Employment Rights Bill

Second Reading

That the Bill be now read a second time.

My Lords, when this Government came into office, we made a commitment to deliver the biggest upgrade to workers’ rights in a generation—a commitment I particularly support, given that I have been a proud member of UNISON for many years. We promised to introduce a Bill focused on improving workers’ rights and creating the necessary conditions for long-term economic growth within 100 days of taking office. This was delivered in October last year, fulfilling a key manifesto commitment.

This Bill addresses the pressing issues workers face today. Workers have waited too long for change due to the legislative stasis over the past decade and more. Average salaries barely increased under the previous Government and the average worker would now be over 40% better off if wages had continued to grow as they did leading up to the 2008 financial crisis. This lack of action means that there are far too many people in low-paid and insecure work. As few as one in six low-paid workers moves into and stays in better-paid work, and 2 million employees report feeling anxious about hours worked or shifts changing unexpectedly.

This is why Labour committed to making work pay as a key pillar of our election manifesto last year. In that manifesto, we were clear that our core mission as a Government would be not just economic growth but growth which raised living standards in every part of the United Kingdom so that working people have more money in their pocket. The mandate that the British people returned was clear. Further polling by Opinium and Focaldata since the election has highlighted that there is broad and strong support across the political spectrum for the policies in this Bill. British people have waited long enough. They now urgently want protections in their workplaces from day one of their job, an end to exploitative zero-hours contracts, and greater flexibility so that work works around their lives.

This legislation was developed in close collaboration with business and trade unions, and we are committed to ongoing engagement to ensure that all stakeholders, including SMEs, receive appropriate time to prepare for the ensuing changes. The improvements it offers in improving workers’ well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits worth billions of pounds per year. The Bill seeks to address the gaps and outdated provisions in current employment law and helps us turn the tide on the debilitating trend of in-work poverty.

I will now speak to the specifics of the Bill. Part 1 introduces changes to various high-profile areas of employment law. Here, we make good on our commitment to end exploitative zero-hours contracts. The Government are committed to ending one-sided flexibility, ensuring that all jobs provide a baseline of security and predictability so that workers can better plan their lives. The changes set out will require employers to offer qualifying workers guaranteed hours, reflecting the number of hours they work regularly during a reference period. This will be set out in regulations but is expected to be 12 weeks.

My Lords, I begin by drawing attention to my interests as detailed in the register, in particular as a practising solicitor and partner at DAC Beachcroft.

I thank the Minister for opening the debate and we look forward to the maiden speeches of my noble friends Lady Cash and Lord Young of Acton, and the noble Baronesses, Lady Berger and Lady Gray of Tottenham.

I have always believed fervently in workers’ rights and trade unions. Indeed, as a young solicitor, I often acted for the Transport and General Workers’ Union in a wide variety of cases. By the late 1970s, however, by which time I was a Member of Parliament, it had become abundantly clear that something had gone seriously awry with the trade union movement. The unions seemed to be abusing their powers, pursuing not only the legitimate interests of their members but an overtly political agenda.

I remember being in the House of Commons when, in the final year of the Callaghan Government, the unions all but brought the country to its knees. A new settlement was needed. Successive Conservative Governments, between 1979 and 1997, gradually changed the nature of the social contract between employers, employees and the unions. Days lost to strikes tumbled from tens of millions a year to a tiny fraction of what they had been. Thanks to the more flexible labour market we had created, renewed economic growth brought a dividend of rising employment and falling unemployment far more quickly than anyone expected. That was not the Wild West. Indeed, workers’ rights and protections were often extended, not diminished.

The last Labour Government, under both Tony Blair and Gordon Brown, broadly accepted that renewed social contract and embraced the flexible labour market that serves both employers and employees so well. So, what has changed? Furthermore, what has changed during the passage of the Bill? It has had a brief lifetime, yet we have already had 160 government amendments in Committee in another place, including 11 new clauses and two new schedules. This farrago was followed by a further 40 new clauses and five new schedules on Report.

My Lords, it is a privilege to contribute to this important Second Reading today. Unlike the noble Lord, Lord Hunt, I acknowledge that this Bill contains several provisions that, if implemented properly, could have a significant positive impact on many individuals. However, as we deliberate, I am mindful that the Bill presents both promise and areas of concern. In particular, I shall focus my remarks on the challenges faced by carers, an often-overlooked but integral part of our society. As the Bill progresses, their needs must be not only considered but prioritised. I shall rely on my noble friend Lord Fox to deal with many aspects of the Bill other than the bits that I am stressing.

