Employment Rights Bill

Baroness Jones of Whitchurch Excerpts

Report stage
Monday 14th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I support all the amendments in this first group, but I shall speak briefly to Amendment 9 in the name of the noble Baroness, Lady Noakes, which, as she explained, is an amendment to the Government’s Amendment 8, and Amendment 22. I want to interrogate the wording of the Government’s Amendment 8. We have a 309-page Bill. There is a lot of concern outside, at the coal face, from businesses about definitions and what the Bill means. This is a good example:

“In exercising the power under subsection (6) the Secretary of State must, in particular, have regard to … the desirability of preventing this Chapter from having a significant adverse effect on employers who are dealing with exceptional circumstances”.


Can the Minister explain how these exceptional circumstances are defined, and how significant does the adverse effect need to be for it to be regarded by the Secretary of State?

I ask that mindful of the latest survey from the Federation of Small Businesses, just a couple of days ago, which surely signals significant adverse effects for the majority of small and micro-businesses. For the first time in its history, the FSB reports that more UK small firms expect to shrink, sell up or shut down over the next 12 months than anticipate growth. The FSB’s Q2 small business index shows that 27% of small businesses expect to contract, close or be sold, outstripping the 25% which are planning for growth, and it marks the first time that the balance has tipped towards pessimism since the index began. As the noble Baroness, Lady Noakes, points out in her amendment, there is no need to layer “exceptional circumstances” on to already significant adverse effects on employers. It would be far neater, of course, to exempt small and micro-businesses from Clause 1, as I and many others argued throughout Committee.

[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, I first thank your Lordships’ House for the extensive engagement, debate and scrutiny that this Bill received throughout Committee. Indeed, we have held over 50 engagements with noble Lords from across your Lordships’ House since the Bill left the other place. As we progress Report, I need to remind noble Lords that the Government were elected on a manifesto commitment to make work pay. This Bill marks the first phase in delivering that commitment. Once implemented, it will raise the minimum floor of employment rights, provide a level playing field for businesses which are already engaged in good practice and raise living standards across the country. Alongside the new industrial strategy, the Bill will support our mission to increase productivity and create the right conditions for long-term, sustainable, inclusive and secure economic growth.

Turning to the amendments, I have listened carefully to the comments of the noble Lord, Lord Goddard, on Amendment 1. I remind noble Lords that as of March 2025, there are around 1 million people on zero-hours contracts in the UK. About 33% of them have been with their current employer for less than 12 months and 51% for less than two years. These are the most vulnerable individuals in the workforce. The Government are therefore committed to ending exploitative zero-hours contracts, which the noble Lord, Lord Goddard, quite rightly describes as “precarious employment”.

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[Lord Wolfson of Aspley Guise (Con)]

Would the Minister accept that setting a cap on the number of hours still gives the Secretary of State flexibility to determine exactly what the number of hours is, while giving industry the security, comfort and certainty it needs to carry on investing in its shops, pubs, restaurants and care homes?

[Baroness Jones of Whitchurch (Lab)]

My Lords, we intend to consult on this, and of course we will take the comments and concerns of business into account; it is our absolute intention to do that. What we do not want to do is pre-empt that by setting out the conclusions of the consultation in advance. I hear what the noble Lord says, but I do not think that fits with our model of wishing to take this and consult further on it. But of course we will take business views into account.

I turn to the amendments tabled in my name. We listened to concerns raised by parliamentarians and business stakeholders, and responded promptly by amending the Bill. The Bill allows regulations to specify circumstances in which the duty to offer guaranteed hours does not apply or for a guaranteed offer once made to be treated as withdrawn. We expect that this power will be used narrowly in response to changing circumstances to address situations where the measure would have significant adverse impacts. The Delegated Powers and Regulatory Reform Committee recommended restating this power with greater precision.

In response, we have tabled amendments to constrain the use of this power. Our amendments require that, in exercising this power, the Secretary of State must have regard to both the benefit to workers of receiving a guaranteed-hours offer and the desirability of preventing the provisions having a significant adverse effect on employers who are dealing with exceptional circumstances. Where this power is exercised and the duty to offer guaranteed hours does not apply, a further amendment clarifies that the exception will operate in relation to a single reference period, rather than being open-ended.

Circumstances specified in regulations would need to be specific, factual and narrow enough so that it is crystal clear that the duty then does not apply or no longer applies. There will be no room for discretion from the employer or the worker. The Government will consult on any use of this power. This way of constraining the exercise of the power still allows flexibility to determine the specific circumstances once all interested parties have had a chance to input.

Corresponding amendments are made to the provisions for agency workers. In addition, under the Bill’s current provision, an agency worker who accepts a guaranteed-hours offer from an end hirer becomes directly engaged by the hirer. The worker could then be entitled to another initial reference period as a directly engaged worker. Amendments 6 and 23 clarify that agency workers who accept a guaranteed-hours offer will not benefit from a new initial reference period. This aligns their rights with directly engaged workers and eases employer burdens.

