Employment Rights Bill

Caroline Nokes Excerpts

Consideration of Lords message
Monday 15th December 2025 Commons Chamber

Consideration of Lords Message

[Madam Deputy Speaker (Caroline Nokes)]

Before we commence consideration of the Lords message, I confirm that nothing in the Lords message engages Commons financial privilege.

Clause 23

Right not to be unfairly dismissed: removal of qualifying period, etc

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[Kate Dearden]

My hon. Friend makes an excellent point, as she always does, and I thank her for it.

To conclude, we are seeking the support of the House so that we can finally secure Royal Assent and move towards implementing our long-overdue reforms to make work pay. Today’s correspondence from business representatives to the Secretary of State states that British business believes that

“now is the time for Parliament to pass the Bill.”

I urge Members across the House to reflect on that comment, on our election mandate from last year and on all the work and consideration that has been put into this Bill so far in both Houses. I thank all colleagues for their work, and I commend this motion to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

[Andrew Griffith (Arundel and South Downs) (Con)]

The concerns that we Conservatives have with the Bill have long been known, and I accept that we have debated them at length. I will not repeat them all today, because we are not here to debate the whole Bill, just the message sent to us from the other place.

There was a time when the Labour party would have cared about protecting jobs and those who wanted one. There was a time when Labour believed, as we do, in the dignity of work and what that meant for families and communities—a Christian socialism, if you like, rather than the state worship that seems to have replaced it. I cannot honestly think of a previous Government who would ever have passed this Bill—certainly not since the 1970s. The result, whether Labour likes it or not, is that day by day, week by week, month by month, people are losing their jobs.

This Christmas there will be 192,000 fewer people in private sector payrolled employment than last Christmas, and who knows what it will be like next Christmas. We have the worst ever graduate jobs market. Adzuna estimates that jobs for degree holders have fallen by 33%. Labour used to care about youth unemployment, but for those aged between 16 and 24 unemployment has now reached 15%, according to the Office for National Statistics. As has been the case every month so far under this Government, tomorrow morning we are likely to hear that the rate of unemployment is higher.

This Bill could have been on the statute book today, but for one simple reason: a gross betrayal of trust. The small group of business groups that Ministers invited in for tea and sandwiches took this Government at their word.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Caroline Nokes)]

Members will be aware that the debate has to conclude by 8.24 pm, so there will be an immediate five-minute time limit. Of course, if Members did not feel obliged to use all five minutes, that would help their colleagues.

[Justin Madders (Ellesmere Port and Bromborough) (Lab)]

May I first declare my entry in the Register of Members’ Financial Interests and donations from the Union of Shop, Distributive and Allied Workers trade union, as well as my membership of the GMB and Unite trade unions? I am not sure if we are on a ping or a pong now, but there is a whiff of stubbornness about the fact that we are back here again.

Last week, I called for the Government to make this place sit every day until Christmas to ensure we got the Bill through—it is a shame that the other place took that as an invitation rather than the contingency plan it was intended to be, but, if that is what it takes, that is what we should do. We are ready. It is wrong that an unelected house, where jobs are given for life, can dig in and push back on something that will give millions of workers rights that we promised long ahead of an election, and for which we have a decisive mandate.

I commend the Government and the Minister for not backing down. A deal was reached with the relevant stakeholders. It is a pragmatic compromise, and a deal they are publicly saying needs to go through. That is how mature, effective industrial relations are supposed to work.

I do not think that the Lords’ arguments are particularly substantial; they are certainly not reasons to delay the Bill again. Their point that we should not agree with the lifting of the cap because it fell outside the scope of manifesto commitments in this area does not really take us very far, given that the original concession made on qualifying periods was also outside the scope of the manifesto, and of course, that is all part of the same package. It feels to me that this is more about the Lords wanting to have the final word rather than having to deal with the substance.

[Justin Madders]

I am glad that there are some Conservative Back Benchers here. Last week they were all somewhere else, but now we are hearing some contributions. I was not in the room when the negotiations took place, but I understand that that was the deal. I am afraid that there have been some wilful misunderstandings on the Conservative Benches about what lifting the compensation cap actually means. Compensation for unfair dismissal is calculated by defined heads of loss under the law, so lifting the cap will not change that one bit. If the claims are still necessary, they will be there. It just means that some workers—particularly older workers who might not be able to get another job and who may have substantial pension losses—will benefit, not the fat-cat bosses that have been talked about. It is important that we stress that point.

