Employment Rights Bill

Baroness O'Grady of Upper Holloway Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

Nobody gave trade unions the power and influence they have. The power and influence were not enshrined in some three amendments in a Bill being passed through this House. They were based on the efforts of individual workers working together to achieve better conditions of work. The idea that you could substitute other bodies out of the blue when this is based, as I say, on 150 years of struggle is a delusion and a misunderstanding of how we have got here.

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

My Lords, I am very pleased to follow my noble friend Lord Davies because I absolutely agree with what he says. I would add, just from my own experience, that, early in my working life, I worked in a retail organisation where there was a staff forum and where I and colleagues were organising to establish a trade union. The difference is this: that staff forum was set up by the employer. It was not set up by workers. That staff forum was funded by the employer; it was not funded by workers. That staff forum was not democratic, whereas the whole point of a trade union is that it is a democratic organisation of working people. I would hope that one of the aims we could share across this House is to see an increase—an expansion—of genuine collective bargaining, because the evidence is very clear that, internationally, we see that the demise of collective bargaining has been associated with growing inequality, worse conditions at work, a poorer share of the wealth that workers help produce and no independent democratic voice.

I would hope that, in this country, we recognise that there are many, many working people who feel they have been denied a genuine voice—an independent voice—at work and in society, and they are rightly fed up about it. If we want to tackle that—if we want to tackle inequality and the sense of powerlessness that many people feel—it is collective bargaining through the route of independent, democratic trade unionism that we all need to see grow.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I was not intending to speak in this group and I am torn between both sides. I have some cynicism about the Opposition’s attempt at recognising non-trade unions and staff associations. I entirely understand the point that the noble Baroness, Lady O’Grady, has just made about employer-led staff clubs, which I have been, over the years, invited to join. While they have been very pleasurably good social forums, they are very different from trade unions.

However, I am afraid that there is a danger that we can romanticise what contemporary trade unionism is, based on the very fine history of 150 years of struggle. I do not actually think that trade unions at the moment should take for granted that workers will be loyal to them, because there have been far too many instances of trade unions not being fit for purpose. Indeed, there is often a huge gap between trade union leaders and trade union members. Many members are leaving unions or not joining them, and that is not always because of evil bosses in a kind of caricatured way.

At Second Reading, I made the point—and I am only repeating it here now—that, for example, the Darlington Nursing Union has been set up because the nursing unions have abandoned female members of staff who were nurses and who have been attacked by their HR departments and their employers for their political views in relation to gender and sex. As it happens, we now can appreciate that they were simply reiterating their right to privacy as biological women—something that the Supreme Court has now at least acknowledged is the law—but they have been harassed and bullied and so on, and the trade unions abandoned them.

I made a point about the Free Speech Union. I appreciate that it is not a trade union, and nobody, least of all me, is suggesting that the noble Lord, Lord Young, who is in his place, will become the noble Baroness, Lady O’Grady, of future negotiations. Despite the fact that that is an unlikely role for the noble Lord, Lord Young, the Free Speech Union has been forced into existence and has represented workers who have been done over by their employers when their trade unions have abandoned them. That is the point I am making.

The UCU is one example of a university union. I was a NATFHE rep for many years in the further education sector and I have watched in horror the way that that union has degenerated and sold out its members. So, for the record, I would prefer that we did not caricature each other in a way that does not represent the contemporary time. The trade unions today are not the trade unions of old. They could do with upping their game. Similarly, I do not think the trade unions are the evil enemy of employers, as is sometimes implied by people sitting closer to me on this side of the House.

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[Baroness Penn (Con)]

My Lords, I rise to move Amendment 64 in my name. This amendment makes a simple change to the right to request flexible working. In 2023, the Employment Relations (Flexible Working) Act amended the right to request flexible working so that it applied from the first day of employment. Previously, employees needed to wait for 26 weeks as a qualifying period before making a request. That was a good move forwards, but in practice, this still means that when finding and taking a new job, an employee might need to leave a role that offers them the flexibility they need without knowing whether their new employer can accommodate their responsibilities outside work. If that request is then denied, the employee may find themselves in an impossible situation, forced to choose between their work and their responsibilities outside work. Employers might also find themselves having gone through a whole recruitment process, having waited for their new recruit to work a notice period for their previous employer, only to find that they cannot accommodate their new employee’s request and potentially having to start the recruitment process again. To me, that is a lose-lose situation, leaving both the employee and the employer worse off.