First, I turn to paid carer’s leave. While the Government have committed to reviewing the Carer’s Leave Act 2023, I question why we delay a measure that is both necessary and beneficial. The Government recognise that carers’ inability to work costs the economy £37 billion annually. In light of this, paid carer’s leave should be a priority, not an afterthought. This is not an expensive proposal. Carers UK estimates that introducing paid carer’s leave would cost between £5.5 million and £32 million per year, depending on the level of compensation. In return, more than 2 million working carers would benefit, businesses would save billions through improved staff retention and workforce participation would increase. Given these clear advantages, why have the Government excluded this measure? During the passage of what became the Carer’s Leave Act, Members of the now-Government challenged this omission. It is striking that they have not prioritised it themselves. Will the Government commit to including paid carer’s leave in this Bill? To neglect this opportunity would fail both carers and the economy.

Beyond paid leave, employers should be required to consider employees with caring responsibilities in their equality action plans, alongside commitments to closing the gender pay gap and supporting employees experiencing menopause. If we are serious about workplace equality, we must acknowledge the specific challenges that carers face. Furthermore, the Government must prevent discrimination against carers. One solution would be adding caring as a protected characteristic under the Equality Act 2010. Many carers face workplace marginalisation and are penalised for their responsibilities. Will the Government explore this reform? Every year, 200,000 people leave the workforce to take on caring responsibilities, costing the economy £8 billion annually. By failing to support carers properly, we harm their well-being and weaken economic potential. Paid carer’s leave would help carers stay in work, strengthening both the labour market and the economy.

My Lords, I have just four minutes, so I will not beat about the bush. While I understand the need to bear down on unscrupulous employment practices, this Bill is fundamentally misguided, out of date and out of touch and will wreck the spirit of enterprise. It will damage jobs, productivity and wages across both the public and private sectors. That is not just my view, but the OBR’s. The impact assessment, which claims that the Bill will have a net positive impact on growth, is guilty of fantasy economics, suggesting that its authors have little feel for, or experience of, creating jobs, developing careers or even meeting payroll.

Perhaps most troubling is that all the clauses in this 300-page Bill, and its 200 pages of Explanatory Notes, apply to all employers without exception, whether you are a UK multinational with a workforce of 100,000, a start-up with 10 staff or a family business with two employees. It is one size fits all, whether we are talking about day one rights, probationary periods, guaranteed hours or flexible working. This Bill shows scant regard for building a competitive economy with modem working practices. It discriminates against SMEs—our country’s engine of growth—and offers nothing for freelancers and the self-employed, for which perhaps we should be grateful.

My views are shaped by my lived experience over 30 years as an entrepreneur and employer, from a start-up with two employees around the kitchen table to building a workforce that grew to 10 staff, then to 50, 100 and eventually to 300 employees, plus 100 freelancers. I learned what it takes to recruit and train people effectively, to incentivise and reward them and to develop their careers from probation to permanent, from junior to management and from internship to becoming an equity partner. I took risks and made many mistakes along the way, from hiring the wrong people, holding on to staff for too long, overpaying, underpaying, growing too quickly and having to downsize in the rough and tumble of the free market. But here is the thing: I never once ended up in an employment tribunal and my experiences with staff and freelancers were overwhelmingly positive, driven by common mutual interest and without the need to resort to onerous employment manuals, interfering HR departments or, indeed, employment lawyers.

My Lords, I am glad to speak in this Second Reading. I look forward to the maiden speeches and welcome new Members to your Lordships’ House.

Some years ago, I undertook research on the apostle Paul and work. Paul was never one to shy away from hard work and spoke of the personal cost of his tent making business, describing it as wearisome and fraught with the challenges of local politics. Two thousand years later, we continue to live amid diverse uncertainties.

The desire to make work pay and improve workers’ rights, as proposed by this Bill, must pay attention to the obvious: people who work are human beings. A strong economy needs resilient workers. As we scrutinise this legislation, we do so affirming that workers matter. If we get this right, we can move closer to a society in which people are viewed with inherent value and dignity. When people are valued and supported in what they do, they contribute to greater economic flourishing.

Noble Lords will know that in-work poverty has risen significantly in recent years, particularly in the north-east region, with those in less secure work much more likely to be experiencing poverty than those whose contracts offer basic protections and guaranteed hours. The disproportionately negative impact on the lives of children is well documented, with the North East Child Poverty Commission reporting heightened concern following yesterday’s Spring Statement. With the Bill before us today, legislating against exploitative contracts is a step forward in ensuring that every person can access good work, plan ahead and provide for themselves and their families. But there may be unforeseen consequences.