Regarding Amendments 12 to 19, the Bill usually requires a guaranteed-hours offer to be made to a qualifying agency worker on no less favourable terms and conditions taken as a whole than those under which the agency worker was engaged during a relevant reference period. We have heard concerns about instances where agency workers are paid a significant premium in recognition of, for example, the temporary and insecure nature of their work. As the Bill stands, such pay premiums could be carried over into a guaranteed-hours offer, putting those agency workers at an unintentional advantage compared with directly engaged workers in similar roles. This could also cause employers to move away from hiring agency workers in the first place. These amendments will allow less favourable terms and conditions relating to pay to be proposed in guaranteed-hours offers to agency workers, to ensure alignment with comparable directly engaged workers, maintaining flexibility for businesses and supporting consistency in treatment of the workers.

I turn to Amendments 9 and 22, in the name of the noble Baroness, Lady Noakes, which seek to amend the amendments in my name that I have just justified. I listened carefully to the noble Baroness’s points, but accepting her amendments and removing the reference to employers dealing with exceptional circumstances would not address the DPRRC’s criticisms regarding the breadth of the power. It would also not be clear what the Secretary of State would need to consider when setting out the specified circumstances. I reassure the noble Baroness that, once the Secretary of State has considered these matters, he can still decide to make regulations to set out the circumstances in which the duty to make guaranteed-hours offers does not apply, which may not relate to exceptional circumstances.

I therefore ask the noble Lord, Lord Goddard of Stockport, to withdraw his amendment. We very much share his objective to address the imbalance of power, and I hope he has heard our case about why we believe that what is currently in the Bill is the best way to do that. I also commend to the House Amendments 6 to 8, 12 to 21 and 23 in my name.

[Lord Goddard of Stockport (LD)]

I thank noble Lords who took part in this debate. The number of amendments in this group shows the depth of feeling on zero-hours contracts. I think it was the same story from the noble Baroness, Lady Carberry of Muswell Hill—for whom I have the highest regard—and the Minister. It was not a defence; it seemed to me that they were saying that giving employees this extra power would somehow not help them in asking for those contracts, as the employer might not like it.

That is the point of it. The Bill is supposed to address what employers and employees like. This is not an either/or; it is an “extra for”—an extra protection for workers. As the Minister herself said, 1 million people are on zero-hours contracts, many of which are exploitative. That should not remain after all this debate has taken place. All we are asking for is clarity and detail and all we are getting is consultation and manna tomorrow. That is not acceptable. There are 1 million people looking at this today, wondering what we are going to do. In my mind, what we should do, which I wish to do, is test the will of the House.

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Moved by

[Baroness Jones of Whitchurch]

6: Clause 1, page 3, line 24, at end insert—
“(6A) See paragraph 5(3A) of Schedule A1 for provision about when the initial reference period is not a reference period in relation to a worker who is a former agency worker and that worker’s employer.”Member's explanatory statement
This amendment is consequential on my amendment to Schedule 1 at page 160, line 33.

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Moved by

[Baroness Jones of Whitchurch]

8: Clause 1, page 9, line 36, at end insert—
“(6A) In exercising the power under subsection (6) the Secretary of State must, in particular, have regard to—(a) the benefit to workers of receiving a guaranteed hours offer under this Chapter, and(b) the desirability of preventing this Chapter from having a significant adverse effect on employers who are dealing with exceptional circumstances.” Member's explanatory statement
This amendment sets out a non-exhaustive list of matters that the Secretary of State must have regard to in exercising the power in new section 27BD(6) of the Employment Rights Act 1996.

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Moved by

[Baroness Jones of Whitchurch]

12: Schedule 1, page 156, leave out lines 27 to 35 and insert—
“(b) must propose terms and conditions of employment relating to pay that comply with paragraph 2A, and(c) must propose terms and conditions of employment relating to additional matters—(i) that, taken as a whole, are no less favourable than the terms and conditions relating to additional matters that the qualifying agency worker had when working for and under the supervision and direction of the hirer during the relevant reference period,”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 that inserts a new paragraph 2A into new Schedule A1 to the Employment Rights Act 1996.

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Moved by

[Baroness Jones of Whitchurch]

21: Schedule 1, page 159, line 15, at end insert—
“(6A) In exercising the power under sub-paragraph (6) the Secretary of State must, in particular, have regard to—(a) the benefit to agency workers of receiving a guaranteed hours offer under this Part of this Schedule, and(b) the desirability of preventing this Part of this Schedule from having a significant adverse effect on hirers who are dealing with exceptional circumstances.”Member’s explanatory statement
This amendment sets out a non-exhaustive list of matters that the Secretary of State must have regard to in exercising the power in paragraph 4(6) of new Schedule A1 to the Employment Rights Act 1996. It is equivalent to my amendment to clause 1, page 9, line 36.