Also, I do not remember the Conservatives’ manifesto in 2010 promising to double the period for qualification on unfair dismissal. Neither do I remember a pledge in either the Tory or the Liberal Democrat manifesto to put a cap on compensation. None the less, the coalition Government pushed both those policies through. Those who claim that the lifting of the cap will see an avalanche of claims ignore the fact that the rationale used for introducing the cap in the first place was to deal with perceptions about levels of compensation people might recover—in other words, legislating on perceptions rather than on facts—and I have to say, we have heard plenty of those perceptions repeated again tonight.

The Opposition can complain about a two-year wait for tribunal claims, but I am grateful to the shadow Secretary of State for recognising his party’s culpability in that. It is important that this Government are working with the trade unions, businesses, the judiciary and ACAS to find ways of improving our system, so that we get justice more quickly, instead of just ignoring it as the previous Government did. This Government have shown flexibility and strength to negotiate a change in order to get a deal over the line. Workers in this country should not be made to wait any longer for these important rights.

It is worth reminding the House that the road map we agreed earlier this year shows that the following laws should be in place by April 2026: doubling the maximum period of the protective award; day one paternity leave and unpaid parental leave; whistleblowing protections; establishing the Fair Work Agency; day one statutory sick pay and entitlements for the first time for millions of people who have been denied them to date; and simplifying the trade union recognition process. These are not minor or trivial measures. They are substantial changes that will improve the working lives of millions of people. We should be proud that it is a Labour Government who are delivering them, and we should be determined to deliver them by April 2026.

Of course, that is just the beginning. Genuine flexible working, ending zero-hours contracts, banning fire and rehire—there is much more in this Bill that really matters to working people. And there is much more beyond the Bill: the reform of TUPE and parental leave and dealing with the epidemic of bogus self-employment are of huge importance. These are the sorts of things that a radical, reforming Labour Government need to tackle, because the world of work is changing. It is changing far faster than we can legislate for, but we can insulate our constituents against the worst excesses and unintended consequences of the tech revolution by putting security and fairness at the heart of every employment relationship, and we need to do that now. If we do not, we will have failed not only to deliver on the promises we made but to stand up for the very people we were elected to represent, so I call on the other place to agree with the will of the democratically elected Chamber and to deliver finally on our promise to make work pay.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

Today we are debating the fourth round of consideration of Lords amendments to this Bill, and this long and protracted process says a lot about the way the Government have approached this legislation. The Bill was initially put together at great speed, missing much of the detail; there was a long series of Government amendments late in the process; and now a major last-minute change on the compensation cap for unfair dismissal has been sprung on businesses and Parliament. Regardless of what one makes of the different measures in the legislation, I think most of us would agree that the process followed in designing it has been less than ideal. Having said that, let me reiterate what has always been the Liberal Democrat position on the Bill: we support many of the aims of this legislation.

We welcome expanding access to statutory sick pay, improving parental leave and taking steps to address the massive pay gap facing social care workers. We agree with giving those on zero-hours contracts more certainty, even though we proposed what we view as a more practical and balanced way of doing so, and we are pleased to see a unified Fair Work Agency, which we also called for as a way of empowering employees to exercise their rights without fear of any negative consequences. However, we have made it clear that we have significant worries about the specific way in which some of those measures would be implemented, and we have repeatedly raised our concern that crucial detail was being left for secondary legislation.

By far our biggest concern was the complete lack of clarity on unfair dismissal and probation periods, which is why we have worked in both Houses to secure a vital concession setting the qualifying period for unfair dismissal at six months. We are proud that when some tried to brush aside the concerns of the business community and others sought to frustrate the process, it was the Liberal Democrats who secured this vital provision. It is the role of any responsible Opposition party to engage constructively and achieve substantial improvements for the good of our country. It could not be clearer that this fair and sensible shift will equally benefit businesses and workers. So many businesses I have spoken to have said that this is the single most meaningful change that could have been made to the Bill.

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[Mark Sewards (Leeds South West and Morley) (Lab)]

I will be brief. I proudly refer members to my entry in the Register of Members’ Financial Interests. I am a proud member of several trade unions, and have indeed received money from trade unions to remove the Conservatives from power.

Speaking of removing the Conservatives from power, on 4 September I proudly voted, along with the vast majority of people in this House, to remove hereditary peers from the other place. I did so because I do not believe that individuals should be able to shape our laws purely because of the families they were born into. Whatever the arguments put forward on the Bill’s amendments, we are here today because hereditary peers stopped the progress of the Bill through the other place. The simple fact is that if we were to remove the hereditary peers who voted—

[Madam Deputy Speaker (Caroline Nokes)]

Order. We are not debating hereditary peers; we are debating the amendments to the Employment Rights Bill.

[Mark Sewards]

Thank you, Madam Deputy Speaker. The votes in the other place serve only to strengthen my resolve that we must get the Bill through Parliament and strengthen the rights of workers.

