Employment Rights Bill

Debate between Baroness Coffey and Lord Sharpe of Epsom

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I support Amendment 8. I commend my noble friend Lord Wolfson on his excellent speech, bringing the reality of employing so many people into the heart of this debate, along with the constraints and the concerns being raised, while still recognising that I understand why so many people consider casual work and zero-hour contracts to be particularly poor when people are trying to have certainty of employment over some time. I also support Amendments 7, 12 and 13—in essence, any amendment that refers to specifying the reference period in the Bill.

I say that because, when thinking of 26 weeks, I think in particular of the hospitality industry in coastal areas. There are a number of employers around the country who literally shut down their businesses, or move to a much lower level of needing people, at certain times of the year, and then, in the summer, are desperately trying to find people. We need to give flexibility. The 12 weeks simply does not recognise that, as has been referred to. It is perfectly usual for people to work at different points throughout the year, potentially in on annualised-hours contract, but varying the number of hours expected to match the demand of customers requiring a particular service. I fear that the 12 weeks does not address that sort of business.

Across the country, 2 million people work in the hospitality industry. It is one of our biggest industries, and for many families it is key to how they support their household income. For the flexibility that employers want, and—thinking of how many people lose their childcare at certain times of the year—for employees to have flexibility around their hours worked, bringing in casual staff is a key element in how employers keep those businesses going.

There is another element that needs thinking through. While I appreciate that the Government seek to reduce the number of agency and bank workers in the NHS, let us not get away from the fact that, unfortunately, many NHS trusts are actually terrible employers. A lot of people leave or reduce their permanent contracts because they simply cannot get the flexibility that they need working in the NHS. That could be for caring reasons, for all sorts of people—it does not matter whether it is men or women; people provide care to their families and to their friends. I am concerned, and I intend to discuss further with NHS Professionals how this will impact on the NHS fulfilling its expectations for people right across the country. I appreciate that it is not simply NHS Professionals; many individual trusts have their own bank. That is intended to provide flexibility based on need, and recognises that simply not everybody can work the NHS shifts expected.

Thinking of the 26 weeks or the 12 weeks, I am also concerned that, at the other end of the Corridor, 650 Members of Parliament are all individual employers. They have to sign contracts, which are provided, but when people are ill or go on maternity leave, MPs can and do take people on through certain term contracts. I am concerned that there will be unintended consequences for the provision of services. As a real example, if you had to guarantee hours beyond when the employee came back, you could end up in a situation that you simply could not manage.

It is for those reasons that we need to think very carefully about the reference period when we are considering the different employment situations that small employers find themselves in, as well as the large sectors, such as hospitality and retail, which have already been discussed.

[Lord Sharpe of Epsom (Con)]

My Lords, Amendments 3, 6 and 17 stand in my name and that of my noble friend Lord Hunt. Before turning to the detail, I would like to frame the debate in its proper context.

At the heart of this issue lies the question of incentives. Much of the discussion around zero-hours contracts rightly concerns the security and well-being of workers. We must not lose sight of the fact that only a relatively small proportion of the workforce is employed on such contracts, or in other forms of temporary work. Many of these individuals are young people—as my noble friend Lady Lawlor illustrated in her very detailed speech—who are starting out in their careers. Others are disabled people, who may be able to work only a limited number of hours due to their personal circumstances. If we make the regulatory environment too rigid, we inadvertently create a disincentive to hire precisely these groups. We reduce the number of vacancies, reduce opportunities and end up harming those we most wish to support. Good intentions do not alone lead to good results. It is the incentives that lead to results.

I thank my noble friend Lord Moynihan and the noble Lords, Lord Fox and Lord Goddard, for their contributions in this group, and I will come on to others. My noble friend Lord Moynihan made a compelling argument to leave out this part of the clause altogether, because it is simply unworkable in its current form. I look forward to hearing what the Minister has to say in response.

I turn to the specifics of my amendments. Job security is vital, and there can be no disagreement on that point, but we have to recognise that guaranteed-hours contracts are not always practical or appropriate across all sectors of the economy. The principle that we wish to uphold is simple: autonomy. Workers themselves are best placed to judge their own circumstances and to decide whether a guaranteed-hours contract would suit their needs.