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Moved by

[Baroness Jones of Whitchurch]

23: Schedule 1, page 160, line 33, at end insert—
“(3A) Where, by virtue of sub-paragraphs (2) and (3), a qualifying agency worker and a hirer are treated as entering into a worker’s contract on a day, and accordingly from that day the qualifying agency worker becomes a worker and the hirer becomes that worker’s employer, Chapter 2 of Part 2A applies in relation to that worker and that employer as if in section 27BA (employer’s duty to make a guaranteed hours offer) subsections (4)(a) and (5) (which provide for the initial reference period to be a reference period and define the initial reference period) were omitted.”Member’s explanatory statement
This amendment produces the effect that where a qualifying agency worker accepts a guaranteed hours offer from a hirer under Part 1 of new Schedule A1 to the Employment Rights Act 1996, so that (respectively) they become a worker and an employer for the purposes of new Chapter 2 of Part 2A of that Act, there will not be a new initial reference period in relation to the former agency worker.

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[Baroness Lawlor (Con)]

My Lords, I support Amendment 25 in particular, although I also support Amendment 24. This is about the freedom to be represented by people who represent you and your stance. Only 22% of employees in this country belong to a trade union, so surely it is right, as my noble friends Lord Sharpe of Epsom and Lord Hunt propose, that a relevant collective agreement for the purposes of Clause 5 will be invalid unless it is open to being struck with a body which is independent of a trade union and which is not just a trade union. Given that many workplaces, particularly small businesses, do not have trade union representatives and some 80% of employees do not belong to a trade union, there really is not a case, in terms of freedom, for restricting who should conduct the collective bargaining. It is important to send a signal that we believe in a free workforce and respect the freedom of working people to join, or not to join, a trade union.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I have listened to the noble Lord, Lord Sharpe, and his explanation for Amendments 24 and 25, and note that these are similar to the amendments he tabled in Committee, but with some of the safeguards and requirements removed. While I respect the noble Lord’s views in this area, I feel this is going in the wrong direction. Staff associations and employee representative bodies can of course be a very positive way for staff and employers to engage. However, we are not convinced they are the suitable vehicle for deciding whether to modify or opt out of statutory employment rights. While many maintain a good balance between positive engagement and constructive challenge, we are not persuaded that they will, in all cases, argue as robustly as a trade union on behalf of workers. In addition, without a trade union representing them, workers will not have as many protections if their employer does not deliver promised benefits.

This is nothing to do with a closed shop or industrial bullying. Under our proposals, employees will continue to have the right to be, or not to be, a member of a trade union. The issue here is the right to be represented by a body that is truly independent. We remain of the view that agreements of this type are best made by trade unions which have been through all the steps to become listed and certified as independent. I would encourage any staff association or employee representative body that wants to negotiate on behalf of its members to register as a trade union and go through the steps to obtain a certificate of independence from the certification officer.

The second part of the noble Lord’s amendment sets out that a relevant collective agreement shall not be treated as valid if it meets conditions such as imposing detriment or disadvantage on a worker who is not a member of a trade union and terms being incorporated into a worker’s contract solely by reason of union membership status. We believe that these provisions are unnecessary. The Trade Union and Labour Relations (Consolidation) Act 1992 already provides sufficient protection by ensuring that workers cannot be subject to detriment for the purpose of compelling them to join a trade union. Furthermore, the application of the terms of collective agreements to workers generally depends on incorporation of them into their contracts, either expressly or by implication, in line with well-established contract law, rather than on the basis of a trade union membership.

I turn to Amendments 26 and 27 in my name. Currently, when the terms of a collective agreement cease to be incorporated, the worker’s initial reference period and initial information period recommence the next day. However, in some cases, there could be quite a gap between these terms ceasing to be in force and the worker next being employed by the employer to work. We heard the strength of feeling around business burden in Committee and, where it is possible to make tweaks, we will do so. In this case, we believe it makes more sense for the reference period to start the next time the worker is employed by the employer. This avoids businesses having to consider making a guaranteed-hours offer before it is sensible and necessary to do so.

We are also tabling a minor and technical amendment to new Section 27BY(8) to reflect that the duty relating to the information right in the existing provisions will be on agencies to inform potential eligible agency workers about the right to guaranteed hours in any relevant information period.

Finally, Amendment 27 ensures that the zero-hours measures in the Bill apply as appropriate to special categories of workers. This follows a long-standing precedent that these categories of workers should be treated as distinct, as they do not have a typical employment relationship or undertake a unique type of work. In line with this precedent, the amendment ensures that House of Commons and House of Lords staff, Crown employees and mariners benefit from the crucial protections the Bill provides on zero hours. It also ensures that duties made under provisions in the Bill do not apply where this would not be appropriate; namely, in relation to service personnel in the Armed Forces and police officers. I therefore ask the noble Lord to withdraw Amendment 24 and commend Amendments 26 and 27.

[Lord Sharpe of Epsom (Con)]

I first thank my noble friends Lord Jackson of Peterborough and Lady Lawlor for their comments. Employee representation must be plural and not monopolised by trade unions. There are many workplaces across the country where independent staff associations or employee bodies are trusted, respected and effective. These organisations are not lesser simply because they are not unions. In fact, they are often more in tune with their colleagues’ needs, less politicised and more flexible in resolving workplace issues—yet disappointingly, the Minister says they are not “suitable”.

