Employment Rights Bill

Lord Katz Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

Will the noble Lord give way very briefly at this juncture?

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

Order. It is clear that the noble Lord, Lord Fox, is not going to give way, and that is his prerogative.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I join the general praise and congratulations for my noble friend Lady Penn for her Amendment 64. There is not much more for me to say, other than that I echo the comments of the noble Lord, Lord Fox. I hope the Government are listening and will address the issue raised by my noble friend as we get to the next stage. If they do not, I would be more than happy to support my noble friend in her future endeavours.

Amendment 66 in the name of the noble Lord, Lord Watson, was expertly spoken to by the noble Baroness, Lady O’Grady. I was going to echo very much the same points about the employment tribunals. An awful lot will be expected of them but, as we know, the simple fact is that the backlog is increasing, there is a shortage of funds and the waiting times are increasing—they are up to two years. It does not seem very plausible to expect that employment tribunals will be able to cope with the amount of work that is coming their way—I am afraid that will probably include work with regard to that amendment. I look forward to hearing the noble Baroness’s comments.

[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.

[Lord Hendy (Lab)]

Perhaps I could add something on that subject. I think that my noble friend suggested that there was one overall cap and that consistency was required, which is the point that my noble friend Lady O’Grady has developed. In fact, there is a range. Unfair dismissal is subject to a maximum per week for two years. Redundancy, which the Minister mentioned, is on a different basis; it is, essentially, one week’s pay for each year of employment up to a maximum of 20. Discrimination is dealt with on a different basis altogether, with no cap at all—it is the amount of compensation. So I do not think that consistency is really an answer. A general review would be very helpful, though.

[Lord Katz (Lab)]

I thank my noble friend for that. I certainly will not try to better his knowledge of employment law and, indeed, compensation for penalties in employment law. What I will say is that the basic principle that this amendment is calling for is not necessary. We have the powers to do what is behind the amendment already in the Bill. Indeed, it is up to individual organisations to engage if they think that that power needs to be used more frequently or to a greater extent.

[Baroness Penn (Con)]

My Lords, I thank all noble Lords for their participation and support and my noble friend Lord Ashcombe in particular for his comments, which demonstrated very practically the benefits of flexible working to businesses and in running teams effectively. I also thank the noble Lord, Lord Fox.

Just to emphasise further the potential benefits of flexible working for businesses and in terms of getting people re-engaged in the workplace, research conducted by the Behavioural Insights Team has shown that offering flexible working can attract up to 30% more applicants to job vacancies, and work by the ONS revealed that older workers working flexibly would be more likely to plan to retire later. Those are just two further specific examples.

I will speak just briefly to the other amendment in this group. I heard how well put the noble Baroness’s argument on behalf of her noble friend was, but I also hear the nervousness around increasing the number of issues that go to employment tribunals and then, across this Bill, the burden that will be placed on tribunals and the delays for both employers and employees caught in that system. The Minister said that perhaps it had, in recent years, been underinvested in, and that that was something the Government would seek to address. I would therefore be interested to know from Minister whether that is something that the Government will seek to address, whether he can say what additional investment will go into the employment tribunal system to prepare for the Bill and whether he will also commit to that investment going in ahead of the commencement of the Bill, so that we have the system in place to deal with some of the changes that we have heard about. He may wish to return to that point at a later point in the debate—he is not leaping to his feet right now.

I acknowledge that, although my amendment would change the legislative framework for flexible working, it is really about changing the culture to one where you can have the conversations as early and openly as possible. However, in how we have approached flexible working in legislation, we have underpinned those changes with legislative rights, so that people have rights to come back to.

I was slightly confused by the noble Lord’s response to my amendment. He said that, in practice, it is what happens anyway, but it would not be appropriate to underpin it with legislation. I was not totally clear why not, when we underpin the rest of the system of the right to request flexible working with legislation. He also said that if someone had their job offer withdrawn because they had made a request for flexible working, that would be covered by existing discrimination legislation. I do not believe that would be the case. It would be the case if their job offer had been withdrawn because they had a protected characteristic.

