Employment Rights Bill

Lord de Clifford Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord de Clifford (CB)]

My Lords, I wish luck to the new Peers with their maiden speeches, and I look forward to listening.

Employment legislation constantly needs to be updated to reflect the changing needs of our society. Therefore, a review is necessary from time to time, but does this Bill reflect a balanced review for both employees and employers? I ask the House to note my registered interest as a part-owner of a small to medium-sized company employing 130 people.

As a relatively small employer, I want to focus on Part 1 of the Bill. The changes to the right not to be unfairly dismissed and the removal of the qualifying period will generate uncertainty among employers, especially SME employers, who do not have significant HR resources. The change is not a bad one and it will focus employers on getting systems in place to ensure that the individuals they employ can fulfil the roles with the skills and knowledge required and have the right attitude for the business and the job. Therefore, I ask the Minister to clarify the probation period, as already requested by the noble Lord, Lord Palmer. This is essential to allow employers the flexibility at the beginning of a contract to see if the employee meets the needs of the job, and to terminate the contract in a responsible way if they do not. Meeting this requirement to dismiss someone in a way that is not unfair is time-consuming, costly and stressful for both employees and employers. To support this change, will the Government review the provision of occupational health services to the SME sector, which is so commonly needed when relations between employees and employers break down?

The second area I wish to address, and will look to research further before Committee, is dismissal for failing to agree to a variation of contract, more commonly known as “fire and rehire”. Will the Minister say why the change to the current legislation is needed, as it appears to be working? Having recently been through the process in our business of requesting variations to individual employees’ contracts to improve efficiency and services to our clients, I know that the current rules ensured that we treated them fairly and with respect and allowed us the flexibility to change things. These proposed changes will make it extremely difficult for employers to make small, reasonable changes to contracts, as the new arrangement is so unclear and demanding on businesses.

My third concern relates to sexual harassment and the question of “reasonable steps”. The change to “all reasonable steps” just creates fear and uncertainty for employers, who want to protect their employees but currently have no clear guidance. I therefore ask the Minister to provide a clearer explanation of what is meant by “all reasonable steps”.

Employment Rights Bill

Lord de Clifford Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I too support Amendment 5. Without small businesses growing and taking on people, we will not achieve the outcomes that the Government have set for getting more people into work. I referred in a debate on an earlier group to the 80% target.

I am conscious of what happened with the Kickstart scheme. We particularly encouraged small businesses to participate in the scheme and to consider the opportunity of an extra pair of hands, giving them the confidence that they could grow their business and employ people, often for the first time. That was an important step in thinking about how to minimise risk in the first instance. A considerable proportion of people were offered permanent jobs as a consequence.

That first step of taking people on is often the hardest for many small businesses and microbusinesses. That is why I would be even happier if this amendment was altered on Report to make it solely for microbusinesses, not just small businesses, as that first step is one of the hardest.

We already have thresholds in many other employment practices. We already have thresholds about things that connect with pension contributions, and other financial thresholds have been referred to. But this is about having the courage to take on people. You may decide to expand your services, whether in the care sector or elsewhere, as you do not want to let clients down, but you need to make sure that you can guarantee quality support to your clients. That is one of those uncertain things when we discuss a wide range of the amendments to Part 1 of the Bill.

There are other opportunities where I will raise the issues impacting small businesses in the Bill, but overall we should take the successful approach of previous Governments, including Labour Governments, of keeping small businesses out of this area. The impact assessments talked about mitigations they plan, but there is no mention of what those mitigations may actually be, and that level of uncertainty is one of the things that will hold back growth, which we are led to believe is the number one mission of this Government. I fear that without some of the exemptions, we will not see that growth coming in our UK industry.

[Lord de Clifford (CB)]

I rise in support of the gist of these amendments with regard to small businesses. I declare my interest as the owner of a medium-sized business with 130 employees, so it would not apply to me. But the burden on small businesses, certainly of Part 1, will seriously restrict their ability to grow and have the courage to take that step of employing people. I certainly think that micro-businesses should be exempted from a lot of these burdens. As we go through Part 1, we need to keep those micro-businesses in our thoughts.