The idea that only a union can be trusted to negotiate terms is a fiction—we just have to look at Birmingham to see the results of that belief. This amendment simply recognises reality: that employee voices come in many forms and the law should not shut out legitimate and independent associations.

Secondly and just as crucially, we cannot allow this legislation to leave space for any form of closed shop, not in name or in practice. It is true of course that compulsory union membership is already unlawful, as the Minister pointed out, but this amendment would ensure that there were no back doors. We do not think the law should have any ambiguity on this. No agreement should ever impose a detriment on a worker simply because they choose not to join a union, and as my noble friend Lady Lawlor pointed out, the majority choose not to—in fact, in the private sector, I think that the proportion who choose not to join a union is 87.7%. No terms should be granted only by virtue of membership. That is not freedom; that is coercion.

We therefore say again that collective bargaining should not become collective exclusion. These amendments would uphold freedom of association in both directions: the right to join and the right not to, but for now, I beg leave to withdraw the amendment.

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Moved by

[Baroness Jones of Whitchurch]

26: Clause 5, page 33, line 40, leave out from beginning to end of line 5 on page 34 and insert—
“(b) in relation to a worker and the worker’s employer—(i) section 27BA(5)(a) has effect as if for sub-paragraphs (i) and (ii) there were substituted—“(i) where the worker is employed by the employer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(ii) where the worker is not so employed, the first day after the effective day on which the worker is employed by the employer, and”, and(ii) section 27BF(3) has effect as if for paragraphs (a) and (b) there were substituted—“(a) where the worker is employed by the employer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(b) where the worker is not so employed, the first day after the effective day on which the worker is employed by the employer.”,(c) in relation to an agency worker and a hirer for and under the supervision and direction of whom the agency worker works, paragraph 1(5)(a) of Schedule A1 has effect as if for sub-paragraphs (i) and (ii) there were substituted—“(i) where the agency worker is working for and under the supervision and direction of the hirer on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(ii) where the agency worker is not so working, the first day after the effective day on which the agency worker is working for and under the supervision and direction of the hirer, and”, and(d) in relation to an agency worker and the work-finding agency with which the agency worker has a worker’s contract or an arrangement by virtue of which the agency worker is (or is to be) supplied to work for and under the supervision and direction of a hirer, paragraph 6(3) of Schedule A1 has effect as if for paragraphs (a) and (b) there were substituted—“(a) where the worker’s contract or arrangement is in force on the day (“the effective day”) after the day on which terms cease to be incorporated as mentioned in section 27BY(7)(b), the effective day, or(b) where it is not in force on the effective day, the first day after the effective day on which it is in force.””Member's explanatory statement
This amendment ensures that the gloss in new section 27BY(8) of the Employment Rights Act 1996 operates effectively.

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Moved by

[Baroness Jones of Whitchurch]

27: Schedule 2, page 191, line 31, at end insert—
“18A In section 192 (armed forces), in subsection (2)(e), after “103” insert “, 104BA, 104BB”.18B (1) Section 194 (House of Lords staff) is amended as follows.(2) After subsection (2)(a) insert—“(aza) Part 2A, apart from Chapter 1 of that Part,”.(3) In subsection (2)(c), for “and 47E” substitute “, 47E and 47H”.18C (1) Section 195 (House of Commons staff) is amended as follows.(2) After subsection (2)(a) insert—“(aza) Part 2A, apart from Chapter 1 of that Part,”.(3) In subsection (2)(c), for “and 47E” substitute “, 47E and 47H”.18D (1) Section 199 (mariners) is amended as follows.(2) In subsection (8), for paragraph (b) substitute—“(b) Part 2,(bza) Part 2A, apart from Chapter 1 of that Part,(bzb) Parts 2B, 3 and 5,”.(3) After subsection (8) insert—“(9) In the application of subsection (7) to the provisions mentioned in subsection (8)(bza), the reference in subsection (7)(b) to a contract of employment is to be read as a reference to a worker’s contract.”18E In section 200 (police officers), in subsection (1)—(a) after “8 to 10,” insert “Chapters 2 to 4 of Part 2A,”;(b) after “47C,” insert “47H,”.”Member's explanatory statement
The paragraphs inserted into Schedule 2 by this amendment make amendments of Chapter 1 of Part 13 of the Employment Rights Act 1996 (particular types of employment) that are consequential on clauses 1 to 5.

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[Lord Goddard of Stockport (LD)]

My Lords, I will speak on the important topic of statutory sick pay, particularly in relation to amendments in this group. I thank the noble Baroness, Lady Coffey, for signing the amendment. I listened to her very closely in Committee; she may have got a flavour of what I am about to say, because she has an excellent overview of these matters, and I think the House does listen. I also thank the noble Baroness, Lady Noakes, for her forensic examination of the financial cost, which should never be underestimated—these things are emotional, but there are costs to anything that anybody does. It is important that we understand where the balance lies.

I will speak predominantly to my Amendment 30, which is a probing amendment. We recognise that there are challenges in creating a two-tier employment system with different obligations depending on business size. For that reason, we will not press for a Division on this amendment. However, this amendment highlights the importance of recognising the potential impact that this might have on small and medium-sized enterprises due to the costs that they incur from statutory sick pay. SMEs form the backbone of our economy. It is essential that government policy takes full account of the financial pressures that businesses face.