TUC research shows that two in five mothers do not feel comfortable asking for the flexible working they need during a job interview, for fear that they will face discrimination or have their offer withdrawn. Changing the law to allow flexible working requests from the job offer stage would give candidates vital protection. As I have said, the change would also benefit employers. It would create a legal framework for an open, honest conversation about working patterns before contracts are signed, ensuring that both parties can agree on arrangements that genuinely work for them. It does not change employers’ need to consider a flexible working request, nor their right, having given it proper consideration, to say that it does not fit with their business needs. Such a change would and could support fairer hiring, greater inclusion and better long-term retention.

Flexible working can unlock economic opportunities for growth. Indeed, the post-implementation review of the Flexible Working Regulations 2014, which extended the right to request flexible working to all employees, not just those with caring responsibilities, showed that flexible working can reduce vacancy costs, increase skills retention, enhance business performance and reduce staff absenteeism rates. It has the potential to bring people back into economic activity who would otherwise have left the labour market.

The noble Lord, Lord Londesborough, spoke about the importance of bringing older people back into work, along with people with disabilities and those who have been on benefits for a period of time. These are people whom the Government are spending a lot of time and effort trying to re-engage into the workforce for their own good and for the good of economic growth. This change could help do that.

On these Benches, we have emphasised the benefits of having a flexible labour market, and, in my view, that means one where people are able to move easily between employers. I think this amendment would support that, so I would be interested to know what the Minister thinks of this proposal. I beg to move.

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

My Lords, it is a pleasure to follow the noble Baroness, Lady Penn. I shall speak to Amendment 66 in the name of my noble friend Lord Watson, who is unable to be in his place today due to a long-standing family commitment.

Clause 9, on flexible working, will make a huge difference to working people, including those with caring responsibilities. Many of us know all too well and very personally the daily juggling-act miracle that working mums especially are expected to perform. Anything that makes their lives easier has to be welcome. Flexible working has the added benefit to business and for the wider economy of making it easier for carers to both enter the workforce and stay there. This will help close the gender pay gap, reduce child poverty and help keep mothers and babies healthier.

Amendment 66 seeks to address the concern that, to be effective, those new rights must have teeth. I know that my noble friend Lord Watson would want to acknowledge the support of Maternity Action and the National Education Union in preparing this amendment. Amendment 66 would require the Business and Trade Secretary to review and publish a statement on the adequacy of the maximum compensation which an employment tribunal can award where an employer has not followed its obligations in dealing with an employee’s flexible-working request.

Currently, employees have the right to request flexible working, but employers can refuse on a wide range of listed grounds. Clause 9 boosts employees’ rights by introducing a reasonableness requirement, meaning that employers will be permitted to refuse a statutory flexible-working request only if it is reasonable to do so on one or more of the listed grounds. This new requirement is a positive step towards making flexible working the default. The problem is about the maximum compensation which an employment tribunal can award when it upholds an employee’s complaint about how an employer has treated their flexible-working application.

Currently, the maximum compensation that an employment tribunal can award is eight weeks’ pay, capped at £719 per week, which is a total of £5,752. This low compensation cap does not reflect the devastating cost to a worker where that flexible working has been unreasonably refused. Maternity Action and trade unions have documented how unreasonable refusals effectively force employees—particularly many new mothers and other carers—out of their job, often into lower-paid and less secure work or out of work altogether.

Flexibility should be a two-way street for the employer and worker, but in the real world too often it is mothers who are paying a high price. Set against the expense of legal representation, the low level of compensation available deters mothers from pursuing a flexible-working complaint through an employment tribunal. Their only meaningful recourse may be an indirect sex-discrimination claim against their former employer for which compensation is not capped. However, such claims are often long, complicated and extremely stressful. It is much better to send a signal that the Government are serious about enforcing flexible working rights so that employers are encouraged to do the right thing in the first place.

