Employment Rights Bill

Baroness Chakrabarti Excerpts

Committee stage
Monday 19th May 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, I rise to support the amendment ably and comprehensively moved by my noble friend Lord Hunt of Wirral, which would, as he explained, insert a new clause. It is an eminently sensible amendment. The noble Lord, Lord Fox, described the arguments put by this side in the previous debate as straw man arguments. He was like Don Quixote tilting at windmills, because his claim that they were straw man arguments was comprehensively eviscerated by my noble friend Lord Young of Acton. They were substantive arguments and substantive concerns, notwithstanding the noble Lord’s comments and those of noble Lords on the Government’s side.

Clause 20 could be described as a hologram or a chimaera because it does not provide very much in the way of detail about the practical ramifications and impacts of this clause on businesses, particularly smaller businesses. The amendment is very sensible. In section 10 of the cost-benefit analysis in the Employment Rights Bill: Economic Analysis that the Government published last October, one is hard pressed to see any detailed empirical evidence from reputable economists or other academics which would sustain the likely costings that the Government have prayed in aid in favour of this part of the Bill. We are told that the universal cost of the Bill to business will be a very speculative £5 billion, but the source of that figure is not very clear; in fact, it is quite opaque. I do not believe that figure. For a number of reasons, the data is suspect, which is why we need the proper impact assessment so persuasively argued for by my noble friend on the Front Bench. We have not had a proper analysis of the detail in a risk assessment of section 10 of the cost-benefit analysis.

We also have not had a proper consultation process on the Bill. We have not had the opportunity to look at the likely impacts that flow from this clause. I say at the outset that, like my noble friend Lord Young of Acton, I am a proud member of the Free Speech Union, which has made a similar case about consultation.

We also do not know anything about the opportunity cost. Not everyone is an economist, but opportunity cost is what may have happened if this Bill had not come along. I suspect that employers, including smaller employers, would have taken on more staff, had there not been the encumbrances in this clause. In other words, they will be risk averse: they will not wish to run the risk of taking people on, given the litigation and vexatious claims which may well arise from this clause.

The figure the Government have put forward for the number of employment tribunals does not stand up to scrutiny, given the pressure that this will put on the tribunals themselves, as well as the other courts that will be responsible for adjudicating on this litigation. Indeed, as my noble friend said, this will exacerbate the already very significant problem of backlogs in the employment tribunals.

I turn to the kernel of this amendment. If I take the Minister and, indeed, the noble Baroness, Lady Carberry, who supported her from the government Benches, at their word, I do not know why they would not wish to support the free speech caveat in this amendment. Although they have not properly identified what harassment is—they have not defined it—they are going after people who are committing acts of harassment. They are not seeking to stifle or curtail free speech.

[Baroness Chakrabarti (Lab)]

I am grateful to the noble Lord for giving way. I would suggest that the so-called “free speech caveat” is Section 6 of the Human Rights Act, which requires all public authorities, including courts and tribunals, to interpret all other legislation in a way that is compatible with convention rights, including—for the purposes of the present debate, as I understand the noble Lord’s concerns—Article 10 of the convention on human rights.

[Lord Jackson of Peterborough (Con)]

I defer to the noble Baroness’s expertise on human rights legislation, but we are considering this specific, bespoke legislation. There will not necessarily be a read-across between that and—

[Baroness Chakrabarti (Lab)]

There will.

[Lord Jackson of Peterborough (Con)]

Well, the noble Baroness will not be present at every employment tribunal and hear and adjudicate every case. As my noble friend Lord Young of Acton has said, there is a significant threat of inadvertent issues arising from this legislation, which, as my noble friend Lady Cash has said, is very poorly drafted. As subsection 2(a) of the proposed new clause sets out, it is important to look through the prism of free speech at Clauses 19 to 22.

It is also important to look at the likely costs to employers. This is the central point of my remarks: we do not know what those costs will be. It is certainly appropriate that Ministers be required to tell Parliament what the ramifications are in terms of cost. This is a Government who are committed to growth and to supporting businesses in all their endeavours. Therefore, it would be sensible to consider a review of how these issues impact on businesses.

On proposals for mitigations, there have been no ideas, no protocols, no concordats, and no policies put in place to give any guidance to smaller businesses—I am not necessarily referring to the smallest micro-businesses—to cope with the problems deliberately arising because this Labour Government have chosen to put these encumbrances and burdens on businesses. They are not giving any support to businesses to help cope with this. The costs will fall on the shareholders, on the businesses, and ultimately on the workforce—and it will cost jobs. For that reason, I support the amendment. It does not detract from the important commitment to protect ordinary working people, who deserve to be able to go to work without being bullied, harassed or treated unfairly or egregiously. We all agree with that, on which there is a consensus. It would not detract from that to make an amendment that would provide extra protections against people who are vexatious or malicious, or who cause difficulties in the long run, for no apparent reason. It is a sensible amendment that would protect business and would also protect the workforce.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, I, too, have my name on Amendment 97, which would introduce yet another impact assessment. I know that so many impact assessments have been proposed in relation to the Bill that it has become a bit of a cliché, but I am especially concerned that this one is taken seriously because the third-party harassment sections of the Bill are ill thought out in a way that could lead to unintended consequences.