Expanding statutory sick pay is an important and welcome goal, but it must be done with careful consideration of how the additional costs affect the viability and growth prospects of SMEs. That is why meaningful consultation with these businesses throughout the implementation process is critical. The Government should actively engage with SMEs to ensure that their concerns are understood and addressed, so that any changes to statutory sick pay are substantial and do not inadvertently place undue burdens on the very common businesses and people who are trying to drive the economy.

I will ask the Minister to confirm that, as the Government continue their thorough consultation as part of the implementation of the Bill, they do so directly and in close alignment with small and medium-sized businesses, not during the passage of the Bill but throughout its full implementation. Can the Minister provide reassurance that SMEs’ voices will be heard, and their concerns addressed, as the policy is rolled out? Because it is only through partnership with the SME community that we can ensure the statutory sick pay system is both fair for workers and sustainable for business. I look forward to the Minister’s response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have contributed. I will start with Amendment 28, which looks at retaining the waiting period for one day. The Government believe that removing the waiting period is essential in ensuring that all eligible employees can take the time off work they need to recover when sick. That is why we committed to it in the manifesto. This is particularly true for employees with long-term or fluctuating conditions, who should feel able to take a day of sickness absence to manage their condition or prevent it worsening. The noble Lord, Lord Hunt, said that the one-day waiting period that he was proposing should not be a punishment, but that is exactly what it would be under the proposals before us.

It is also worth saying that 25% of all employees receive only statutory sick pay, and many are forced to choose between their health and the genuine financial hardship during the first three days of sickness absence when they are not paid. Removing the waiting period will make a tangible difference to ensuring that the safety net for sick pay is available to those who need it most.

I understand that the noble Lord is concerned about the wider impacts on businesses of these changes, but, without the removal of the waiting period, many employees will be forced to continue to come into the workplace when they are sick. The pandemic exposed how damaging this can be for businesses and individuals, with WPI economic modelling telling us that presenteeism can lead to up to 12% of the workforce becoming sick from the illness of a single employee. By reducing such presenteeism, businesses may benefit from the overall productivity increase, which can also contribute to a positive work culture that better helps recruit and retain staff.

Of course, as we have debated before, employers will need to manage sickness absence, as they do at the moment. I listened to the noble Baroness, Lady Fox, on the cultural issues, and, yes, some of the things she identifies are real issues. We are addressing them across government, and she will have heard many of my ministerial colleagues set out how they plan to do that. But that does not alter the fact that, in this Bill, what we are proposing makes good sense for the lowest paid.

I also remind noble Lords that the additional cost to business of the statutory sick pay reforms is about £450 million annually—a relatively modest £15 per employee. It was quite rightly pointed out that these figures were modelled by the DWP, but it does have a reasonable track record of doing such modelling, and I do not think that the figures should be dismissed.

Amendment 29 seeks to exempt employers from having to pay the rate of statutory sick pay outlined in Clause 11 if they already provide a contractual scheme that pays at least 80% of normal weekly earnings. The rate of statutory sick pay is set out in the Bill as the lower of 80% of an employee’s weekly earnings, or £118.75. This already means that no employer will have to pay more than 80% of an employee’s normal weekly earnings. Therefore, an employer already paying 80% of an employee’s weekly earnings would be compliant with the statutory minimum set out in the Bill. As such, I am unclear on the intended impact of this amendment on employees or employers, as it does not appear to change the statutory sick pay entitlement.

I turn to Amendment 30 in the name of the noble Lord, Lord Goddard, and I appreciate what he said about it being a probing amendment. As I have mentioned, the changes we are making to statutory sick pay will cost businesses around £15 per employee. This relatively modest amount compares with projected costs of up to £600 million a year to government of a rebate for the full amount of statutory sick pay for SMEs. I accept the arguments made by the noble Lord that this cost will of course depend on the size, scope and complexity of a rebate scheme. However, we have experience of administering such schemes. We previously delivered statutory sick pay rebate schemes such as the percentage threshold scheme. A review found that the employers underused it and found it was complex and time-consuming to administer. Any rebate system that maximises opportunity for business take-up, which I envisage would be the noble Lord’s intent in this amendment, would collectively be costly for the taxpayer as well, whereas the cost saving for individual employers would be small and a new administrative burden would be placed on them.

Previous statutory sick pay rebate schemes also did not incentivise employers to support their employees back to work or invest in their health and well-being. This, in turn, can affect overall productivity and staff retention. We know that employers have responsibility for paying sick pay, and that helps maintain a strong link between the workplace and the employee, with employers encouraged to support employees to return to work when they are able. I would also like to add that the Government have asked Sir Charlie Mayfield to lead the Keep Britain Working review, which will consider recommendations on how employers and the Government can work together to promote healthy and inclusive workplaces. A final report with recommendations is expected in the autumn.