In the Bill’s impact assessment, it is stated that an aim of the changes in Clause 9 is to allow an employment tribunal to scrutinise whether the decision to reject a flexible working request was reasonable. For that to be effective, penalties should be introduced that reflect a substantive failure to act in accordance with a new reasonableness requirement. The Government’s aim of making flexible working the default is very welcome, but I hope my noble friend the Minister will consider bringing forward an amendment on Report or provide reassurance that other routes will be taken to ensure that the new right to flexible working is one that will be enforced in practice and that workers who are unreasonably refused such arrangements get adequate compensation.

[Lord Ashcombe (Con)]

My Lords, I support my noble friend Lady Penn. I declare an interest that I work for Marsh, a very large insurance broker in this country and around the world. I run a team of between 30 and 40 people. Within that team, I have all sorts, sizes and cultures—you name it. Of that team, all the married women—I should say, the women with children—have some sort of flexible way that they work with us. I can tell noble Lords from my own experience that unhappy staff do not do good work; it is 101. Happy staff are very likely to do very good work. One of my main jobs is to keep my team happy, and I am given immense flexibility to do it. Without this amendment, it is less easy. I rest my case.

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[Lord Katz (Lab)]

I am afraid the noble Lord will not; he will hear from me. I thank my noble friend Lord Watson of Invergowrie in absentia for tabling Amendment 66 and my noble friend Lady O’Grady of Upper Holloway for so ably speaking to it. I also thank the noble Baroness, Lady Penn, for tabling Amendment 64. This has been a broadly helpful debate, if somewhat spicier than expected, on flexible working.

This group and the next deal with flexible working. I agree with many of the comments that noble Lords across the Committee made in highlighting how important flexible working is in helping people to balance work with responsibilities in their personal lives, particularly caring responsibilities. As the noble Lord, Lord Ashcombe, pointed out, flexibility can lead to happier, healthier and more productive employees. He is absolutely right on this point. It is good for employees, good for businesses and, in turn, good for the economy.

As the noble Baroness, Lady Penn, outlined in some detail, along with the noble Baroness, Lady O’Grady, a primary benefit of flexible working for families is that being able to work part-time, or having flexible start and finish times, can make it easier for parents to balance work and childcare needs. Similarly, for those caring for a vulnerable adult or a child with a disability, flexible working can help people to manage their caring responsibilities while remaining in work.

I echo some of the comments of the noble Lord, Lord Fox, about how we regard flexible working. To be clear, flexible working is not solely about working from home—something on which, post pandemic, we have become somewhat focused. Indeed, the ACAS guidance sets out eight examples of flexible working, and working from home is only one of those eight. It talks about compressed hours, staggered hours, remote working, job sharing and part-time hours as well as working from home.

According to the 2023 flexible jobs index, although nine in 10 want to work flexibly, only six in 10 employees are currently working flexibly and only three in 10 jobs are advertised with flexible working. Equally, the Government recognise that business needs vary and that not all flexible working arrangements are possible in all circumstances. That is why the Government are increasing access to flexible working by making it the default, except where not reasonably feasible. I concur with the comments of the noble Lord, Lord Fox: this is not a soft policy but an important economic and human management tool, and we should regard it as such.

Amendment 66 in the name of my noble friend Lord Watson would require the Secretary of State to review and publish a statement on the adequacy of the maximum compensation that an employment tribunal may award to an employee with a successful claim related to flexible working. The maximum compensation award is currently set at eight weeks’ pay for an employee bringing a claim to a tribunal.

Section 80I of the Employment Rights Act 1996 already means that the Government may review the maximum number of weeks’ pay that can be awarded to an employee. If they consider it appropriate to do so, they can then use this power to change the specified number of weeks’ pay by which the maximum amount of an award of compensation is set. It is therefore not necessary to include anything further in the Bill. It is worth pointing out to noble Lords that the maximum has risen every year since its introduction, from £250 in 2002 to £719 now—so this is not something that is caught in aspic. Therefore, we would argue that a statutory review on the maximum compensation award within six months of Royal Assent could create uncertainty across the board and detract from some of the other important reforms that employees, employers, trade unions and the wider economic and business community will need to prepare for.