[Baroness Kramer (LD)]

My Lords, I am channelling the noble Lord, Lord Fox, who has been called away. He, on behalf of these Benches, cannot accept a two- tier workplace in regard to employment rights, which obviously form the content of this Bill, so we will not be supporting these amendments.

Employment Rights Bill

Lord de Clifford Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Verma (Con)]

My Lords, as an employer who has employed people over the past 40-odd years, I know that the difficulty for an SME—any small business such as my own—is the ability to manage all the bureaucracy that is entailed with it.

For businesses in the social care sector, for example, unfortunately you cannot really understand how good or bad a care worker will be until they have worked a little while in the organisation, even with the training. However, if we are to give the rights from day one, the difficulty will be that we will end up with a sector already very short of workers needing to hire more workers in case any are not suitable for the role. We would have to release them, knowing that they may then apply workers’ rights on day one without proper probation periods and take us to tribunal. It is a difficult sector.

There are many sectors like the care sector, and it is particularly challenging for small businesses in the wider sector of delivering something that is so important. If the care worker is not the right fit, it does not really matter how big or small the organisation is—that person is just not suitable for the role. We need to have the ability to dismiss the person without having to go through the bureaucracy of all the Government’s intentions in this part of the Bill. I therefore support my noble friend and the noble Lord on these amendments.

It is time to have a strong rethink about how we can come to a good middle ground, where employers are not fearful of employing. I have been talking to a lot of SMEs over the past few months, and the difficulty that noble Lords across the House will have found, when they have talked to businesses in their own communities, is the worry around what will happen when the legislation in this Bill is enforced.

[Lord de Clifford (CB)]

My Lords, I will speak in support of this group of amendments. I refer the House to my entry in the register of interests as the proud employer of 140 employees.

The removal of the qualifying period for a right not to be unfairly dismissed is not, and should not be, feared by good employers. Good employers should have systems in place to ensure that new employees have regular reviews to enable them to feed back to the employer and, likewise, for the employers to feed back to the employees. As an employer, I am aware of the protection that employees are entitled to, and rightly so.

When dealing with any employment issue, the word that always comes to my mind is “reasonableness”. Is it reasonable to totally remove the qualifying period? I do not think so. Employees should be protected from just being dismissed without proper procedures, review and consultation. I support this group of amendments on the probationary period, which is described in the Bill as the “initial period of employment”. There is very little detail in the Bill on what length the probationary period will be.

This lack of detail and clarity creates real uncertainty for employers at present, including myself. The probationary period is an essential time for both employees and employers to get to know one another. For the employees, it ensures that the job meets their expectations, including about terms and conditions, that the culture within the workplace suits them and that they are respected. For employers, it is time to ensure that the employee has the skills and knowledge—or the potential to develop their skills and knowledge—to fulfil the tasks required by the role in question.

The employees in our business can give one week’s notice that the job is not right for them. Likewise, the employer needs flexibility, if they feel that the employee is not right for their business for conduct, personality or capacity reasons. Therefore, employers do not need to go through a long and detailed process to end the contract when the employee has just started that job. In some cases, the procedure to dismiss an employee could take longer than the time they have been employed by the company. I acknowledge that the reason for ending a contract in this probationary period, as has clearly been said by my noble friend, should never be for a protected characteristic under any circumstances, which I fully support.

The group of amendments tabled by the noble Baroness, Lady Neville-Rolfe, seek—as other Peers have clearly observed today—to enable the termination of a contract without fear of unfair dismissal claims being brought during a probationary period. It gives employers the confidence to employ individuals, and at times gives employers confidence to take on an individual who may not fully meet all the criteria of that role but shows potential, thereby giving that individual the opportunity of work. Nearly every noble Lord has discussed young people and people possibly with a disability.

However, further details are required. It is essential that a minimum length of probationary period is detailed in the Bill. For my business, that is three months, but it may be longer for others. The extension of the probation is required when things are not quite going to plan. In that case, the employer needs to go through a process of extending it, which is essential for both the employee and the employer.