I therefore do not believe that a rebate scheme is the best way to support our SMEs at this time, but, in response to the noble Lord, Lord Goddard, I say that of course we are continuing to have a dialogue with SMEs, and we take their concerns very seriously. I therefore ask the noble Lords, Lord Sharpe and Lord Goddard, not to press their amendments.

[Lord Hunt of Wirral (Con)]

My Lords, I would like to thank all noble Lords for their contributions to this important debate. I am particularly grateful to my noble friend Lady Noakes for reminding us all that one of the great difficulties we have in debating a subject such as this is the lack of a reliable evidence base, and that is particularly relevant to the debates on these amendments. The noble Baroness, Lady Fox of Buckley, quite rightly drew our attention to the unintended cultural issues, which worry us all so much and to which the Minister has just referred.

I remain wholly unconvinced by the Minister’s response when debating the removal of the waiting period for statutory sick pay. To remove any waiting period at all, and to introduce a day one entitlement without qualification, is not just a step too far but an unnecessary one. Having at least one waiting day does not undermine the Government’s stated intention to support those who are genuinely unwell. It is a modest safeguard that reflects the balance they claim to seek, and its removal creates perverse incentives at a time when we should be doing all we can to encourage people back into work.

On the issue of agency work and statutory sick pay, the Minister’s response is equally unconvincing. I did try to outline a scenario where individuals go off sick, claim SSP and then begin new assignments, while continuing to receive sick pay from another employer. I do not believe that the Minister adequately addressed that point. I suggest that perhaps we ought to put our heads together and try to find another solution. Having listened carefully to the debate, a system-wide mechanism, possibly administered by HMRC, to cross-check SSP claims across employers could serve as a much-needed safeguard. Perhaps she might reflect further on that on that idea, because I believe that such a mechanism would not target those with legitimate dual employment. We recognise that some workers genuinely hold more than one job in a given week, but it would introduce a basic layer of validation—a simple tool to distinguish between valid and dishonest claims. Without it, businesses, particularly small and agency employers, would remain exposed to fraudulent or inadvertent overclaims that could cost them thousands of pounds, all in the name of a policy that currently lacks real oversight.

I thank my noble friend Lady Coffey and the noble Lord, Lord Goddard of Stockport, for their important probing amendment. It has been a useful and interesting debate, but we still search for the solutions that will meet the problem. I urge the Government, in their phased consultation, to listen to businesses from across the board as they highlight their concerns. In the meantime, I beg leave to withdraw the amendment.

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Moved by

[Baroness Jones of Whitchurch]

33: Clause 18, page 41, line 24, leave out “conditions specified in the regulations” and insert “specified conditions”
Member’s explanatory statement
This amendment is consequential on my amendment of clause 18 at page 41, line 39.

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Moved by

[Baroness Jones of Whitchurch]

34: Clause 18, page 41, line 27, at end insert—
“(ca) after subsection (3) insert—“(3A) For the purposes of subsection (1) an employee is also a “bereaved person” if—(a) the employee has suffered a pregnancy loss of a specified kind, or(b) the employee satisfies specified conditions as to relationship with—(i) a person who has suffered a pregnancy loss of a specified kind, or(ii) a child who had been expected to be born had a pregnancy loss of a specified kind not occurred.”;”Member’s explanatory statement
This amendment and my other amendments of clause 18 would enable the entitlement to bereavement leave conferred by section 80EA of the Employment Rights Act 1996 to be extended to cases involving pregnancy loss.

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Moved by

[Baroness Jones of Whitchurch]

36: Clause 18, page 41, line 28, leave out “for “child” substitute “person”;” and insert “omit “in respect of a child”;”
Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

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Moved by

[Baroness Jones of Whitchurch]

40: Clause 18, page 41, line 39, at end insert—
“(ga) in subsection (9)—(i) in the definition of “child”, after “stillbirths” insert “after twenty-four weeks of pregnancy”;(ii) after the definition of “child” insert— ““live birth” means the birth of a child born alive;“pregnancy loss” means—(a) the ending of a pregnancy after less than twenty-four weeks of pregnancy in any way other than by a live birth, or(b) the failure of an embryo to become implanted following a transfer carried out in the course of providing treatment services within the meaning of the Human Fertilisation and Embryology Act 1990;“specified” means specified in the regulations;”;”Member’s explanatory statement
See the explanatory statement for my amendment of clause 18 at page 41, line 27.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friends Lord Young of Acton and Lord Holmes of Richmond for their amendments in this group. I join the noble Lord, Lord Goddard, in his remarks about the amendment of the noble Lord, Lord Holmes, in particular, which addresses an important point about the employment opportunities for blind and sight-impaired people. Unfortunately, the measures in the Bill make it significantly more costly to hire all individuals, and this will hit those on the margins of the labour market the hardest.

My noble friend Lord Young has made some very compelling points in Committee and now on Report on Clause 20, and this is where the noble Lord, Lord Goddard, and I differ. If the Government do not accept my noble friend’s amendments, we must consider the logical—and potentially absurd—consequences of allowing unqualified liability for indirect harassment.

