled the noble Lord, Lord Clement-Jones, which I was happy to sign.

Amendment 301 introduces a new clause which, for the first time in statute, provides a clear and much-needed definition of a freelancer. This definition acknowledges the reality of modern working life, where individuals are often engaged on short-term contracts, operating through their own companies or via intermediaries and managing their own tax and national insurance affairs. These individuals, who are distinct from employees or workers as defined under current legislation, are nonetheless a vital and growing component of our labour market, as the noble Lord, Lord Londesborough, has just pointed out. The amendment does not seek to blur the lines between employment statuses, but rather to draw a necessary and clarifying distinction that enables policy and legislation to recognise freelancers in their own right. The inclusion of the provision for the Secretary of State to issue guidance ensures that the definition can evolve with working practices and case law, and that is both sensible and future-proofed.

Amendment 302 builds on this by creating a duty—a statutory obligation—for relevant government departments to have due regard to the freelancer workforce when shaping new policy. Too often freelancers are treated as an afterthought, and they fall between the cracks of legislation designed for binary employment categories. This amendment seeks to correct that omission. It ensures that the realities of freelance working are considered proactively in policy design, not reactively after the damage has been done.

Furthermore, the amendment ensures that the freelance commissioner, a role established to advocate for and advise on matters affecting freelancers, is appropriately consulted in the policy-making process. That is a modest yet essential safeguard to ensure that expertise is brought to bear when policies may significantly affect freelance professionals, particularly in sectors such as the creative industries, technology and media, where freelancing is not the exception but the norm.

These are thoughtful and proportionate amendments. They do not create undue bureaucracy, nor do they entrench rigid definitions. They offer clarity, fairness, and recognition to a workforce that contributes enormously to our economy and cultural life, yet is often unprotected and unheard in legislative terms. These proposals are not about privileging one form of work over another. They are about ensuring that our legal and regulatory frameworks reflect the diversity of modern work. I commend the noble Lord, Lord Clement-Jones, and his cosignatories on bringing these matters before the Committee, and I urge the Government to give serious consideration to these amendments as practical and principled improvements to the Bill.

I will take this opportunity to speak more broadly regarding the wider group of amendments concerning the impact of this legislation on freelancers and the cultural and creative sectors. Amendment 285 proposes a temporary waiver for small and independent cultural organisations in financial hardship. This is a pragmatic and compassionate measure. We all support robust employment protections, but a one-size-fits-all rollout risks devastating unintended consequences: closures, lay-offs or the collapse of small institutions that are already on the financial brink. The idea of a grace period and progressive enforcement is a proportionate way of balancing worker protections with organisational survival.

Corporate Liquidations

Lord Londesborough Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Leong (Lab)]

My Lords, I assure the noble Baroness that we will publish our industrial strategy very soon, and it will definitely cover SMEs. As I mentioned earlier, compulsory liquidation is not something new. Companies go bust. We have seen big companies fail. Failure is a reality of business. Even major firms such as Ted Baker, The Body Shop and Wilko have collapsed. We should be thinking about how to support these corporate failures. We must have a more robust system, whether it is the credit system that needs reforming or even British banks. We must incorporate the American culture. Yes, we have to address failures, but more important is how we get up, dust ourselves down and get on to the business market again.

[Lord Londesborough (CB)]

My Lords, does the Minister accept that some of these business closures, particularly for SMEs—where payroll is their largest expense—were triggered not only by the scheduled increase in NICs but by the steep hikes in the national minimum wage? As the noble Lord pointed out, this was demonstrated by the very disturbing falls in payrolled staff and vacancies reported by the ONS. The resulting squeeze on their cash flow may cause a further spike in the rate of liquidations through Q2 and Q3. How does this sit with the Government’s claim to have “restored economic stability”?

[Lord Leong (Lab)]

The noble Lord makes an interesting observation that I do not share. First, there is no empirical evidence to suggest that NICs or business rates changes are primary reasons for any of these closures in the UK. I can give examples of businesses that are doing very well. Let us look at the hospitality business. I just looked at the latest results for JD Wetherspoon, which had revenue of £2.2 billion and EBITDA of £19.28 million. Stonegate, one of the largest pub companies in the UK, had revenue of £1.75 billion and EBITDA of £394 million. These are not companies that are in trouble. The picture is mixed. Yes, we have some contraction in the business sector, but businesses are thriving. Do not listen to me. Listen to people such as the president of Blackstone, who this week said:

“I would give the UK Government a lot of credit for embracing business”.

Employment Rights Bill

Lord Londesborough Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

These amendments are trying to preserve flexibility for the poor business owner. We all know that many business owners are having to close down. With some it is because of employment law, and with others it is because of the very high rates that they have to pay on the high street; there are many reasons. But here is an opportunity for them to preserve flexibility. I hope the Minister will give very careful thought to these amendments as we work our way through the Bill, because the alternative is lower employment, lower growth and people out of work because we have been too prescriptive.

