Employment Rights Bill

Baroness Neville-Rolfe Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I rise to speak to Amendments 105 to 107 and 109 to 112 in my name, and I am delighted to have the support of my noble friend Lady Noakes and the noble Lords, Lord Morse and Lord Vaux of Harrowden, who has already spoken so eloquently as the mover of the first amendment in the group.

I agree with the noble Lord that this is the most damaging part of the Bill, which is why I have joined proceedings today. I support all that he has said, including his Amendment 334. The approach in Amendment 334 may reflect the Government’s intention on timing, so I look to the Minister to support this clarificatory amendment. I also thank the noble Baroness, Lady Jones of Whitchurch, for a very useful online meeting and for a speedy response to my queries from her excellent office.

My main current concern is the promotion of economic growth. It is also the Government’s stated main objective, with the Prime Minister saying that:

“Growth is the defining mission of this Administration”.


Yet, the need to drive growth conflicts with their manifesto promises on employment rights. These will slow growth and increase bureaucracy and inefficiency across the economy, especially the proposal to specify reasons if employees are let go in the period immediately after appointment, which is the subject of this group.

The Government cannot have it both ways, and with growth prospects so poor next year, changes must be made to the Bill. There is evidence to support this. The noble Lord, Lord Vaux, has already quoted from the impact assessment. Careful reading of the DBT economic analysis of 21 October, written to support the Bill, admits in section 16, on unintended consequences, that:

“There is some evidence that employment reforms make employers less willing to hire workers, including evidence specific to the strengthening of dismissal protections. For example, the OECD”,


an external body,

“noted that more stringent dismissal and hiring policies involve an inherent trade-off between job security for workers who have a job, and firm adaptability to changes in demand conditions or technology”.

In other words, it implies lower growth.

Noble Lords will know of my own background in retail and wholesale, working for many years at Tesco, a company that had a unique partnership with the trade unions. Indeed, the noble Lord, Lord Hannett of Everton, and I worked together, and I am delighted that he now sits on the Labour Benches and only sorry that he is not here today.

Retail is a sector that leads the way in employing the economically excluded and those who need flexibility in their hours and location of work.

The noble Lord, Lord Hannett, is sitting there, just not in his usual place.

However, I understand from the BRC, which has recently surveyed HR directors, that there could be a significant impact on hiring decisions, particularly for those starting in or returning to the workforce after a period of leave or inactivity. That includes those coming back from parental leave or those who have been unemployed for an extended period. The changes could reduce opportunities for entry level jobs—27% of the retail workforce is under 24—and for those from disadvantaged backgrounds.

As our birthday boy, my noble friend Lord Hunt of Wirral has already explained, it also jeopardises the vital increase in our apprentice population, which is desperately in need of a simpler and more flexible system —another reason to think again.

All this uncertainty is bad for the Government’s wider objective of growth and, very important, for getting hundreds of thousands off benefits and into work. Without a genuine probation period, employers, especially smaller employers, will no longer be willing to take a chance on people for fear of being stuck with bad or unsuitable employees or facing unaffordable compensation bills after a very short time.

[Baroness O’Grady of Upper Holloway (Lab)]

The noble Baroness mentioned the OECD. Is she aware of the OECD’s employment protection index, which shows that countries such as Germany, Poland and Japan have stronger protection than the UK on dismissal, yet they have lower unemployment? I think it would be helpful if she agreed that there is no direct association between employment protection on dismissal and unemployment.

[Baroness Neville-Rolfe (Con)]

I am not sure that I agree. I have sat on a German company. Growth is very poor in Germany at the moment. A company I worked in exited France because of the difficulty with employment protections. Employment protection is not the only issue we are talking about. In my opinion, we are trying to find the right employment protection mix to make sure that the economy continues to flourish.