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[Mr Joshua Reynolds (Maidenhead) (LD)]

Does the hon. Gentleman understand that his Government are yet to abolish the hereditary peers—

[Madam Deputy Speaker (Caroline Nokes)]

Order. We are not having a debate on hereditary Members of the House of Lords. We are debating the Lords message on amendments to the Employment Rights Bill.

[Laurence Turner]

If the Lords amendment were not rejected, it would have two immediate effects. First, it would collapse the agreement between employers and union representatives. It is not some reasonable call for a review; it strikes out the changes to the compensation cap, which was a key component of that agreement. The Conservatives know that it is a nonsense to call for a review if the legislation that would give it effect is not carried—[Interruption.] Secondly, the amendment would so delay the Bill that April’s extension of statutory sick pay and parental leave for millions of people—some on the very lowest incomes—falls into doubt.

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[Sarah Olney]

On a point of order, Madam Deputy Speaker. I think that is disgraceful. The hon. Gentleman is literally implying corruption. I made it very clear in my speech what the basis of our change in support in the Lords was for, and I think it is intolerable that we are being accused.

[Madam Deputy Speaker (Caroline Nokes)]

I thank the hon. Member for her advice. As it happens, she makes a good point. The hon. Member for Broadland and Fakenham (Jerome Mayhew) should not be suggesting any particular motive attributed to that issue, and could he perhaps confine his remaining comments for the next 90 seconds?

[Jerome Mayhew]

I am grateful for that direction, Madam Deputy Speaker.

Let us move to Lords amendment 120N. This is a major new policy. We do not have to argue about whether a £118,000 cap is a good or bad idea. I think the cap is a good idea, but the amendment seeks to clarify the process by which the Government have decided to impose this measure in the Bill. It was not part of the manifesto. It was not part of the Bill or discussed in the Bill Committee. It has just been inserted at the last moment in ping-pong. There has been no risk assessment, no impact assessment, and no consultation. The amendment does not put the Government off course. All it asks the Government to do is, within three months of Royal Assent,

“conduct a review of the limit imposed by this section on the amount of the compensation awarded”.

That consultation only has to consult employers’ organisations, trade unions—one would think Labour Members would be in favour of that—and

“organisations representing employment law practitioners, and such other persons as the Secretary of State considers appropriate.”

If the Government choose to implement policy on the hoof, the least they can do is undertake a consultation that they should have carried out—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I call the Minister.

[Kate Dearden]

I am grateful to hon. Members across the House for their contributions today and throughout the passage of the Bill. When there is a finding of unfair dismissal at tribunal, it is important that the claimant is fairly compensated for the loss they have suffered. We also believe that the cap on compensatory awards for unfair dismissal incentivises claimants to construct complex cases that allege both unfair dismissal and discrimination so as to access uncapped compensation, as I stated in my introductory remarks—perhaps Conservative Members did not hear that. By removing the compensatory award cap for unfair dismissal claims, that incentive will be lessened.

By removing the cap, the Government will also deter employs from treating the cost of dismissing employees unfairly as part of business as usual, instead ensuring that employees who face significant losses as a result of being unfairly dismissed are fairly compensated. Compensation for unfair dismissal is awarded only where a tribunal finds in favour of the claimant. Claims that do not have merit will not secure any compensatory award with or without a cap.

Lifting the cap will not mean that compensatory awards start from a blank sheet of paper and become impossible to anticipate. Tribunals have well established ways to calculate the compensation that might be awarded for particular types of losses resulting from unfair dismissal. I thank the Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney), for her support. As she referenced, and as Members will have heard in my introductory remarks, we will publish an economic assessment in due course, and I am always available for further discussion.

Conservative Members have opposed this Bill at every stage, and no matter what the issue was today, they would oppose it again. Businesses and unions have shown leadership, and Conservative Members and Parliament should respect their voice. The tripartite agreement was forged through dialogue with those who live the realities of our workplaces every day. That agreement included a package conducted in good faith and with good will, and I thank them for it.

This Government’s aim is clear: to conclude the passage of the Bill so that millions of British workers gain new rights while businesses can prepare for change with certainty. Labour Members send a clear message to the other place to now let the Bill—a Bill that delivers on multiple manifesto commitments and has a clear electoral mandate—pass. Any further delay risks leaving workers without protections and businesses without clarity. We now strive to conclude this process and deliver the change that Britian needs to make work pay. We cannot build a strong economy with people in insecure work. We are strengthening the foundations of our economy and improving living standards. The Bill, and all our work across Government, is the foundation for building an economy that works for everyone.

Question put.