I support my noble friend Lord Vaux of Harrowden’s Amendment 108, as it puts a minimum length to the probation period within the Bill and therefore gives employers confidence in the probation process. Nine months gives employers time to have an initial probation period and then extend it if need be. If then the employer wishes to terminate after that many months, they will still need to follow a detailed procedure, as the risk of unfair dismissal is still high if not followed. This is a benefit to the employee from the shortening of the qualifying period. Moreover, the probationary period cannot be renewed continuously, which is to the benefit of both the employee and the employer, as there is a time limit.

Within secondary legislation, the Secretary of State can define the length of an initial probationary period, for, say, a maximum of six months. With this time limit, as proposed in Amendment 108, it would allow for one extension to nine months. The initial period of employment is an important part for all employers, whatever size, but for the SMEs and the micro-business, as previously stated, it allows flexibility. It avoids time-consuming and very costly processes to end the contract of an employee who is not working out in terms of conduct, capacity or personality. I ask the Minister to consider these amendments or refine them before Report to give all employers the confidence to employ new people, but especially in the SME sector and micro-businesses.

[Baroness Meyer (Con)]

My Lords, I, too, rise to support all the amendments in this group. I support the Government’s ambition to boost productivity, create good jobs and crack down on bad employers. However, as many noble Lords have highlighted before me, Clause 23 risks doing more harm than good. The letter from the UK’s five leading business organisations, cited repeatedly at Second Reading, sets out the long-term damage that this Bill, and this clause in particular, would do to business and the wider economy. Surely, they understand the risk better than anyone, and, if I may say so, better than most politicians. We really should listen to their concerns.

After Covid and all the additional costs, many small and larger businesses are struggling. This clause will hit them further, particularly small and medium-sized businesses. Are we really willing to push them out of business? I do not think that this is what the Government really intend to do.

Let me give noble Lords one example. A Ukrainian cabinetmaker whom I met 15 years ago—in fact, I was his first client—built a small business from scratch. He actually talked to me last week, and told me that rising costs and additional regulations are now threatening his business. He told me that, with this Bill, he might not be able to go any further and, especially, he will not be able to hire altogether.

Like many tradesmen, he cannot risk employing somebody based solely on their CV. He needs a clear period to assess whether this person can actually do the job and fit into the team, as noble Lords have highlighted before. Without a workable probation framework, he will not be able to take the risk. The Government have acknowledged this problem and proposed this nine-month statutory probation period with a “lighter touch” dismissal process. However, there is no detail, no definition and no guidance, and legal experts still question its compatibility with the ACAS code.

Worse still, this framework will not come into force until August 2026, leaving 18 months of legal uncertainty. How can employers plan or hire when they do not know what the rules are going to be? Therefore, if the Government accept these risks and have promised a solution, why is it not part of the Bill as it is? It risks killing job creation, driving away investments and weakening economic recovery. This is definitely not what this Government intend to do.

However, with that background, I add my voice to those of other noble Lords who say that this clause may need to be taken out altogether; otherwise, we will need to take into account all these amendments.

--- Later in debate ---

[Lord Lucas (Con)]

My Lords, I have Amendment 113A of this group, which is a very minimalist amendment designed to deal with circumstances in which, for instance, the company needs to change its registered address. That does not in any way affect the employee, but in the current wording of the Bill it would constitute a variation of the contract, and if the employee refused it—they do not have to be reasonable in doing so—we have found ourselves in difficulties for no good reason. I have a lot of sympathy with what my noble friend Lord Hunt has been saying, but my amendment is just to try to avoid creating difficulties where there should be none.

[Lord de Clifford (CB)]

My Lords, I will speak on Amendment 115 in my name, and I wish the Committee to note my entry in the register as set out in the previous group.

Employer businesses sometimes need to change, to adapt to the changes in the marketplace, to their customers’ needs, and sometimes to changes in society. Therefore, on occasions, employers need the ability to vary their employees’ contracts. This process should be done through consultation, negotiation and finally, agreement with their employees, at all times respecting the rights of those employees. I will quote from the Chartered Institute of Personnel and Development’s website, which refers to the current legislation:

“In exceptional circumstances, where there are genuine and pressing business needs and agreement cannot be reached, employers can sometimes be justified in unilaterally changing workers’ terms and conditions by terminating their contracts and re-hiring them on new terms and conditions”.