Before closing, I highlight two of the less obvious perverse effects. The provisions will require significant extra internal resources to ensure compliance, in addition to the cost of the various measures in the Bill. If anyone has been through the sad process of sacking someone, they will understand this point. It is necessary to be extremely organised and have a cast-iron paper or email trail to avoid losing in a tribunal. This approach will now be necessary for the 9 million employees who currently work for less than two years in a job. Even if the Government introduce a lighter touch probationary period—now expected to be nine months—it will still be necessary to implement cumbersome administrative procedures across all businesses for all employees, including in the public sector. It will make the introduction of Making Tax Digital, deferred a number of times because of the difficulties businesses faced, look extremely easy in comparison. Above all, it will increase costs, thereby reducing investment and growth.

The second perverse consequence, as the noble Lord, Lord Vaux, has already said, will be the increase in traffic through employment tribunals. There is already a tremendous backlog of 50,000 cases in the system. I met someone yesterday whose case has been listed in 2027. The changes look as if they will plunge the employment sector into the sort of chaos we saw in the past on passports and in several other areas as a result of Covid.

I am extremely keen to find a way out of this unfortunate set of circumstances and am open as to how the problem is resolved. The fact is that sometimes appointments do not work out and it is no one’s fault. I accept that that should normally be clear within nine months. If the changes on unfair dismissal are to be workable, let alone a success, the Government must listen and come forward with firm proposals before Report. These can be consulted on in parallel, as has already happened in other parts of the Bill. This House cannot agree to delegate this vital matter to the Executive in a statutory instrument that we have not even seen in draft.

The proposed nine-month probation period is a welcome start. However, so far, the only way forward I can see is to amend the Bill to allow the termination of employment during a probation period without giving rise to an unfair dismissal claim, as proposed in our amendment.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

That has reminded me that that was the other question asked by the noble Lord, Lord Sharpe—so I thank the noble Baroness for raising it.

As we have said before, we are working on an implementation plan, which we hope to share with noble Lords as soon as we can. It is in my interests as well as noble Lords’ interests that they see it sooner rather than later, but there is no point in sharing something that is not complete. Noble Lords will see that—and it will set out exactly what we are planning to do and where the consultations will fit in with all of it. I hope that when noble Lords see it, it will reassure them.

To go back to the particular question from the noble Baroness, Lady Coffey, we see this as a wholesale package. It is right that it is introduced to employers as a package; it will have appropriate timescales in it. We do not want to do things on a piecemeal basis, we want to do them in the round. That is why we are attempting to address this in the way that we are proposing today.

[Baroness Neville-Rolfe (Con)]

Unfortunately, that is our concern—that we do not know what the detail is, and we are being asked to pass a Bill without all that detail, as I said in my speech.

There was a more technical point that I wanted to raise with the Minister, if she wants to come back to me. I set out how having to cover an extra 9 million employees is going to lead to huge amounts of extra compliance costs. She emphasised the benefits for the workers, but she did not at all address the monumental amount of paperwork. My noble friend Lord Sharpe raised a similar point. As he explained, all managers in all companies are going to have to prepare for this and work out how they treat their employees from day one and what paperwork is required. I am not convinced that there is any understanding of that.

When we had similar consultations on the minimum wage, when I was in business, which the noble Lord, Lord Monks, mentioned, there was a great deal of detailed consultation very early on on how it would work. I said in another debate how I was consulted about whether we could put it on the payslips—and I explained that it would cost us £2 million, so it would cost the whole economy an awful lot just to put the minimum wage on the payslip. That sort of detail is incredibly important, if you are bringing in regulation that affects all employers and potentially benefits all employees.

I urge the Minister to think about these things and not say that it is going into the long grass and that we will get an impact assessment ex post, but think about how employers will actually manage this.

[Baroness Jones of Whitchurch (Lab)]

I can assure the noble Baroness that not only have we thought about this but we are working very closely with the business sector to get this right. We understand that some of these things will take time. It takes time to change systems, and a lot of it is about changing computer systems for processing and so on. We are aware of this and, when the noble Baroness sees the implementation plan, it will reassure her that we have allowed space and time for it, as well as proper consultation with those who will be affected.