[Lord Londesborough (CB)]

My Lords, I will speak briefly to Amendment 19A in the names of the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, and offer my support for Amendments 20 and 21.

My main concern, as I expressed on the first day in Committee, is over the impact of guaranteed-hours contracts on the small and micro-business sector, specifically those with fewer than 50 staff. Amendment 19A is particularly relevant to start-ups and scale-ups, and we cannot ignore their high-risk operational context. Again, I declare my interest as set out in the register: I chair, advise and invest in a range of start-ups.

Clause 1’s right to guaranteed hours will inhibit job creation but also job mobility and flexibility, as we have heard, if applied to such businesses, to the detriment of both employer and employee. Rigidity—I think the noble Lord, Lord Hunt, used that word—is especially dangerous in a flat economy environment such as we have at the moment.

Small business planning requires agility and flexibility when creating new jobs. As we know, business circumstances will change, often on a month-to-month basis, given the natural volatility around budgeting, forecasting revenues, forecasting bookings and indeed anticipating demand. When we talk about

“the reasonableness of entering into a limited-term contract”,

we simply cannot afford to ignore the early-stage development of these companies and watch them avoid risk-taking.

The Member’s explanatory statement to Amendment 19A quite rightly points to

“unforeseeable changes in business conditions”,

and that is especially relevant to small businesses. As I know through bitter experience, as both an employer and an investor, there is often a huge delta between entrepreneurs’ forecasts and the actual outcomes. This is about not just seasonality, events or the weather but unpredictable customer demand.

We should therefore not handicap entrepreneurial risk-taking, which this economy so desperately needs to encourage, and specifically the creation of new jobs, by applying such blanket restrictions on limited-term employment contracts. We need a more nuanced approach, as this amendment suggests, and I ask the Government to give it serious consideration.

[Baroness Noakes (Con)]

My Lords, I support the amendments in this group in the names of my noble friends on our Front Bench. I have a number of concerns about the guaranteed-hours provisions in the Bill, one of them being that they are drafted almost wholly from the perspective of workers and pay little heed to the needs of employers. I do not believe that is a good way to create employment law to underpin a healthy economy.

On our first day in Committee, the noble Lord, Lord Barber of Ainsdale, who is not in his place today, and the noble Baroness, Lady Carberry of Muswell Hill, both spoke about the work of the Low Pay Commission on zero-hours contracts. I was grateful to them for being pointed in that direction. I have a great deal of time for the work of the Low Pay Commission, which is always balanced and very careful, so I went back and looked at the 2018 report. Unsurprisingly, I found that it does not provide the copper-bottomed support for the Bill that noble Lords opposite have claimed—I should also say that the employment bodies represented on the Low Pay Commission have told us that as well.

The Low Pay Commission did indeed recommend that workers should be offered guaranteed-hours contracts, but, importantly, it also recognised that there would be circumstances in which it would not be reasonable for the employer to have to do that. There is not a trace of that in the Bill. The Low Pay Commission was clear that the Bill should set out specific circumstances in which the employer would not have to offer guaranteed hours. The commission cited with approval some equivalent legislation which was at that stage going through the Irish parliament, which provided, among other things, that adverse changes in the employer’s business or the existence of temporary factors would allow employers not to offer guaranteed hours.

Like the noble Lord, Lord Londesborough, I believe that Amendment 19A is eminently reasonable in that context. It does not give an employer carte blanche to ignore guaranteed hours but allows for some genuine business circumstances to be taken into account by the employer when looking at whether guaranteed-hours contracts should be offered.

At the end of the day, if we do not have successful businesses, there will not be any jobs on any kind of contract available. As I said on our first day in Committee, I am particularly concerned, as is the noble Lord, Lord Londesborough, about small and micro-businesses, which really need to be allowed the flexibility if we are to protect the work opportunities of around half the private sector workforce.

Even if those small and micro-businesses survive the incredible bureaucracy associated with these guaranteed hours, they will potentially not survive the substantive impact of the hours if they are required in all circumstances to offer guaranteed-hours contracts. Of course, this is particularly the case in the hospitality sector, the largest user of zero-hours contracts; my noble friend Lord Hunt spoke about the problems in that sector. There are also very large numbers of small and micro-businesses in that sector.

Recognising some very limited flexibility, my noble friend’s Amendment 19A is actually very modest. It would go some way towards making this new requirement to offer guaranteed hours work in the context of businesses that have to face difficult circumstances, and at the moment the Bill pays no attention to that.

--- Later in debate ---

At the very least, to test the water, can we not say that we will have an impact assessment on whether the Bill will be positive to sectors that are absolutely drowning, in many instances because of things that this Government and the previous Government have done? Surely we have to ensure that something that is well intentioned to help workers does not do more harm than good. Therefore, we should support an assessment of what the impact will be.

