Employment Rights Bill

Lord Fuller Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, I support the amendments in this group and endorse most of the arguments that have already been advanced. I will focus just briefly on tech scale-ups.

Noble Lords will, I hope, remember that the Communications and Digital Select Committee published a report just a few months ago on AI and Creative Technology Scaleups. These businesses are incredibly important to our economic growth. They represent the innovation that comes out of our universities and the talent that exists in this country, but they need a huge amount of support to get from being start-ups to scale-ups. However, if they are successful, the return that they then deliver to our economy is huge.

Our inquiry found that the UK is, in effect, an incubator economy. What we are seeing now is that increasingly the kinds of businesses that have the potential to turn into unicorns, or indeed become unicorns, are galloping away. They are doing so because of many things. Sometimes it is about access to capital growth and to highly competitive workforces. But one of the biggest challenges that we face is that our regime, whether it is regulatory or investment, is not supporting risk-taking. As my noble friend Lady Noakes said a moment ago, the measures in the Bill about day-one rights on unfair dismissal, along with many other things, are undermining risk takers.

As part of our inquiry—before the Bill was published—witnesses told us, in the context of hiring, that the costs of hiring and firing are already much higher in the UK than anywhere else, which is putting UK businesses at a disadvantage. In the context of the Bill and the day-one rights around unfair dismissal, the Startup Coalition, which represents the start-ups, talked in its briefing note about the chilling effect that these day-one rights around hiring and firing would have on start-ups, seriously undermining their potential for growth. TechUK, which represents tech businesses of all sizes, has raised a lot of concerns about some of these day-one rights, but in the context of unfair dismissal, one of its concerns, which I do not think we have heard much about so far, is the risk of fraudulent claims.

In the Government’s response to our report—while I am on my feet, I add a bit of advertising: the debate on the report is on Friday 13 June, so I urge any noble Lords who are interested in this to sign up and contribute—they referred a lot to their AI action plan and the forthcoming industrial strategy, saying that jobs will be “at the heart” of that strategy. If that is the case, I urge the Minister to think again in the context of what I have just argued. If jobs are to be at the heart of that strategy, and the Government are as keen to support tech scale-ups as they have declared themselves to be and have put this part of the economy centre stage in all their growth plans, but these kinds of measures are making it impossible or so difficult for these businesses to be willing to take the risks to hire in the way that they need to in order to scale, then the Government are introducing measures which are self-defeating and which will undermine their own objectives.

[Lord Fuller (Con)]

My Lords, I shall speak to Amendments 104, 105, 106 and 107, but particularly Amendments 107A and 108, relating to day-one rights.

Getting into work helps people make the best of their lives and reach their full potential. It is good for them and their families, and, of course, employment helps businesses and, through the taxes that everybody pays, helps sustain our state. You would expect that it was a core role of the state to incentivise the creation of jobs in pursuance of economic growth, personal fulfilment and a reduction in the costs of worklessness. It sounds so obvious, but the Government need to be reminded of those simple truths, because the facts are that the well-meaning and superficially attractive suggestion that employees should have full rights from day one is full of perverse consequences that will reduce the appetite to take on staff and will particularly benight those with few qualifications and limited experience. Furthermore, it does not reflect the way in which the economy is changing and the world of work is altering, as people choose to work in different ways.

Taking on new employees is not something that organisations do lightly. For the most part, there is an application and interview process, and we have heard about this from other noble Lords. For most employees, applying for and getting a new job is a well-trodden path, as someone builds a career, gains experience and seeks promotion. But that is not how it is for the part of the workforce that does not have formal qualifications. We have heard about ex-prisoners and people without experience or a strong track record in a particular field. People get on the ladder only when an employer takes a chance on them. The muddled thinking behind this Bill will result in the perverse outcome of increasing not only the cost of taking somebody on but the risk of getting it wrong. The consequence will be to make a business think twice before taking a chance on the person with limited experience, people at the beginning of their career, or those with an impaired employment record. These people need the greatest help.

It is not just the youngsters who may suffer from these well-meaning but counterproductive proposals. Many people prefer a portfolio of part-time jobs nowadays, because it suits their lifestyle. The facts are that the relationship between casual, agency and temporary work in the UK suits those engaged in it for a variety of reasons. The temporary agency, Adecco, tells me in a briefing that 79% of UK temporary and agency workers rate the flexibility it gives them most highly, and two-thirds say that temporary or part-time work helps their work-life balance.

Because much of the temporary work is variable and unpredictable, it is incompatible with some of those other day-one rights, such as the offering of guaranteed hours over a reference period. Some of the employment that might fall under this ambit is weather-dependent work—there is not much call for an ice-cream seller on a wet bank holiday weekend in a seaside town, for example. Seasonal work—harvesting, for example—often depends on the weather. It has been very dry recently, and harvest is going to be earlier this year. If you think about the reference period, there is more likely to be work up until 30 June, rather than in the normal quarter, which would have been the successive quarter reference period. There is casual work, such as waiting at a wedding or manning the turnstiles at a stadium concert or event, for example. All of these are temporary things, and it is going to be very difficult on day one for the employer to commit to some of these rights, because it is out of the employer’s control.

