Employment Rights Bill

Lord Leigh of Hurley Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lord, I have added my name to Amendment 326A in the name of the noble Baroness, Lady Penn. I agree with all that has been said by the noble Lord, Lord Vaux of Harrowden, in introducing it, and, indeed, with the convincing analysis by my noble friend Lord Sharpe.

Noble Lords may recall that I come to the scrutiny of the Bill constructively, having worked for Tesco for many years and enjoyed excellent relations with the USDAW union, the noble Lord, Lord Hannett of Everton, and with the trade unions in general, under the noble Lord, Lord Monks, at that time. We always tried to treat people well, and the success of the business was a testimony to that. We complied with the law.

However, the law is now changing, and I am afraid that this Committee has shown that the Bill needs further work. As drafted, it will be a huge check on growth and will undermine the competitiveness of which we have rightly been very proud in the UK. My noble friend Lord Hunt of Wirral mentioned earlier the worrying research by the Institute of Directors that reveals that seven in 10 business leaders surveyed believe that the Employment Rights Bill will have a negative impact on UK economic growth.

I have two particular examples, which I hope the Minister will look at again. First, Ministers—or rather their civil servant agents, and possibly even the trade unions—will be able to take a legal case where an employee is unwilling to pursue a complaint. That is inappropriate and unfair; consent is such an important principle. It also risks putting further pressure on the already struggling tribunal system.

Secondly, and I apologise that this example has already been mentioned, the Bill will radically reduce the effectiveness of the labour market by giving employees the right to claim unfair dismissal from day one of their employment. Other employees will be disadvantaged, as those who are slack, do a poor job or play the system will not be able to be dislodged without a long tribunal case. This will hit good employees who need to cover for their fellows.

The Minister has very helpfully agreed that there should be a probation period during which suitable arrangements can be made in such circumstances, but we have no detail. All of that will go into regulations, which we will not be able to reverse. That is why I feel so strongly about this evening’s amendment on growth and competitiveness. This would apply when regulations were being made by Ministers. There is, unfortunately, a plethora—a cornucopia—of powers in the Bill. It is essential that Ministers, here and in the devolved Administrations, to which our amendment refers, should be required to look at the impact on UK economic growth and competitiveness when they are making regulations. Otherwise, I fear that the growth objective of this Government is for the birds.

[Lord Leigh of Hurley (Con)]

My Lords, I shall speak to the amendments in my name and in so doing support the other amendments in the group, all of which have been most eloquently described by my noble friends, Lord Sharpe of Epsom and Lady Neville-Rolfe, and the noble Lord, Lord Vaux. My noble friend Lord Sharpe of Epsom is right that the Government’s stated objective of growth, which is a commendable objective, is hampered by some aspects of this Bill. All I am asking for is some time for the real effect and impact of this Bill to be assessed, particularly in respect of small and medium-sized businesses, each and every one of which that I have spoken to to explain what is in this Bill is very unhappy about the consequences that it will have for their business, be it small or medium.

All credit to the Labour Government that, when instructing regulators and creating new regulations, particularly in the financial services market, they have been very clear to the regulators that they must not impede economic growth, and I commend them for that—it is absolutely right. I encourage them to take their own advice and allow this Bill to have an overriding principle that anything and everything in it is intended to promote and help growth. There does not seem to be anything controversial to be afraid of in that respect, and therefore I encourage them to accept the amendments tabled by my noble friends Lord Sharpe and Lady Penn.

My amendments are just asking for time to consider matters. They cover two areas: business and union funding. Very many small and medium-sized businesses will have read the Times comment a few days ago, which I will repeat to your Lordships because it is bang on. It points out that:

“Four in five businesses expect their costs to rise in the wake of the reforms, though ministers have shown little interest in their views. The inevitable result will be a wave of redundancies, hiring freezes, curbs on training and a rise in automation”.


A rise in automation is, of course, a good thing, but it will inevitably lead to greater unemployment. There is no question about it. Every single business I have been talking to has said it is freezing hiring people until they get to understand this Bill better. As the Times points out:

“That is a counterintuitive way to buttress workers’ rights, to say the least”.


and the fact that, as my noble friend Lady Neville-Rolfe explained,

“taxpayers will be called upon to foot the bill, size yet unknown, for the FWA’s operations adds insult to economic injury”.

The Times points out that:

“It is an irony that Labour’s reforms will harm the very individuals they are designed to help. Labour should recognise that in requiring the taxpayer to potentially underwrite the activities of trade unions, they are not only recklessly introducing unnecessary frictions to the labour market, but making inappropriate demands on public money”,


because that is where it will fall. The Times is quite clear when it says:

“Labour ought to think again”.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Sharpe, and all noble Lords who have spoken in this debate.

I begin with Amendment 326B in the name of the noble Baroness, Lady Coffey, which was moved by the noble Lord, Lord Sharpe. In accordance with procedure, the other place has passed a money resolution authorising the payment, out of money provided by Parliament, of expenditure incurred as a result of this Bill by any government department. In practice, the authorisation of any additional government expenditure, for example in relation to the fair work agency, will be approved by the elected Chamber in accordance with its Estimates procedure. As noble Lords will know from the previous debate, our impact assessment for establishing the fair work agency set out the current running costs of the enforcement bodies and initial estimates of set-up costs for the fair work agency.

I turn to Amendment 329A, tabled by the noble Lord, Lord Leigh. As your Lordships’ House will be aware, the Government have committed to ongoing, detailed engagement with businesses of all sizes as we develop the details of regulations under this Act. In addition, our published impact assessments evaluate a range of evidence on the impacts on small and medium-sized enterprises. They also outline a plan for monitoring and evaluating the impact of the Bill and subsequent secondary legislation, which will involve reviewing how the reforms have impacted SMEs.