Research from the Chartered Institute of Personnel and Development, published in its report on zero-hours contracts, found that workers on such contracts often report a better work-life balance and higher well-being compared with other workers. This is an important reminder that flexibility, when genuinely chosen, can be empowering rather than exploitative.

Not every worker wants a rigid schedule. Young people, parents with caring responsibilities and disabled people may actively prefer the flexibility that variable hours allow. A one-size-fits-all approach simply does not reflect the realities of the modern labour market. Sectors such as retail, hospitality and tourism, and other seasonal industries, are heavily dependent on flexible staffing to meet seasonal demand. It is these very sectors that offer the vital entry-level opportunities to workers who might otherwise struggle to find employment.

Despite the Government’s understandable ambition to improve labour market fairness, the Bill as currently drafted risks reducing that flexibility rather than enhancing it. The automatic obligation placed upon businesses to offer guaranteed-hours contracts once certain thresholds are met would impose significant and disproportionate administrative burdens, even when the worker involved may have no desire to change their current arrangements.

The problem is particularly acute for larger employers, such as national retailers, as we have heard from my noble friend Lord Wolfson, who delivered an expert speech. They would be forced into a continual cycle of recalculations and offers, simply because an employee’s working patterns have shifted slightly. As my noble friend Lady Verma explained, that affects small businesses as well. In practice, firms would face a daily or weekly obligation to offer a new contract based on changing patterns, resulting in huge and unnecessary administrative costs. This would not only create inefficiency but would discourage businesses offering overtime and additional work voluntarily, thereby reducing opportunities for those who value flexibility.

The amendments I propose take a different approach. Instead of an automatic right to be offered a guaranteed-hours contracts, we propose a right to request a guaranteed-hours contract. It entirely respects the spirit of the Government’s intentions. As the noble Lord, Lord Fox, has already explained, it would impose the same the obligations on employers as the Government’s Bill. This would preserve the choice for workers, empowering them to seek greater stability when they wish, but it would avoid imposing blanket obligations on employers that may lead to perverse outcomes. The Government’s current drafting, with an automatic right to guaranteed hours, risks creating a bureaucracy that neither workers nor businesses have asked for.

On the subject of businesses, it is worth referring to the letter received from five employers’ organisations. For reference, those are Make UK, the CBI, the IoD, the Federation of Small Business and the British Chambers of Commerce. They say in that letter:

“Not every job can be made compatible with every possible need. This reform means businesses incur admin costs whenever an employee works variable hours. The result is that firms are discouraged from offering variable hours even when the flexibility is requested by workers, including voluntary overtime. The cost associated with administering and calculating contract offers on a rolling basis whenever staff work additional hours is also disproportionate and provides no clear benefit to workers”.


I could not have put it better myself.

There has been some reference on the other side, by the noble Baroness, Lady Carberry, to the Low Pay Commission, which met seven years ago. That ignores the fact that, over the last seven years, working practices more generally through the economy—whether on flexible-hours contracts or not—have changed very dramatically, partly as a consequence of the pandemic. I note that the FSB has now signed the letter which includes the quote I have just delivered, so it has clearly changed its mind.

I recognise that there may be an even simpler and more effective alternative to the right to request, which would be an automatic offer of a guaranteed-hours contract combined with the right for the worker to opt out if they so wish, so Amendment 17 introduces a worker opt-out mechanism. A qualifying worker may opt out of receiving a guaranteed-hours contract provided that the employer has provided clear written information about the guaranteed-hours system, the worker has given written notice in a prescribed form, and the employer reminds the worker at regular intervals, at least every six months, that they can opt back in at any time. Under that model, every eligible worker would be enrolled on to a guaranteed-hours contract after the reference period by default.

However, those workers who genuinely value the flexibility of their zero-hours arrangement—and there are many, particularly, as we have already discussed, young people, carers and so on—would have the right to decline the offer by providing written notice. This approach would strike a better balance, because it would ensure that guaranteed hours are the norm unless the worker themselves chooses otherwise, thereby protecting workers who might otherwise feel pressured not to request more security. Equally, it would avoid the unnecessary administrative burden on employers of offering contracts that in many cases would be rejected. We would be sparing businesses the cost and disruption of a process that delivers little practical benefit where flexibility is mutually valued by both employer and employee. It would ensure that the choice remains a real and continuing one, recognising that workers’ needs and circumstances evolve.