That comment and others that I have heard would suggest that the current legislation has been working, other than in exceptional circumstances and by some terrible employers. There will always be employers and people in society who will manipulate the law to their own advantage. This certainly was the case with the notorious P&O Ferries, which undertook an outrageous fire and replacement of their employees. Also, sometimes employers will certainly threaten employees with a fire and hire to gain advantage in negotiation. I recognise the value of unions and other employee organisations to assist and support employees when employers undertake varying contracts as a last resort.

Employment Rights Bill

Lord de Clifford Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Sentamu (CB)]

My Lords, I will begin with an explanation. When I supported the amendment from the noble Lord, Lord Vaux of Harrowden, in Committee, there was concern about a risk assessment that said that if there was no probation period, it would be quite difficult for some employers to take people on. The same question was then posed, rather more sharply, by the noble and learned Lord, Lord Phillips: would you employ an ex-offender if there was no probation period at all? That little sentence requires probing.

Last time, I began with apprenticeships. In particular, I spoke about a young man called Oscar, who has been taken on by one of our best plumbers in Berwick, and I said that I hoped he qualifies. I was about to move on to the actual amendment when I said that, when Oscar finishes his apprenticeship, he will have an interview with his current employer and some other people, and that if he passes that interview he will be expected to serve a period of probation, and that this wonderful plumber would not be likely to retain Oscar if there was no probation period. That is where I was going to end. It is right that we remove the two-year qualifying period, which is too long, but I am not so sure that it should be nine months.

In the Church of England, no cleric is an employee because they are all self-employed. I remember a wonderful case where someone complained about a bishop for something they had said to this particular clergy, who had gone to a tribunal after a series of reviews that showed that he was not competent in what he was doing. At the end of the hearing, the clergy was told that he was suing the bishop but that the bishop was not his employer—his employer was God. He was told that if he could bring God into this, he could sue him because he was self-employed and answerable only to God.

We have lived without this worry, but the more I have worked with a lot of people and become a trainer for some, the more I have realised that, if we remove the probation period, we are going to find ourselves in a very difficult situation. The people who are more likely to miss out are young people who need some mentoring and support, and who can be directed to different things.

I am not sure where this is coming from. There are, of course, bad employers, who like to dismiss people at the shortest notice. If we went for six or 12 months in the statute, most employers would abide by what they have taken on. Let us give a good word to employers and not think that all of them simply want you to get out as soon as you come in.

I support Amendments 49, 50 and 51. If all of them are put to a vote, I will be the first into the Lobby.

[Lord de Clifford (CB)]

My Lords, I support this group of amendments, as the initial period of employment is so important to both employers and employees. I declare my interest in the register as the part owner of an SME veterinary practice that employs 140 employees. I am one of those people who will suffer from Clause 23, which is changing our views because of the uncertainty it will bring. Your Lordships have made many very important points that I will try not to repeat.

As employers, we still have no details of when the consultation on probation periods will be launched or how it will work, again creating uncertainty. Probation periods are so important to both employees and employers. The start of a new job is very important for both parties and is, we hope, the start of a long and productive relationship. Employers value employees who stay for many years, as the cost of employing individuals is so expensive. Employees have flexibility at the start of a job, with generally a week’s notice. All we ask is for flexibility for employers as well. That is what probation periods grant, but the Bill will potentially remove these.

Why is the probationary period so important for employers? It is a time to assess whether the individual that you have employed has the capacity to do the required tasks of the job. Do they have the skills that they said they have? Do their skills meet the standards that you set for your business? Is their attendance of a reasonable standard to be part of a team? Do they fit the culture of the business and hold similar values? If the employee, for whatever reason, does not fit, the employer has to go through a long, time-consuming and unfair dismissal process, even when someone has been in the business for two or three weeks or a couple of months—a process that uses up valuable management time and brings uncertainty for the employee. In some cases, it is blatantly clear that this relationship between the employee and the employer is not going to work.