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 63. I agree that the impact of Clauses 1 to 8 will be especially felt by these three sectors: hospitality, retail and social care. But, to be frank, I would not stop there; I advocate expanding this impact assessment, not only to small businesses and micro-businesses—noble Lords would expect me to say that—but to all key sectors in the economy. There will be huge employment variations sector by sector, and they need to be analysed and understood. As we keep hearing, one size does not fit all—although the Bill has a different view on that—and we have the issue of “mind the gap”.

Two other industries that certainly deserve such assessments are the creative industries, which we will debate on another day, and the gig economy. Some very disturbing numbers are already coming out of membership surveys from bodies such as the Federation of Small Businesses and the Institute of Chartered Accountants. I will share two bits of data from the ICAEW’s latest quarterly business survey for the first quarter of this year. It says that 53% of its members expect that the Bill will

“reduce their plans to hire permanent staff”,

and that 40% anticipate greater use of outsourcing because of the Bill—that is a very significant number.

What does this mean? It means—it is already happening—that employees will be coming off payroll and going into freelance and self-employed roles. We have an amendment coming up in many days’ time, or probably weeks; I will not read out the names of my noble friends who are behind it, but it is Cross-Bench and Liberal Democrat-sponsored and relates to the establishment of a freelance commissioner office. I think the Government may have very little choice on this, because the demands for the services of that office are going to go up exponentially, partly because of this Bill and also because of the national insurance contributions Bill. I will not repeat all those arguments.

I come to the second unforeseen consequence—although, frankly, these are not unforeseen, are they? They are foreseen. We can actually say with some certainty that the Government are encouraging the offshoring of jobs from the UK. This trend has been going on for decades, but is it really the objective of the Government, particularly for lower-paid and entry-level roles, to see a percentage of those jobs going off to countries such as India, Vietnam, the Philippines, Romania or Moldova? I am not against offshoring, but I think you have to be very careful about being seen to be encouraging it, and I believe the Bill is guilty of that.

On the assessment, which we hope will happen, the area that should be looked at in greatest detail is the impact on part-time jobs. We have heard already about the young graduates and students, but I will speak up also for older workers. Those of us here who sit on the Economic Affairs Committee—I see the noble Lord, Lord Davies, here—will be aware that we are conducting an inquiry on the economics of an ageing society. If the Government are to achieve their noble objective of raising the economic activity rate from 75% to 80% across all age groups, they will have to tackle the 50 to 70 year-old cohort.

In order to get people back into work, not just those who took premature retirement but those who have been on benefits for a long time, we will have to be far more flexible about creating part-time work, and I am afraid that the Bill is likely to deter the creation of part-time roles. So that is another area that I believe the impact assessment should be looking at, which is not just by sector but by type of job.

I am told by my friends in the recruitment industry, if I can call them that, that there is already a shift in hiring from permanent to interim, and that trend started at the beginning of this year and is accelerating. Again, national insurance contributions have pushed employment in that direction and the Bill threatens to do the same.

My final point, talking about assessments, is that HMRC may well want to conduct one to discover that its projected national insurance contribution tax revenues will, as a result of the Bill, take a significant hit as employees start being taken off payroll and moved into self-employed, part-time or even offshored roles.

[Baroness Stowell of Beeston (Con)]

Perhaps I might intervene briefly on this group. I support Amendment 63 but, like the noble Lord, Lord Londesborough, I wonder whether it is too modest in scope. As I said when I spoke on the last day in Committee, I am sympathetic to the kinds of effects that zero-hours contracts or some of the different kinds of practices that we see now have on employees in these businesses, which are often at the lower end of the pay scale.

However, I am very struck, by listening not just to this debate but to the debates on the various different things that we have been discussing this afternoon, that what we do not seem to be taking account of—or rather, to be more specific, what the Government do not seem to have taken account of in bringing forward this legislation—is that a lot of the practices that they are trying to remove or mitigate are the consequence of other things that have been introduced in the past which have been well intentioned in support of low-paid workers but are now creating other things. For instance, although it is going back some time now and various other things have happened since, I think about the arrival of tax credits when Gordon Brown was Chancellor. That led to people wanting to reduce their contracted hours because of the impact on their various benefits.

So when I hear people say that some of these measures—or, rather, the removal of some of these practices and various other things in the Bill—start to disincentivise people either being offered more hours or whatever, I worry that, given the way in which the Bill has been introduced and what feels like inadequate assessment through the proper stages—Green Paper, and all that sort of thing—we are creating yet more problems, which will then lead to the need for yet more legislation, which will never get to the heart of what we are trying to do here, which is to create an employment economy that is fair for employees and people do not feel that they are being exploited but have the flexibility that they need, and where employers, too, have the freedom and independence that they absolutely need to be able to employ workers and grow their businesses to contribute to the fundamental agenda, which is a growing economy that is fair to everybody concerned.