There is another perverse consequence that relates to the wider umbrella of agency and temporary work, such as supply teachers and supply nurses—I notice that the noble Baroness who was the chief nurse is no longer in her place—and locum and sickness cover, where the employee determines their availability, not the employer, as it suits them. We see that some of these rights are actually going to put the employee in a worse situation, because they are going to lose their bargaining power.

I will move on, because I am conscious of the time. All I will say is that codifying many of these things will make it harder for people to take advantage of temporary opportunities and will counterintuitively reduce their bargaining power, removing the labour market liquidity that makes the economy work for all parties, and particularly the taxpayer.

--- Later in debate ---

[Baroness Coffey (Con)]

My Lords, this is one of the most important parts of this legislation, and I am very conscious of the Labour Party’s manifesto and its success in the election last year. However, at the same time, this is the same Government who want to increase the employment rate to 80%, which has not been achieved in a very long time. If we go back in history, we see that the Blair-Brown Government did not make changes to go to zero or day-one rights in the same way. Yes, they changed it from two years to one year. The coalition Government later changed it back to two years.

Yet we are now seeing—as has already been pointed out elegantly by the noble Lord, Lord Vaux of Harrowden, in response to some of the comments raised on the Government Benches—that this is the Government’s own impact assessment. If we look at the Regulatory Policy Committee’s assessment of these proposals, we see that it gives a very strong red rating on this element and suggests that, basically, there is no evidence that they are in any way needed.

There are aspects here of “What is the problem that the Government is trying to address?”. Lewis Silkin solicitors point out that if the only changes to be made were those referred to and we were still to have, as the noble Lord, Lord Hendy read out, the different approaches on fair dismissal in the tribunal, the Government could just put forward a statutory instrument based on the existing power of the 1996 Act. However, they have not done so in the Bill; they are seeking to go much further in a variety of ways in Schedule 3. That is why I share the concerns of many other noble Lords who are worried about the unintended consequences. Nobody can believe that a Labour Government would want to see unemployment rise or more people on benefits, or not tackle the challenge of people not in education, employment or training—

[Lord Fuller (Con)]

Or the most vulnerable.

[Baroness Coffey (Con)]

Or the most vulnerable—and we can just keep going.

However, on whether people take cases to the employment tribunal, as has been referred to, we are not going to debate Part 5 tonight, but in this same Bill, where we have to consider a lot of these things in the round, the Government are proposing to give an unlimited amount of money to somebody to get legal aid or legal support so that they can go to tribunal. In fact, they are going further and saying that the Secretary of State or somebody they appoint can go to court on their behalf. In that case, in Part 5, we are talking about people who have not even started work.

So, rolling it back, on some of the concerns about which noble Lords on the Government Benches are suggesting, “Don’t worry about it, this isn’t going to happen”, actually, the entire Bill is opening that. That is why I hope the Government do not just listen to the real concerns of noble Lords in this House; they should consider their own impact assessment and the representations of all the business organisations that think that this is just wrong.

I support the amendments. There are a variety of them about putting in the Bill a defined time for what should be considered a probationary period. We have already had a separate discussion about apprenticeships but, going further, one thing that surprises me is that in paragraph 2 of Schedule 3, new Section 108A refers to:

“Employees who have not yet started work”.


You may think, “That’s very sensible. How can you have an unfair dismissal?” I have already referred to Part 5, coming somewhat later. Then there is a list in the Explanatory Notes. It is quite complicated—it tries to simplify it, but the legislation is complicated—but here we have one of the answers. A lot of the Bill is basically about trying to make sure that trade union membership goes up—that means more money going into the political fund and having to wait to opt out until the following January, for, in effect, finances. Indeed, paragraph 5(3) of Schedule 3, as a consequential amendment, says that, in effect, the qualifying period for unfair dismissal, before you have even started work, will not apply if you are a member of a trade union. That is what is going on in this legislation. I will read it out:

“Omit section 154 (disapplication of qualifying period for unfair dismissal relating to union membership”.


There are a number of activities here; it goes further in the Explanatory Notes. They include if you are on strike—I do not quite understand how you could be on strike if you have not started work, but perhaps one is on strike if one is in a different job. There are already protections in the disapplication in existing law—it suggests people who are pregnant and similar. There are a variety of things here where there are already protections, but these are now being extended in different ways. Sometimes, the Government Back Benches may not all have necessarily read the full detail of the Bill.

To that end, I support the noble Lord, Lord Vaux of Harrowden, in saying, “Let’s get rid of this clause and this schedule”. There is genuinely a way to start this again. There is still time for the Government to go away and do proper thinking—there is plenty to get through in this debate before we get to Report—to really narrow in on what the Government are trying to do, rather than, frankly, giving a blank cheque to a series of employment situations. My noble friend Lord Hunt of Wirral—happy birthday to him, by the way—has already deemed this to be the unemployment Bill. I know those are not the consequences that the Government are seeking to address, but the experience and the petitioning of business organisations is very clear that that is what will happen.