Imagine for a moment that the same principle was applied here in this House, as the noble Lord, Lord Lucas, just did, while making some very good points. Suppose for example a guest in the Public Gallery was to lean over and whisper something mildly controversial—perhaps a pointed remark about constitutional reform. A doorkeeper standing nearby happens to overhear it and finds it offensive. Under the logic of indirect third-party harassment liability, would the Lord Speaker be expected to issue a formal apology? Would Black Rod be required to eject the offender and impose mandatory sensitivity training on all future guests? What would the “banter consultant” mentioned by the noble Baroness, Lady Fox, say about that?

This illustrates the unworkability and overreach of the current drafting. No one would expect Members of this House to be held responsible for the spontaneous and overheard utterances of strangers in the Gallery, and nor should we expect publicans, shopkeepers or venue managers to be so, either.

As to Amendment 193 standing in my name, the Government have already decided to delay many of the measures in the Bill. Originally, we were told that these measures would come into effect by 2026, but the Government’s decision to postpone parts of the Bill is, I believe, an implicit admission that their consultation process was inadequate.

The Government have now begun to recognise the very real and unintended consequences that could follow from some of these provisions. Clause 20, which seeks to impose liability on employers for third-party harassment, is one such provision that warrants further scrutiny and, at the very least, a longer lead-in time. This clause, while we accept it is well-intentioned in its aim to protect employees, risks, as we have discussed, casting too wide a net. It opens the door to legal uncertainty and potentially frivolous claims based on subjective interpretations of overheard remarks or perceived offence. Therefore, the Government must reconsider how such a broad definition of harassment could be interpreted in real-world settings, particularly in the hospitality and retail sectors, where employees regularly interact with members of the public.

As my noble friend Lord Young of Acton pointed out, recent warnings from the British Beer and Pub Association, which has announced that Britain is now losing a pub every day, should be heeded. This is not simply a matter of economics; it is a cultural and social loss, as my noble friend pointed out. Pubs are part of the lifeblood of our national identity. They are centres of community, debate and tradition, yet now, in addition to facing tax increases, rising costs and staff shortages, pub landlords are being told they may be held legally responsible for comments made by their patrons, even if those comments are not directed at staff. To quote again from the noble Baroness, Lady Fox, this is not made-up nonsense; this is factual.

I urge the Government to take this opportunity to reflect, to consult more widely and to ensure that they do not impose a law which may undermine business, stifle free expression and expose employers to unfair liability.

[Baroness Jones of Whitchurch (Lab)]

My Lords, this Government have provided assurances to your Lordships’ House throughout these debates, time and again, that Clause 20 will not have the chilling effect on free speech that is being claimed today. Therefore, we will resist Amendments 43, 44 and 45, tabled by the noble Lord, Lord Young of Acton, in relation to third-party harassment.

I make it absolutely clear at the outset that this clause is about addressing harassment, not about banter. We have overarching legislation in the Human Rights Act 1998 which guarantees freedom of expression in a way that is legally and constitutionally stronger than any amendment the noble Lord could make to the current Employment Rights Bill. Therefore, we do not accept the argument that carve-outs are required or that new concepts should be introduced that would complicate the law unnecessarily.

Employers are already obliged under the Equality Act 2010 to protect employees from harassment in the workplace. That has obviously not led to “banter bouncers” in the workplace. Therefore, employers already have an understanding of how to apply these protections in practice. Our aim is not to burden employers or prevent free speech; it is to deliver on our commitment to create and maintain workplaces and working conditions free from harassment, including by third parties.

The question was raised as to whether cases would go to a tribunal for people being oversensitive. It is important to note that in an employment tribunal claim for harassment, if certain conduct has a humiliating or degrading effect on the recipient but that was not its intended purpose, the tribunal must consider whether it was reasonable for the conduct to have that effect. The reasonableness and the facts of the individual’s situation must always be considered. It is not a purely subjective test based on the view of the recipient. In addition, there is a seriousness threshold. Conduct that is trivial or causes minor offence will not be sufficiently serious to meet that definition of harassment.

The protection we have proposed is welcomed by a recent nationally representative survey of 5,000 people by the TUC, which found that eight out of 10 people—

[Noble Lords]

Oh!

[Baroness Jones of Whitchurch (Lab)]

I do not know what is funny about that, because I do not know that I have heard any polls from the opposite side. The TUC poll found that eight out of 10 people—79%—support the plan to protect workers from harassment.

I remind noble Lords that the Government will be publishing guidance so that employers are supported with these changes. We will make it clear that they are not required to take unreasonable steps and we will set out how they can continue to effectively prevent harassment and protect free speech. No business will be required to hire staff to monitor speech or diversity under this provision.

Many public-facing businesses, such as pubs, universities, sports venues and public transport, already have posters that signal a zero-tolerance approach to any form of harassment at their venue or site, including harassment of their staff. We would consider this a reasonable step.

The noble Lord, Lord Lucas, raised the issue of this building, and this very building has notices detailing the behavioural code, making it clear that everyone on the estate should treat one another with respect and that unacceptable behaviour will be dealt with seriously. This has not had a chilling effect on free speech in this place.