One noble Lord a few moments ago asked why there was a desire for an impact assessment rather than thinking of the potential positives of the Bill. The response of the Government in relation to concerns about Clause 20, for example, which is to say that there is nothing to see here—no problem at all—is an insufficient way of responding to some quite detailed scrutiny that has been put forward. If there is any exaggeration of the potential problems, an impact assessment should be able to resolve that for us.

I will focus largely on Clause 20, looking first at its potential cost to employers. That is especially important given that the Minister’s counter to my remarks earlier was that Clause 20 will be good for business. The Government’s own assessment advises that the total economic impact of complying with Clause 20 will be under £10 million and will have negligible economic impact on businesses. That is irresponsible; some might go so far as to call it misinformation. For example, that assessment says that the cost of familiarisation with the Bill and its ramifications will be £30 per medium business and only £19 per small microbusiness. I am not sure where these woeful underestimates come from or what they are based on, but if noble Lords have never met an employment lawyer, I can assure them that that is an unlikely figure.

We need a serious cost-benefit analysis. Let us consider what this section of the Bill requires businesses to do. Employers must show that they have taken all reasonable steps; that sets a high threshold for preventive action, as we heard earlier. Let us think what that means. There are direct costs for the initial implementation of anti-harassment policies, including familiarisation with the new regulations and checking exactly what their legal liabilities will mean. As we have seen during this debate, it is not necessarily as clear as day what the Bill requires.

As we have been arguing, if you are a small microbusiness trying to concentrate on being a business and trying to grow bigger, having to study the Bill and work out what your liability will be could be quite time consuming, nerve-wracking and so on. They will have to seek out third-party and legal advice—no doubt, there will be lots of consultants queuing up—because, as responsible businesses, they will want to safeguard themselves from the financial risks of not complying. One of the main risks they will be trying to ensure they do not have to deal with is the possibility of employment tribunals.

In what seems like an entirely arbitrary figure, the Government predict that only 30 employment tribunals a year will come from these clauses. There is no explanation as to how the Government reached that figure, and it is certainly completely at odds with industry experts who expect that Clause 20 alone will see an increase in employment tribunals of 15%—in other words, an additional 14,750 cases a year. As we heard earlier in a different context, already in 2023-24, employment tribunal courts received 97,000 cases, up from 86,000 the year before. That is an increase of nearly 13%. More and more people are forced into employment tribunals for a variety of reasons.

This Bill threatens to create even more cases—an unknown figure because it is a new provision. The Government are saying that it will be only 30 a year, but that is just making it up. There is, at least, an attempt in this amendment to try to work it out. According to the chambers of commerce, the cost of one employment tribunal is, on average, about £8,500, and if a claimant is successful, there is no financial limit to the compensation in a harassment case. Imagine you are a business worried about what is going to happen: this clause will lead to risk-averse and overcautious behaviour, not detailed in the Bill, to try to avoid being held liable. Some of us fear that this is what this kind of over-regulatory, precautionary approach will lead to.

Businesses will not be able to be slipshod about their potential liability. Smaller SMEs and microbusinesses —often with no dedicated HR or EDI offices—will need to think about employing new staff dedicated to protecting them from claims and giving them advice. The idea of a whole new generation of HR and EDI staff roles in every business in the country is frightening enough, but, anyway, it has nothing to do with their core businesses. Let us also note that the average salary of an EDI officer in the UK is £42,084.

I want also to stress why an impact assessment must include which occupations might be at particular risk of third-party harassment claims through no fault of the employer and the impact, specifically, on free speech. These parts of the amendment are very important because we were asked earlier in a different group why there had been a focus on hospitality, sport and universities. There may be other sectors but, in a way, this is an assessment to see which sectors would be affected. It also asks for an impact assessment on free speech. As we have heard, the Government simply deny that there will be any impact in relation to free speech. I disagree, but let us scrutinise it.

The noble Baroness, Lady Chakrabarti, made the point that we should not worry about free speech because it is protected by the convention on human rights. She cited a number of clauses. It is true that, on paper, none of us should be worried about free speech; our free speech in this country is fully protected. And yet, daily—I stress, daily—there are more and more instances, as the noble Baroness, Lady Deech, who is not in her place, indicated earlier, in which free speech is under stress in this country. More and more people are walking on eggshells and are, in many instances, getting sacked or disciplined for speaking their minds in workplaces, so I am not convinced by “Nothing to see here, don’t worry about it, all is well”.