Actually, I think that one of the important things about the shift in flexible working that we have seen in recent years, and the 2014 move to extend that right to request to everyone, not just mums, dads or carers, is the changing of the culture around what flexible working means. It is really important for those people with caring responsibilities and other responsibilities in their lives, but it is really important for a whole host of other reasons, and we cannot second-guess people’s individual circumstances when they request flexible working. If someone has been made a job offer and they request flexible working, I do not think that current legislation will protect them if that job offer is withdrawn on that basis.

[Lord Katz (Lab)]

I would be very happy to write to the noble Baroness to clarify our understanding of the way that the discrimination order would operate in that scenario. Perhaps the way that I was explaining it was not clear enough, but we think that it is the case that a lot of what she is asking for in the amendment will be covered.

[Baroness Penn (Con)]

I thank the noble Lord for that offer; I really appreciate it. Just to touch on the points made by my noble friend Lord Jackson, I absolutely heard his support for flexible working. In fact, one of the points I just made is that I am really keen, as noble Lords will hear from me on later amendments on paternity leave, that we shift some of the assumptions around who might need and use flexible working and other kinds of flexibility in the workplace, so that we do not assume that it is just the women or the mums. Then they might actually face less discrimination, because an employer cannot look at someone and say, “I think this person’s going to make a particular request of me and I’m a bit nervous about that: how’s that going to work?”

The whole basis of this, and the whole success behind it, will be in having the support of employers. This is an area where culture has shifted. There is further to go among some employers, but they really see the benefits of this in their workplaces, so although I have tabled an amendment to provide a legislative underpinning to things, I think it is about changing culture and having a more open conversation. With that, I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Fox (LD)]

Those are good points. Again, had the noble Lord seen an earlier episode of the soap opera of this Committee, he would have heard noble Lords from all around talk about firming up imprecision, which is why I talked about firming up the imprecision of that list of attributes rather than trying to produce a list of businesses and activities that somehow should come into this—an impossible job, frankly. Of course we should have a war on imprecision but, in the end, there are going to be some things that tribunals rule on that will be important, and we need to have the tribunals active and quick to do so.

To some extent, there is an element of creativity around the fungibility of some of these criteria—I think the noble Baroness, Lady Bousted, made that point. If we have some flexibility of interpretation, schools and other organisations that want to hang on to valued colleagues will find a way of using it in order to do that. If we start to rule out professions or rule in very hard and fast rules, we lose the opportunity to retain and attract certain groups of people. I understand the point made, that the more of that fungibility there is, the more so-called imprecision, and there is a balance between the two. That is why I still think that if we have ideas around new subsection (1ZA), that is the way forward on this rather than a list of jobs.

[Lord Katz (Lab)]

I thank the noble Lord, Lord Sharpe of Epsom, for tabling this group of amendments related to flexible working.

Amendment 65 would exempt security services from the flexible working measures we are introducing through the Bill. These measures include ensuring that employers refuse a flexible working request only where it is reasonable to do so, on the basis of one of the business grounds set out in legislation and requiring that they explain the basis for that decision to their employee. I draw the noble Lord’s attention to the existing provision the Government have made to safeguard national security in relation to flexible working.

I will explain the measure taken in the Bill. Clause 9(7) brings the flexible working provisions into the scope of Section 202 of the Employment Rights Act 1996. Section 202 states that if in the opinion of a Minister the disclosure of information would be contrary to national security,

“nothing in any of the provisions to which this section applies requires any person to disclose the information, and … no person shall disclose the information in any proceedings in any court or tribunal relating to any of those provisions”.

By bringing the flexible working provisions under the scope of Section 202 of the 1996 Act, the Government have already taken the necessary and proportionate steps to protect national security. To respond directly to the question of the noble Lord, Lord Sharpe, we have indeed engaged with, discussed and agreed this approach with the intelligence services.