The Government value the insights that SMEs and their representatives can bring in ensuring the particulars of this Bill strike the right balance. To recognise that, Ministers and officials have hosted and continue to host a range of SMEs and their representatives, including and beyond those stipulated by the noble Lord’s amendment, to discuss the Bill. Such engagement and consultation will continue following Royal Assent, and SMEs will always feature in such engagement and consultation without the need for a formal requirement.

Amendment 329B from the noble Lord, Lord Sharpe, and Amendments 330BA and 330E from the noble Lord, Lord Leigh, cover impact assessments. I will not repeat the points made earlier by my noble friend Lord Leong on the steps the Government have and will continue to take to ensure impacts are properly understood and assessed. The Government have noted the Regulatory Policy Committee’s opinion on our impact assessments, but it has always been our intention to refine our analysis as policy development continues, working closely with external experts, businesses and trade unions.

To reassure the noble Lord, Lord Leigh, on political funds, I reiterate the point that the Bill will ensure that political funds operate in a transparent manner that is clear to union members. Sections 32 and 32A of the Trade Union and Labour Relations (Consolidation) Act 1992 will not be amended via this Bill. It will continue to require that unions provide details of their total income and expenditure in their annual returns to the certification officer, which are made publicly available, and that all members of a union receive information on the total income and expenditure of a political fund through the annual statement to members.

Members of a union are also part of a collective of workers, and political funds should be considered in that light. If a union has a political fund, its members have control over how it is spent through the democratic structures of the union. Unions put considerable effort into raising engagement in their democratic processes, which any member is free to participate in, meaning they are able to decide how their political fund is used. If union members want more information on political fund expenditure, or if they disagree with how that expenditure is being directed, they can take steps to change it. Union members are ultimately members of a voluntary organisation and are free to opt out of political fund contributions if they have objections to how a political fund is operated.

The amendments from the noble Lord, Lord Sharpe, and the noble Baroness, Lady Penn, would require the Secretary of State to have regard to the UK’s international competitiveness and UK growth when making any regulations under the Bill. First, it is worth noting that the UK already lags the OECD average on most employment protections, yet the UK economy has not grown at the average rate of other OECD economies in the last 14 years, missing out, as I said earlier, on £171 billion in growth. The Government’s impact assessment notes that the Bill could have a “direct and positive impact” on economic growth and

“will help to raise living standards across the country and create opportunities for all”,

supporting the Government’s mission for growth. We will continue to pay close attention to the potential impacts as we develop regulations to implement the measures in the Bill and produce further impact assessments in line with our Better Regulation requirements.

This Government know the impact of the UK being internationally competitive. Our country has great strengths, but we have lacked the dynamism required to seize new opportunities, and businesses have needed long-term stability. Meanwhile, the global trading environment has become unpredictable, supply chains fragile and other economies more assertive in protecting their security and promoting their strategic strengths. That is why we have a clear goal: driving growth domestically. Making work pay is just one aspect of our mission to boost growth and break down the barriers to opportunity which have been holding our country back.

Our plan for change is already delivering benefits. We had the fastest growth in the G7 at the start of the year. Interest rates have been cut by the Bank of England four times since the election. A record £63 billion of private investment was announced at the investment summit last year, with £40 billion announced by Amazon just today, and 500,000 more people are in work. We have three trade deals with global economic powerhouses, and business confidence is at a nine-month high. This is a Government delivering for working people, and this Bill will help more people stay in work, support workers’ productivity and improve living standards across the country.

To wrap up this lengthy Committee stage, I want to say that it is with great pleasure that I conclude our final group of this Committee. The Government were elected on a manifesto that committed to implementing Labour’s plan to make work pay in full, in order to put more money into working people’s pockets. Our first mission as a Government is to deliver economic growth in every part of the country. However, securing that growth can only be worth doing if working people actually feel the benefits. While workers are subject to unethical fire and rehire practices, exploitative zero-hours contracts or last-minute shift cancellations, that certainly will not be the case. That is why this Bill is at the centre of the Government’s plans. It will protect workers from these practices and provide economic safety for the lowest paid in the labour market.

Just consider a few of the changes it brings. It means that 9 million employees will gain protection from unfair dismissal—not after two years, but from day one. It means that workers in some of the most deprived parts of the country will be spared up to £600 in lost income from the hidden costs of insecure work, and it means that at least 900,000 workers every year will benefit from bereavement leave following the death of a loved one.

In conclusion, my noble friends Lord Katz and Lord Leong and I very much look forward to engaging with noble Lords further on the Bill as it progresses to Report. I thank the Official Opposition, the Liberal Democrat Front Bench and noble Lords across the Committee for their contributions throughout this Committee. I must ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 325.

[Lord Leigh of Hurley (Con)]

Before the noble Baroness sits down, I thank her for her answer. Clearly, the feedback from the organisations she has met is not in parallel with the feedback I have had from similar organisations. I appreciate that the meetings she has had may have been in confidence. But if not, would it be possible to publish the notes of those meetings and of any future meetings with representative organisations such as those in my amendment, and of meetings with the other organisations that, I am pleased to hear, she has also met?

[Baroness Jones of Whitchurch (Lab)]

We on these Benches meet with members of the SME sector all the time for various purposes. As well as the formal meetings, we meet them in all sorts of guises—for example, to discuss the industrial strategy and some of the digital growth policies. I do not think it practical to do what the noble Lord has asked, but I can assure him that the more formal consultation meetings happen regularly.