As said by the noble Lords, Lord Sharpe of Epsom and Lord Vaux of Harrowden, we need guidance on the initial period of employment, as it is so important for employers to take on employees who may be disadvantaged in the job market. If employers want to give them a chance but have no clear guidance or a short probation period, they will not take a risk that could benefit potential employees and those who, in the long term, may become really valuable with some time.

This group of amendments seeks to bring important parts of the employment relationship into the Bill, rather than waiting for a long, detailed consultation, with no details. It would help the Government’s plan to make work pay by encouraging all into work. That is why I support this group. If the noble Lord, Lord Sharpe, calls for a Division, I will follow him into the Lobby.

Employment Rights Bill

Lord de Clifford Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 10th December 2025 Lords Chamber

[Lord Barber of Ainsdale (Lab)]

My Lords, the subjects covered by these amendments have been more than extensively debated already, so I do not need to rehearse all the arguments around each issue. Nor do I need, I hope, to remind the House that this whole Bill represents the fulfilment of a hugely important manifesto commitment and, by long-established convention, it must ultimately be recognised and accepted by this House.

As a former chair of ACAS, I will briefly focus on what is new since our previous debate on the Bill: the unprecedented agreement between the TUC and unions and the major employers’ organisations in this country. I say “unprecedented” because, although there have been agreements on some issues over the years between the TUC and the CBI—I think of the joint work that was excellently done developing the furlough scheme during the Covid crisis—I cannot recall such a grouping of the representative organisations of employers ever coming together to seek and to reach an understanding with the TUC. I do not need to list all those organisations on the employer side in this process; the noble Lord, Lord Fox, has done that for me already. This is a historic development and, to my mind, a very positive one. I warmly congratulate those on all sides who gave leadership, for the Government, the unions and the employers, to make this possible. All the parties needed to move from their original positions to make this possible.

As is clear, the centrepiece of this agreement is moving from a right to protection against unfair dismissal from day one of employment to after six months in the job. This proposal was championed by many noble Lords in our earlier debates, speaking up, as they have, for what they have seen as employers’ most important concern about the different provisions in the Bill. But, of course, this agreement is more ambitious than that, in also clearing the decks for the Bill to move swiftly to Royal Assent. As the joint statement by all the employers’ organisations makes clear:

“This change addresses the key problem that must be sorted in primary legislation”.


That statement acknowledges that other issues covered by the Bill, on which those organisations may have concerns, will be consulted on in due course after Royal Assent. This reflects a widely shared view that, rather than leaving continued uncertainty and dragging this debate out further, it is now better for all parties to get the Bill passed so that we can all move on to the next stage of bringing some key provisions into force, in line with the published timetable, and the planned consultations on other issues covered by the Bill.

My ACAS and TUC experience has taught me how difficult it can be to find intelligent compromise on issues that may have been hard fought. It has also taught me the vital importance of agreements being honoured when a deal is done. If the passing of this Bill is further delayed it would frustrate one of the key objectives of this agreement.

As the employers’ organisations said in their statement, this shows that dialogue works. I truly hope that the positive spirit that underpins the agreement continues to the next phase—I mean in the changes to be made across the workplaces of this country, not just the consultations on detailed aspects of the Bill. My ambition has always been for unions and employers to find constructive ways of working together in order to build successful organisations. In that spirit, I hope all noble Lords will now get on board and show—dare I say it—solidarity with the employers of our country in the compromise that they have reached. I hope noble Lords will not just support the changes in unfair dismissal arrangements but now pass the Bill through to Royal Assent without any further delay.

[Lord de Clifford (CB)]

My Lords, I will speak on Motions B and B1 and register that I speak on behalf of SMEs and as a small employer of 130 people. I thank the Government for listening to businesses and this Chamber with regard to the change to unfair dismissal. Six months is certainly enough time for businesses to assess employees.

I thank the Opposition, the Liberal Democrat Front Bench and my noble friend Lord Vaux of Harrowden for persisting in trying to change Clause 23. This change could have had the effect of allowing employers, especially SMEs and micro-businesses, to take a chance on a prospective employee who shows the skills and talents for a particular role when the employer, for whatever reason, may have doubts. This could be due to a lack of experience, the different ways in which some individuals need to work nowadays, or an employment gap. This change certainly would help that.