Earlier, the noble Baroness—

[Baroness Chakrabarti (Lab)]

I am grateful to the noble Baroness; I will be brief. I want just to respond to her point, because she referred to what I said earlier. I am not trying to suggest that there are not challenges and there is not, on occasion, over-policing of people’s freedom of expression. Believe it or not, I probably read the same newspapers as the noble Baroness. I was trying, perhaps inadequately, to make the point to the noble Lord earlier that we have overarching legislation in the Human Rights Act which guarantees free speech and does so in a way that is legally and constitutionally stronger than any amendment noble Lords could pass to the current Employment Rights Bill. If that is not working, then we need to enforce it better. I am just suggesting that, as a matter of law, we have the protection for free speech; we just need to enforce it.

--- Later in debate ---

[Lord Hacking (Lab)]

Hear, hear! It was a very good speech.

[Baroness Chakrabarti (Lab)]

There we go. We have had the adjudication. It was a very good speech. I am very grateful to my noble friend Lady Jones of Whitchurch. She demonstrated the patience of a saint in earlier, more contentious groups, if I can put it like that. If there needs to be further evidence of her patience, I was very grateful for the significant time that she and her Bill team and other experts gave me to discuss this issue and a later issue in the Bill.

Numerical accidents aside, I have to commend the noble Baroness, Lady Kramer, on her impeccable opening to the debate. I think we can all agree that it was a fabulous tour de force around the issues.

In contrast to the Bill as a whole or previous groups, there is some serious room for non-partisan and cross-partisan consensus in this area. I really do believe that, for reasons that ought to be self-evident from what we have heard from Members of the Committee already.

We have heard from noble Lords—actually, it may be a total accident but I think it has been noble Baronesses so far—and we know that there is a place for a certain type of non-disclosure agreement to protect commercial confidences and client lists, et cetera. We are trying to be more balanced and more forensic than that in this group, and we know why. We want to protect those things, to have a decent employment relationship and to have commerce and so on, but not to have the abuses. I suggest that the abuses have to go broader than harassment; that is why Amendment 281 in my name is drafted in terms of illegal activity more broadly. I will say more on that in a moment.

I support the thrust, the intention and the aspiration of all the amendments in the group. At this stage I consider them all probing amendments. Realistically, I suspect that what the Committee, or everyone who has spoken so far, wants is a government amendment, informed by these discussions, that we can all get behind. That is the way to do it, obviously.

I will speak in favour of Amendment 281, or of the drafting approach that I have taken, having listened to other Members of the Committee and tried to take on board their Second Reading speeches and their considerable work, over many years in some cases. I commend Amendment 281 because it aspires to some simplicity, some versatility, some breadth and the avoidance of unintended consequences.

For example, it is broader than harassment. The approach I have taken is based on my understanding of what the common-law position was anyway. Like everyone else in the Committee and beyond, I watched the scandals around Harvey Weinstein and #MeToo, et cetera. When they began to erupt—and, goodness me, do they not keep on coming?—my analysis, my view, was that these contractual agreements were all voidable in the public interest in any event. As a matter of common-law principle, they should all have been voidable in a court and therefore unenforceable in any event. The problem with relying on just my understanding of the common law is that it does not send a signal to the wicked employers—not all of them, but the ones who are wicked—nor give confidence to victims, whistleblowers and so on.

This is one of the areas where there is some value in putting some common-law principle clearly, succinctly and non-exhaustively on the face of a statute, to give confidence and clarity so that people know that abusive non-disclosure agreements—not the ones that we think are valuable, but abusive ones—which are being used to silence and cover up revelations of illegal activity, broadly, will not be enforceable in court, whether or not you have shelled out some money in the first place. That was what I attempted to do in the drafting approach that I chose with Amendment 281.

Members of the Committee who have come armed with the actual Marshalled List, which I know is a novel thing to do, will find Amendment 281 on page 114. The approach I have taken is to say that non-disclosure agreements are voidable. They are not automatically so, but they are voidable—that is, in those circumstances, unenforceable—if they prevent disclosure of conduct that may be contrary to law.

When a court is considering whether to void such an agreement—to make it unenforceable—there are certain factors that ought to be taken into account. The severity of the allegation of proven or admitted conduct, including the veracity of those allegations, would come up in an attempt by the former employer or current employer to enforce this agreement. The second factor is whether all parties to the contract were in receipt of independent legal advice. This means that an employer trying to construct one of these agreements and to get an employee to agree to it will have to realise that if that independent legal advice is not evidenced and not provided, later, the whole thing will be an expensive waste of time, because it is likely to be voided in the public interest by a court or tribunal. Therefore, they had better do what employers often do in standard consent agreements, which is pay for independent advice and have that witnessed.