Harassment is taking place in many workplaces that is not banter and, in some cases, employers are simply not doing enough to protect or support their employees. In a poll of 16 to 35 year-olds in 2018, the TUC explored the experiences and the impact of third-party harassment. For example, a young woman complained of

“customers sexually harassing staff members and myself whilst drunk. It also occurs when they are sober. It happens every time I work. My managers think it’s funny”.

Another customer, a sales assistant aged 18 to 21, said that they were constantly being sworn up by customers for no reason and called racial slurs, and had witnessed people being hit. I do not know what the answer of the noble Lord, Lord Young, is to all of that, but we have an answer, which is to take steps against third-party harassment.

My noble friend Lord Leong shared a very personal story about when he worked in a pub in his student days and was harassed constantly, being called all manner of racist names. He complained to the manager, who dismissed it as banter, but it was not banter, and he still finds it very difficult to talk about it to this day. He left the pub after two weeks because he could not take it any more. We do not want people to have to do that in future. It is very important to us that future employees do not feel this way.

Diversity in businesses can be linked to benefits, including improved recruitment, employee engagement, more effective teams and improved understanding of customer wants and needs. We also know that companies with the most diverse leadership teams are more likely than ever to outperform less diverse peers on profitability. A customer service survey by Hospitality UK and CGA found that almost two-thirds of customers think that a venue’s equality, diversity and inclusion policy is important, and a third said that they would be more likely to visit a venue if it had policies to promote equality. We are, therefore, convinced that very few businesses, if they want to keep their customers, would support the amendments from the noble Lord, Lord Young.

I now turn to Amendment 193, tabled by the noble Lord, Lord Sharpe of Epsom. As set out in our road map for delivering Labour’s Plan to Make Work Pay, we intend to commence the Bill’s protections against third-party harassment in October 2026. It is important that we get implementation and the details right to ensure that employers and employees understand the new law, and that it can be as effective as possible in ending third-party harassment. The approach we have taken and the timeline set out allow the time required to deliver effective implementation.

I assure the noble Lord that there is no need to delay commencement of Clause 20 until October 2027 due to concerns relating to free speech or burdens on business. Over the coming months, we will be engaging with stakeholders to ensure that guidance is fit for purpose. This will build on the consultation held in 2019 on introducing protections against third-party workplace sexual harassment, as well as on responses to the recently closed call for evidence on equality law. This timeline therefore accounts for the need for stakeholders to prepare for changes, and we will ensure that they are supported in their preparations. I remind your Lordships that, if a woman is sexually harassed by a customer at work today, she cannot seek individual redress, and if an employee experiences racial or homophobic harassment from a third party at work today, they have no protections under the Equality Act 2010.

I hope that we can all agree that employees should feel safe at work and be free of harassment. Therefore, we should not delay introducing these important protections any longer, and I urge the noble Lord, Lord Young, to withdraw his amendment.

[Lord Young of Acton (Con)]

I would just like to clarify that, when I referred noble Lords to my entry in the register of interests, I was referring them specifically to my job as the general-secretary of the Free Speech Union, which has been campaigning on this issue. I thank noble Lords for all their excellent contributions to this debate, particularly the noble Baroness, Lady Fox of Buckley.

I will quickly respond to a couple of points made by the Minister. I do not think she can justifiably claim that Clause 20 will be for the first time protecting workers from being racially abused by customers or members of the public. If someone racially abuses another person, as I understand it, that would be a racially aggravated offence under Section 5 of the Public Order Act 1986. So it is not as if there are currently no legal protections for workers who are abused in that unacceptable way.

The Minister said that the Government intended to publish guidance. on what “all reasonable steps” employers would be expected to take to protect their employees from third-party harassment. But, as I understand it from my reading of the Bill, the Government are obliged to provide guidance when it comes to protecting workers from third-party sexual harassment. They will set out what all reasonable steps are with respect to that, but there is no comparable clause in which the Government commit to providing guidance on what all reasonable steps are when it comes to protecting employees from third-party non-sexual harassment.

The Minister said that it would introduce an element of confusion into Clause 20 to accept either Amendment 43 or 44, because the things these amendments are trying to rule out of scope are already out of scope. If that is the case, and if the Minister genuinely believes that indirect harassment is not within scope, that banter is not within scope and that this is an exaggeration, a faux outrage, and if she genuinely believes that good-faith conversations about moral, political, religious or social matters, provided that they are not obscene, are out of scope, why not accept Amendments 43 and 44?

Doing so would provide the hospitality sector, and publicans in particular, with some clarity about what reasonable steps they can be expected to take to comply with this new clause. As it stands, there is a great deal of confusion. They will feel that they must err on the side of caution to prevent the possibility of being taken to the employment tribunal by aggrieved workers.

Pubs are on their knees. I ask the House not to impose these additional burdens on publicans who are already struggling to survive and keep their businesses afloat. If the Government genuinely believe in growth, and if they genuinely believe that pubs are an important British institution and want to take steps to preserve them, at the very least they should give publicans the clarity that accepting Amendments 43 and 44 would provide.

I am afraid that I am not satisfied by the Minister’s answer and so would like to test the opinion of the House.