However, the Government’s introduction of the change to lift the compensation cap will potentially significantly dampen down employers’ enthusiasm to take this chance. This is especially true for micro-businesses. The regulatory burden and the risk of starting to take on employees is significant, and the removal of a cap will add to the real fear about starting to employ people. All those businesses hear is an unlimited cap, which is what the focus will be in their minds. They will not know about the average limit being just £7,000 or £8,000. The thought of an unlimited liability if you get the dismissal process wrong will either stop businesses taking on employees or mean that some employee issues are not tackled for fear of the possible amounts. This will have a negative impact on productivity and, possibly, the culture that people work in.

I have listened to the Minister and welcome the impact assessment and consideration, but I ask the Government to reconsider this change and put some limit on the compensation, so that small businesses can assess the liability and not have the fear, even if unfounded, of paying a large fine that could put those businesses or business owners at risk.

[Lord Hendy (Lab)]

My Lords, I will make two points. The first relates to Motion B and the removal of the arbitrary statutory limit on compensation. My noble friend the Minister mentioned the tribunal statistics for 2023-24, published by the Government, and the fact that the median award for unfair dismissal was £6,746. That is the median award, not, as the noble Lord, Lord Fox, mentioned, the average award. It means that 50% of all awards for unfair dismissal are less than £6,746.

But those statistics reveal something that I found even more startling: in that year, 2023-24, the tribunals disposed of 31,000 single-claim cases and 2,000 multiple-claim cases; of those, only 646 awards were made in respect of compensation for unfair dismissal. Of course, one accepts that many cases were settled through ACAS or between the parties and then approved by the tribunal, and that would count as a disposal. But 646 cases out of 33,000 means that this jurisdiction of unfair dismissal is little used.

Of those awarded compensation, the latest government survey, which dates from 2013 and has never been updated, found that only 49% of claimants had been paid in full, a further 16% had been paid in part and 35% of successful claimants receiving a tribunal award had never received a penny of their awards. In 2016, the then Government sought to address this lamentable state of affairs by establishing the employment tribunal penalty enforcement and naming scheme to penalise companies that do not pay within 28 days of the tribunal order and, since 2018, by publicly naming them.

However, the BBC and the Bureau of Investigative Journalism published research two months ago showing that of the 7,000 unpaid claimants using the scheme, no less than 5,000 had failed to obtain any recovery. Some 4,800 penalty notices had been issued, with a combined value of £9 million of unpaid awards, but government records show that only 109 of those notices were actually paid, and none of the employers in question was named, despite nearly 4,000 requests for naming as well as compensation. These are the issues that the Government need to confront, not whether highly paid executives and others who are found to have been unfairly dismissed are entitled to the full measure of compensation for their losses.

My second and final point relates to Motion D, the amendment to it from the noble Lord, Lord Burns, and the discussion there has been, on this occasion and on the previous one, which my noble friend Lord Barber was involved in, about the compromise that was reached in 2016. I will go back a little further in the history of trade union political funds. In 1871, the Trade Union Act gave unions, for the first time in British history, legitimacy under the law. A trade union was materially defined as

“such combination, whether temporary or permanent, for regulating the relations between workmen and masters”.

The Act protected such organisations from illegality, in particular for restraint of trade, what is now called anti-competitive activities, of which collective bargaining as the means of regulating relations was the paradigm example. With various tweaks, the essential element of regulating relations between workers and employers remains the essential element in the current legislation for the definition of trade unions.

The point I want to make is that before the 1871 Act and for 40 years afterwards, trade unions continued to spend money promoting parliamentary Bills for the benefit of working people, such as on health and safety, national insurance, restoration of the right to strike after the Taff Vale judgment of 1901, and so on. At the end of the century, they came to the conclusion that they needed representation in Parliament. The Labour Representation Committee was founded by the TUC in 1900 and became the Labour Party in 1906. All this was largely financed by the unions from their general funds, just as employers financed the Tories and the Liberals. But in December 1909—