Before leaving this, it might be helpful to speak to the wider points from the noble Lord, Lord Fox, on tribunals. I cannot speak in any great detail on this issue, but I understand that the Ministry of Justice is undertaking a review of the employment tribunal system. I would hazard that it has not been sufficiently invested in in recent years, and the slowness of that system is certainly something that we should seek to address.

Before leaving Amendment 66, it is worth pointing out that there is a risk in creating uncertainty for both businesses and workers alike by creating the possibility of differing awards for different types of claims. As things stand, a number of types of claims—for example, relating to redundancy and unfair dismissal—face the same maximum award as those relating to flexible working. It might be undesirable to create confusion and undue complexity through in effect having a two-tier system.

I turn to the amendment proposed by the noble Baroness, Lady Penn, Amendment 64, which would extend the right to request flexible working to candidates with a job offer. In practice, the Government believe that this is already the case. The right to request flexible working, which is being strengthened in this Bill, is already a day one right. This means that employees can request flexible working from their first day in a role. We know that, in practice, many employers and employees will begin discussions about working arrangements before the candidate starts work.

As the noble Baroness said, before joining an organisation, informal and constructive discussions can offer a more effective way in which to identify working arrangements that work for employees and employers than a one-off formalised request and response might otherwise achieve. Mandating through legislation a right to request flexible working prior to appointment would not account for the fact that not all job offers come to fruition, for a number of reasons. However, candidates with a job offer have some limited rights. Discrimination and contractual rights are among those. The hypothetical example that the noble Baroness cited in her contribution would indeed be taken care of; discrimination based on protected characteristics is currently outlawed during the recruitment process. However, we would contend that it is not a status that we would want to overformalise at this point.

Additionally, under this proposal, employers would still have up to two months to consider and respond to a request. If the intention of this amendment is to significantly bring forward in time people’s ability to have a flexible working request accepted, it would not succeed in this respect. While the Government encourage employers to start conversations about flexible working with new starters at an early stage, it would not be appropriate to extend the legal framework for flexible working to all candidates under offer.

Lastly, to respond to the point made by the noble Lord, Lord Jackson, on sex discrimination, I contend that this form of discrimination would actually carry a higher risk of penalty and payout than unreasonable refusal of flexible working, so it is probably a little out of place in the debate on this amendment.

To close, I therefore seek that noble Lords do not press their amendments in this group.

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

My Lords, my noble friend is absolutely right that the maximum cap applies to a number of areas, and many people believe that it is too low on those areas as well. Is he at least able to write to me or to the noble Lord, Lord Watson, and explain when the next review of the cap will take place, and the opportunities there will be for organisations such as Maternity Action and trade unions to make their case that the maximum cap should be higher?

[Lord Katz (Lab)]

I thank my noble friend Lady O’Grady for that; I would of course be very happy to write to her and my noble friend Lord Watson on this. The point that we are making is that there is already a mechanism in place to upgrade. That does not mean that it is not something that organisations concerned about the limit of compensation can lobby on, but the amendment as tabled is superfluous; it would not add any powers that are not already in law or in the Bill already.

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I believe these are not small matters. The Government’s decision currently risks undermining the integrity of the statutory sick pay system and could have serious consequences for businesses, workers and the economy. I hope the Minister will reconsider but, in the meantime, I beg leave to withdraw the amendment.

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

Before the noble Lord sits down, it would be very helpful if he could confirm and clarify that, in expressing a concern that removing the waiting days would lead to more and sporadic absenteeism, it is not being implied that workers are swinging the lead. If it was being implied, where is the evidence?

[Lord Hunt of Wirral (Con)]

Of course it is not being implied. It is outrageous that the noble Baroness should think so and voice so in this debate, which has seen a very calm and careful consideration by the Minister, who sets a good example for us all. I hope the noble Baroness will follow it. I beg leave to withdraw.