Employment Rights Bill

Lord Berkeley Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

Moved by

[Lord Berkeley]

323E: After Clause 150, insert the following new Clause—
“Substitution clauses and the definition of “worker” in app-based work(1) The Employment Rights Act 1996 is amended as follows.(2) After section 207B, insert— “Substitution
207C Prohibition of substitution clauses in platform-based logistics work(1) A relevant company must not include a clause in its contractor agreements that permits substitution in the performance of services, unless—(a) the company can demonstrate that such substitution is operationally viable and genuinely offered to all contractors, and(b) the identity of any substitute is subject to the same training, vetting and approval standards as a directly contracted individual.(2) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).(3) In this section—“dependent contractor” means a person who—(a) performs services arranged through the company’s platform;(b) is paid per task or service delivered;(c) is not classified as an employee or worker by the company;“relevant company” means a company that—(a) provides services in relation to food and beverage delivery, postal and courier operations, or private hire transport via a digital or app-based platform, and(b) engages more than 250 workers or dependent contractors globally.(4) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).”(3) In section 230 (employees and workers), after subsection (3), insert—“(3A) For the purposes of subsection (3)(b), a requirement to perform work personally shall be deemed to exist unless the right to substitute—(a) is genuine, exercised in practice, and not fettered by contractual or practical limitations imposed by the contracting entity,(b) is not subject to prior approval or vetting by the company, either directly or indirectly, and(c) forms a meaningful part of the way in which services are actually delivered.(3B) Where the work involves the use of a digital platform to allocate real-time, location-based tasks in sectors including—(a) food and beverage delivery,(b) postal and courier services, and(c) taxi and private hire operations,any contractual clause purporting to allow for substitution shall be treated as void and of no effect, unless the company can demonstrate that the right of substitution is genuine, practical, and routinely exercised.(3C) A substitution clause in a contract for services of the type described in subsection (3B) shall not, by itself, be sufficient to establish that an individual is not a worker.””

[Lord Berkeley (Lab)]

My Lords, the new clause proposed in Amendment 323E in my name has been given the rather surprising title “Substitution”, and one or two noble Lords may be wondering what that means, so I will try and explain. It refers to the substitution of people with the intention of avoiding paying tax, national insurance or anything else. It is a problem that has grown like Topsy over the last five years.

Noble Lords will remember how many times in the last year we have debated whether electric scooters should go on the road or the pavement and whether we should have electric bikes. More recently, we have been debating electric bicycles with big trailers behind them, usually pulling Deliveroo or something like that. While many of us think that it is a great idea to have green transport, when you start looking behind the way that this part of the industry is created, it does not look quite so good.

I am not going to go into the road safety element, because we are not in a road safety debate tonight, but there are other safety implications concerning the people who drive these vehicles. There are questions concerning, first, the extent to which they should be in the country at all and, secondly, whether they are paying the right amount of tax—and that is before we get into any other thing that might be driver related.

Noble Lords may have read a big spread in the Sun today, which I think is coincidental. It reads:

“Asylum seekers are cheating the taxpayer—with illicit Deliveroo and Just Eat accounts offered to them within ten minutes of asking”.


It goes on to explain that there are people selling Deliveroo driver accounts to migrants even while they are on the rubber dinghy coming across the channel from Calais. That makes it very nice for them, because they know they are being taken on and do not have to look for a job. That is one problem. I am not going to repeat the rest of the article as it will take all night, but it is well worth reading the reasons behind this.

The other issue is that these drivers riding the bicycles seem to be very adept at getting their friends to substitute for them. The friends may have no qualifications, driving licence, residence or anything else, and are probably not recognised, so they carry on driving these things, frankly, illegally. That is before we get to the questions of why there is no enforcement in relation to these people’s driving ability or whether they should be here at all. I am not going to go into any greater depth on what is wrong. As we all know, this is a serious problem in London, but it is also a problem elsewhere.

The amendment is quite complicated, but then employment law is complicated. My friends in the cycling and walking community, who are really fed up with this, look upon this amendment as a matter of safety, but they also are asking, “Why should people get away with doing this when they probably are not paying tax or anything else?”

The wording of the amendment is designed to cover the most popular parts of the industry, such as food and beverage delivery, postal and courier delivery, and taxi and private hire operations, as well as probably many others. It is to make sure that, if people are hired by one of these companies to drive these vehicles and go on particular routes, they actually do it rather than subcontract the work to somebody else who has no qualifications at all. I have not yet seen any convictions for people found guilty of what you might call substitution, but I expect it will happen soon.

