Employment Rights Bill

Lord Sharpe of Epsom Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 10th December 2025 Lords Chamber

For these reasons, we will support the Government to ensure delivery of the change to unfair dismissal, as well as the broader set of new rights in this Bill, which these Benches support. I beg to move Motion A1.

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak principally to Motion B1 in my name. The Government’s introduction of a six-month qualifying period, one that can be amended only through primary legislation, was, I am happy to acknowledge, a very welcome concession and we thank the Government Benches opposite for it. Angela Rayner spoke of disruption, but the truth is that this House was simply doing what it is supposed to do and what it does best—scrutinising legislation diligently and ensuring that our small businesses and our young people retain at least some chance of building a bright future. Those are our vested interests.

However, what followed was the very opposite of proper scrutiny. Without consultation, assessment or, as far as we can tell, any precedent—and without even the courtesy of signalling the change to either House—the Government brought forward at the 11th hour a wholly new measure to abolish entirely the compensation caps for unfair dismissal. These issues had not been discussed at any earlier stage in the Bill’s passage. The constitutional implications of introducing major new policy at ping-pong are profound. This is not responsible government; it is unnecessary, inappropriate and constitutionally troubling.

Motion B1 in my name accepts almost all of the Government’s amendment. It seeks only a modest and responsible safeguard that the Government conduct a review of the compensation limits before abolishing them. I acknowledge that an impact assessment has been promised after this becomes law, but what use would that be? It would already, by definition, be somewhat redundant.

This is not obstruction. It is the bare minimum that a competent Administration should undertake. When Tony Blair increased the cap in 1999, there was consultation. When the coalition Government introduced the 52-week cap in 2015, there was consultation. Why should this Government be exempt from the same cross-party accepted standards of good practice? The Government claim that this change reflects an agreement between business groups and trade unions but I wonder whether this is true.

Neil Carberry, chief executive of the Recruitment and Employment Confederation, was explicit. He said:

“For the employer side of the table last week ‘lifted’ did not mean ‘abolished, right now’. We agreed that the 52 week cap should go—protects ordinary workers better—as part of the deal that retained the qualifying period. We anticipated a further discussion about the future of the cash cap, too. But the decision to go for abolition, now is political”.


The Federation of Small Businesses said on Times Radio this week: “In the agreement between us as business groups and the unions, we agreed that there would be a lifting of the cap. We didn’t suggest it would be both caps abolished. So that’s broader than the agreement, and it helps a very small number of very, very rich people working for corporates”.

When those alleged to have agreed to this package say plainly that they did not agree to abolish both caps, the government rationale collapses. It is rumoured that there are minutes of these various meetings and, to clear all this up, perhaps, I ask the Minister whether that is the case and, if it is, will they place a copy of the minutes in the Library?

Let us also have a look at the possible practical consequences of this. The Government appear not to have considered even the most basic scenarios. For example, what happens when a board is faced with an underperforming CEO on £1 million or more? Today, many boards reach a clean exit. Notice is given, a payment to cover the maximum unfair dismissal award is made and a swift settlement is agreed. It allows the organisation to move on. But under an uncapped regime, the entire risk changes. Will a board now be expected to conduct a full six-month performance improvement plan, offer formal warnings, objectives, documented support and staged reviews, simply to reduce the risk of defending a seven-figure tribunal sum? In answer to the question from the noble Lord, Lord Fox, the incentives have now changed, so we would expect behaviour to change. They will now be incentivised to use the tribunal system, even if they were not in the past.

Let us consider a particular bête noire of your Lordships’ House: the water company executives, those who have overseen sewage being pumped into our rivers and seas. Are these individuals really now to be entitled to multimillion-pound payouts for so-called unfair dismissal? Is that the policy intention? Are noble Lords opposite truly comfortable becoming the party defending corrupt water bosses, while ordinary claimants are pushed further back in the queue? This policy is a recipe for the rich and a wrecking of justice for working people.

On Motion C, we are glad that it has taken the persistence of the Official Opposition to ensure that the Government now concede the need to consult our farmers and our other seasonal businesses. After the jobs tax, the tax on family farms and the business rates increase that are crushing the hospitality and retail sectors, and with the construction sector shrinking at the fastest rate since the pandemic, it is rather vital that such industry concerns are taken seriously.

