Employment Rights Bill

Sarah Olney Excerpts

Consideration of Lords message
Monday 15th December 2025 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

Today we are debating the fourth round of consideration of Lords amendments to this Bill, and this long and protracted process says a lot about the way the Government have approached this legislation. The Bill was initially put together at great speed, missing much of the detail; there was a long series of Government amendments late in the process; and now a major last-minute change on the compensation cap for unfair dismissal has been sprung on businesses and Parliament. Regardless of what one makes of the different measures in the legislation, I think most of us would agree that the process followed in designing it has been less than ideal. Having said that, let me reiterate what has always been the Liberal Democrat position on the Bill: we support many of the aims of this legislation.

We welcome expanding access to statutory sick pay, improving parental leave and taking steps to address the massive pay gap facing social care workers. We agree with giving those on zero-hours contracts more certainty, even though we proposed what we view as a more practical and balanced way of doing so, and we are pleased to see a unified Fair Work Agency, which we also called for as a way of empowering employees to exercise their rights without fear of any negative consequences. However, we have made it clear that we have significant worries about the specific way in which some of those measures would be implemented, and we have repeatedly raised our concern that crucial detail was being left for secondary legislation.

By far our biggest concern was the complete lack of clarity on unfair dismissal and probation periods, which is why we have worked in both Houses to secure a vital concession setting the qualifying period for unfair dismissal at six months. We are proud that when some tried to brush aside the concerns of the business community and others sought to frustrate the process, it was the Liberal Democrats who secured this vital provision. It is the role of any responsible Opposition party to engage constructively and achieve substantial improvements for the good of our country. It could not be clearer that this fair and sensible shift will equally benefit businesses and workers. So many businesses I have spoken to have said that this is the single most meaningful change that could have been made to the Bill.

[Dr Luke Evans]

I am conscious that we are debating a particular point. Is the hon. Member voting for or against the cap? That is the essence of what we are looking at today.

[Sarah Olney]

I am glad that the hon. Member has raised that. I was coming to that in my speech. Perhaps he could listen with a little more attention.

Employers have finally been given the necessary clarity to make hiring decisions with confidence, and we have avoided the danger of unnecessarily slowing down the labour market even further, which would have deprived so many people of vital employment opportunities. That is exactly what the progressive Resolution Foundation think-tank warned of when it said there was a risk that

“employers would be nervous about hiring new workers or offering shifts, and this would make life harder for job seekers.”

As I pointed out last week, it is really disappointing that the Government decided to muddy this improvement by simultaneously abolishing the cap on compensation for unfair dismissal. Employers were not in favour of scrapping the £118,000 cap, and I once again point out that bringing in a change like this at the last minute is not how we build trust between Government and business. However, I note that employers and business groups have been equally clear that this last-minute change must not stand in the way of the far more important changes secured with regard to the six-month qualifying period. Above all else, business values pragmatism, and that is exactly why it wants to see this breakthrough protected and enshrined in law. That is what has guided our approach throughout.

Will the Minister confirm on the Floor of the House that the Government will conduct an assessment of the impact of the removal of the compensation cap, actively seeking views from businesses, as was indicated to the Liberal Democrats in the other place? On a broader level, will she give a cast-iron commitment that the Government will hold regular debates in both Houses to ensure that Parliament can scrutinise what work is being done to consult businesses and workers on all relevant implementation aspects of this Bill? How are the Government planning to support employers in order to ensure that they have robust policies and practices in place to navigate these changes to the unfair dismissal regime?

Lastly, to those in the Conservative party who have been trying to sabotage this crucial compromise on the six-month qualifying period, I simply say that they are acting not in the interest of British businesses but only in their own narrow party political self-interest.

[Graham Stuart]

On that very point, does the hon. Member believe that it is totally pragmatic to have disregarded her objections to the removal of the cap in return for additional places for the Liberal Democrats in the House of Lords?

[Sarah Olney]

It is so revealing of Conservative Members’ mindset that they cannot believe what I am actually saying is the reason for our change, and that they assume instead that we must have sought some benefit for ourselves. It is so revealing that that is what the Tories think. It beggars belief that the Conservatives, having hammered businesses while in government, are now doing everything in their power to undermine UK plc from the Opposition Benches.

I note that the Government have taken steps to improve the clarity of the legislation with regard to seasonal work, introducing measures that will ensure that businesses relying on seasonal work and bodies representing seasonal workers will be properly consulted when secondary legislation is drawn up. Many businesses, such as those in the farming and agricultural sector, as well as thousands of pubs, cafés and restaurants, depend on seasonal workers, and any obstacles to hiring them could have a significant impact, exacerbating the long list of challenges they already face, so we must ensure that they are supported as much as possible. Small businesses in our local towns and communities are struggling with the Government’s unfair national insurance rise, high export costs due to Brexit red tape and a business rates system that is not fit for purpose. Struggling businesses mean fewer jobs and lower pay, so it is vital that we take steps to support high street businesses and all those who rely on them.

It is time that we listened to the business community, which is telling us that the best way forward is to look for balanced solutions through secondary legislation and to put an end to the uncertainty and avoid losing the six-month qualifying period, which we were happy to have helped secure. Continuing to delay the passage of the Bill at this late and protracted stage would risk further uncertainty for businesses, particularly small and medium-sized enterprises, and would jeopardise significant changes that will benefit workers, such as expanded protections against workplace harassment and improved paternity leave rights.

I urge Members to be pragmatic and to provide clarity to businesses and workers alike regarding an implementation timeline. That is critical for providing a stable operating framework so that businesses can plan ahead. We should now work together to ensure that this legislation can be implemented to benefit businesses and workers alike.

--- Later in debate ---

[Jerome Mayhew (Broadland and Fakenham) (Con)]

We are short on time, so I will limit myself to two points.

I will start with what my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) admirably described as the “craven capitulation” of the Liberal Democrats. Just a week ago, the Liberal Democrats were arguing passionately about unions’ abilities to cause strikes, and about the right to guaranteed hours. Then what happened? Five peerages came along. Now they are in favour of those things. It used to be the case with their last Prime Minister, Lloyd George, who famously used to sell peerages for money. Now it seems that the Liberal Democrats sell their principles for peerages.

[Sarah Olney]

On a point of order, Madam Deputy Speaker. I think that is disgraceful. The hon. Gentleman is literally implying corruption. I made it very clear in my speech what the basis of our change in support in the Lords was for, and I think it is intolerable that we are being accused.

[Madam Deputy Speaker (Caroline Nokes)]

I thank the hon. Member for her advice. As it happens, she makes a good point. The hon. Member for Broadland and Fakenham (Jerome Mayhew) should not be suggesting any particular motive attributed to that issue, and could he perhaps confine his remaining comments for the next 90 seconds?