--- Later in debate ---

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I thank my noble friend Lord Berkeley for tabling Amendment 323E and everyone who contributed to this short but important debate on the issue of substitution clauses.

To be absolutely clear, the Government are very alert to the risks that my noble friends Lord Berkeley and Lord Hendy and the noble Lords, Lord Russell of Liverpool and Lord Palmer of Childs Hill, all raised on substitution. We recognise that substitution in the platform economy is an issue, and we share the concerns about the impact that it can have on working conditions and the prevalence of illegal working.

Some of the critiques that my noble friend Lord Berkeley made about e-bikes and e-scooters, and some of the comments made by the noble Baroness, Lady Neville-Rolfe, fall a little outside what we are talking about tonight. One only has to be in the Chamber at Oral Questions on a regular basis to understand that noble Lords across the whole House share concerns about the impact that e-bikes and e-scooters are having on general society, as well as their attitudes towards the noble pursuits of cycling, walking and sharing public spaces.

There is growing awareness of substitution clauses and their use to deny workers core protections, including the national minimum wage and holiday pay, as set out by many noble Lords this evening, particularly the noble Lord, Lord Russell of Liverpool. Clearly, in extremes this can lead to abusive and exploitative treatment of workers, and we are looking at it closely.

My noble friend Lord Berkeley raised the issue of illegal working as reported in today’s edition of the Sun. It is important in considering this issue to realise that the Government recently introduced an amendment to the Border Security, Asylum and Immigration Bill on Report in the other place to extend the scope of the requirement on employers to carry out right to work checks on limb (b) workers or individual subcontractors, such as those working in the platform economy.

We must remain in step with modern labour market models. The purpose of these changes is to require businesses that employ individuals in new labour markets to check that only those with a right to work in the UK are eligible to participate in these arrangements, and to enable Immigration Enforcement to issue penalties where they are not. This ensures that compliance is equivalent for traditional employers. That, as I understand it, is the core of the issue raised in the newspaper report described by my noble friend Lord Berkeley.

The links between substitution and employment status demonstrate how complex this area is. As my noble friend Lady Jones said earlier this evening in discussing Amendment 318, we are committed to consulting on a simpler employment status framework. My noble friend Lord Hendy said that we should look at this holistically. I am confident that this will provide an opportunity to hear views from a wide range of stakeholders on the use of substitution clauses and the interactions with employment status. This is an important issue, but I am also aware that there is a complex interplay with measures we are going to discuss shortly in Committee on the Border Security, Asylum and Immigration Bill. In that context, it might be useful for me to take this back to colleagues in the Home Office and see how best to pursue it further.

I therefore ask my noble friend Lord Berkeley to withdraw Amendment 323E. In so doing, as this will be my last opportunity to speak in Committee, I would like to take this opportunity to thank all noble Lords who have taken part in the wonderful 11 days in Committee on this Bill for their constructive engagement and, indeed, at times, stimulating debates—who would have thought we would get so many days in Committee? I take note of what the noble Lord, Lord Sharpe, said earlier about the pace of progress during immigration legislation. As I am going to be on the Front Bench for the Border Security, Asylum and Immigration Bill later this week, all I can say is: I simply cannot wait.

[Lord Berkeley (Lab)]

My Lords, I am really grateful to noble Lords who have taken part in this short debate and made many contributions, which indicate that it is a difficult subject and it would the better if the whole thing went away. But of course, it will not go away. When my noble friend the Minister said that this is his last appearance on the Bill, I thought, “Well, is it a sinking ship or is it going to the next stage?” I hope it is not a sinking ship, and that there is going to be another good stage.

[Lord Katz (Lab)]

To be clear, we are in Committee. Who knows what comes next?

[Lord Berkeley (Lab)]

We had a problem up in the Committee room last week with the mice eating through the electric cables. We have got a few problems here.

More seriously, it is a big problem. We only covered probably a small fraction of it tonight, but I would be very grateful if the Minister agreed to meet those of us who are interested, sometime between now and Report, to see how we can take it forward in one way or another. I am not sure which way “forward” would be; but otherwise, it is very tempting to put another amendment down on Report and have another debate like this. It would be much better if we could all sit around a table for half an hour and hear what the Government want to do, and hopefully agree—or hopefully not. Is my noble friend about to say yes to that?

[Lord Katz (Lab)]

Over many years now, I have had lots of interesting discussions with my noble friend, in different guises. It is always a pleasure to meet with him—and indeed with any other noble Lords who wish to engage on this important issue.

[Lord Berkeley (Lab)]

I am most grateful to my noble friend. On that basis, I beg leave to withdraw the amendment.

Amendment 323E withdrawn.