On Motion D1, I agree with the noble Lord, Lord Burns. He has been entirely reasonable and constructive throughout these discussions. The noble Lord has engaged with the Government in good faith, seeking sensible middle ground rather than conflict. It is precisely because his approach is so measured that the position taken by the noble Lord, Lord Collins, opposite is so remarkable, because it was the Collins review of 2014 that argued that the old model of automatic political fund enrolment was no longer acceptable. It was the Collins review that insisted that workers must give explicit individual opt-in consent before contributing to political activity, and which championed transparency, choice and the principle that democratic legitimacy cannot rest on inertia. We agree with the noble Lord, Lord Collins; dare I say that he is U-turning, and is possibly not the first on those Benches to do so?

In our previous debate, the Minister suggested that the recent wave of industrial action somehow demonstrates that the existing legislative framework is inadequate. The rise in strikes in 2022 and 2023 occurred against a backdrop of the sharpest inflation shock in 40 years, global economic turbulence during and after the pandemic, and the profound wage erosion that followed the peak of the Russia-Ukraine conflict. These are extraordinary economic circumstances, not failures of the Trade Union Act 2016. In 2017, 2018 and 2019—the first full years after the Act was implemented—working days lost to strike action fell to historic lows. In 2018, the 273,000 working days lost represented the sixth-lowest annual total since records began in 1891, according to the ONS. Industrial action in the public sector was at its lowest sustained level for decades.

I turn to recent events. Just over a week ago the BMA announced yet another round of industrial action. These strikes will undoubtedly put patients at risk and place even greater strain on our already overstretched National Health Service. Let us also recall that it was the Government’s own Health Secretary who accused the BMA of behaving like a cartel—and you cannot negotiate with a cartel. We have all heard, purely through the most reputable Westminster whispers, of course, that there may be a measure of tension within the Government on this—a hint of disagreement between the Health Secretary and other Ministers, perhaps even the Prime Minister himself. I would never suggest that Ministers are briefing against one another or that competing ambitions are shaping policy, but the murmurings grow louder by the day.

The Government have a splendid opportunity this afternoon to dispel all such unhelpful chatter. They can prove to the House, and perhaps even to themselves, that they are a united operation. They can put all doubts to rest with one simple gesture, by accepting what we are calling the Wes Streeting amendment before your Lordships today. His Majesty’s Official Opposition remain firmly and unapologetically on the side of Britain’s businesses, large and small.

[Lord Burns (CB)]

My Lords, I will speak to Motion D1. In recent years, there has been an extraordinary and significant interest in what has become known as choice architecture. This was popularised by the book Nudge and by one of its authors, Richard Thaler, who received the Nobel Prize for Economics in 2017, partly for his work on it. One key point which is so relevant to the issues I have been raising is that he highlighted that when individuals are presented with a choice, any default option has a very important influence on their decision and should be taken into account in designing the process of choice.

My previous amendment aimed to eliminate the impact of the default option, in one direction or another, when members wish to take advantage of the right not to pay the political contribution. It proposed that new members should be required to make an active choice between two options displayed on the application form: to pay or not to pay. This would eliminate the need for a default option, and potentially reflect more closely the true preferences of members. This proposal has not found favour in the House of Commons: clearly, the Government and the trade unions with political funds want to influence the decision of members in favour of paying the political contribution. They want as many members as possible to pay the contribution, and of course I understand the motivation.

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Moved by

[Lord Sharpe of Epsom]

At end insert “and do propose Amendment 120N as an amendment to Commons Amendment 120G and Amendments 120P to 120S as amendments to Commons Amendment 120H—

120N: Leave out subsection (3) and insert—
“(3) In section 124 (limit of compensatory award etc.), after subsection (5), insert—
“(6) The Secretary of State must, within three months of the day on which the Employment Rights Act 2025 is passed, conduct a review of the limit imposed by this section on the amount of the compensation awarded or compensatory award made.
(7) A review under subsection (6) must include a consultation with—
(a) employers’ organisations,
(b) trade unions,
(c) organisations representing employment law practitioners, and
(d) such other persons as the Secretary of State considers appropriate.””

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120S: Leave out paragraphs 2 to 5”

[Lord Sharpe of Epsom (Con)]

My Lords, in view of the manifest constitutional impropriety on display, I do not think we have a choice. I beg to move Motion B1.

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[Baroness Lloyd of Effra (Lab)]

My Lords, I have already spoken to Motion E. I beg to move.

Motion E1 (as an amendment to Motion E)

[Lord Sharpe of Epsom]

Moved by

Leave out from “House” to end and insert “do insist on its Amendment 62, and do disagree with the Commons in their Amendment 62E in lieu of Lords Amendment 62.”

[Lord Sharpe of Epsom (Con)]

I beg to move.