I welcome reforms to parental leave and strengthened flexible working. I would like to see a statutory right to paid kinship care leave on a par with adoption leave—a point made just now by my noble friend Lord Palmer. A right to paid leave would enable kinship carers to take time to make necessary adjustments and continue in paid employment. This is a matter I have already raised with the Minister, and I was very grateful for her time in listening. I raise this matter again here and look forward to further conversations.

My Lords, this is a very bad Bill for many reasons, and I will have to ration myself to just two areas.

First, the Bill is unequivocally bad for businesses and therefore bad for growth. It is not pro-growth to impose £5 billion-worth of costs on businesses. It would be pretty bad if this Bill existed in isolation, but it is not in isolation; it is part of a triple whammy which involves the jobs tax, which will add over £20 billion to private sector wage bills, and the national minimum wage increases, which will add many more billions.

The Government seem to have forgotten that they need private sector businesses to grow if they are to achieve their overall growth objective. The economic impact analysis which accompanied the Bill claims the possibility of a small positive impact on growth, but the probability is a big negative impact, as suggested by the OBR in its spring forecast yesterday. For that reason alone, the Government should have killed this Bill at birth. The country cannot afford it.

In response to the triple whammy, most businesses are expecting to raise prices and reduce pay increases and employee headcount. That will lead to inflation, lower employment, reduced profits and reduced taxes. It will create an environment in which businesses will not invest, thus hobbling another leg of the growth ambition. A key plank of the UK’s ability to attract inward investment has been the flexibility of our labour markets. This Bill destroys that competitive advantage. It is an economic disaster zone.

SMEs are particularly hard hit by this Bill. The economic impact assessment is clear about this. Of course, anything which is bad for SMEs is also bad for growth, but policies which bear down excessively on SMEs are particularly destructive to the foundations of the way we do business in this country. At the last count, there were more than 5.2 million micro-businesses with fewer than 10 employees and a further 220,000 small businesses with 10 to 49 employees. Between them, they have nearly 13 million employees. Why would the Government want to put this huge group of employees at risk? I will be looking at amendments to this Bill to protect SMEs from its excessive burdens, and I look forward to working with the noble Lord, Lord Londesborough, on that.

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 Lords, it is an honour to rise to contribute to this debate and to join this House. I begin by extending my sincere thanks to all the people in this place who have been extraordinarily generous in their welcome. Black Rod, the doorkeepers, the special advisers, the catering staff, the mailroom team, the clerks, the reception attendants, and the tech and security specialists: everyone has been so accommodating and helpful as I walk around in circles trying to navigate this side of the estate, or using my phone instead of my pass to “Apple Pay” my vote. I give special thanks to Mrs Mimi Tsehay Gebretsadek, who has been a warm, smiling face every time I have gone for a cup of tea in Millbank House.

I am particularly grateful to those who introduced me. I am in awe of my noble friend Lady Smith of Basildon and her leadership in this House; I look forward to learning much from my noble friend over the coming months and years. I also thank my noble friend Lord Mitchell, who has been a dear friend and mentor to me for two decades. I thank the Chief Whip, my noble friend Lord Kennedy of Southwark, for his extensive counsel and guidance; and to Members from all sides of this House, thank you for your kindness. I look forward to working with you on mutual areas of interest and expertise.

I am speaking in this debate because this vital new legislation speaks so much to what is important in our great land, my motivations for getting into politics, and the experience I have amassed. I grew up in Wembley Park and spent my weekends studying at Brent Town Hall Library. I loved the diversity of my neighbourhood. My dad is from Northampton, where all his family worked on the market, across the county. I started my working life helping my grandfather on his market stall, selling ladies’ fashions, and in London in my parents’ interior furnishing shop. I am certain that I was never paid the minimum wage in the family businesses, but what I did gain was an opportunity to listen and connect to so many different people.

My Lords, it is a great honour to be the first to congratulate my noble friend Lady Berger on that truly wonderful maiden speech. There is no doubt that her great-uncle would be beaming with pride. He sounds like he was quite a character—he would be good at our group meetings, I think. It does not feel like that much has changed when it comes to maintenance of the building either. I look forward to the many other maiden speeches here today.

I first came to know my noble friend Lady Berger back in 2010, when she was first elected for Wavertree. I greatly admired her professionalism and passion for raising the issue of mental health; back then, it was not a fashionable topic to discuss. We became very good, indeed dear, friends and have been through so much together, from musical festivals to hen dos, to riding the infamous pink bus back in 2015—listen, I stand by her. We have very much been through the good, the bad and the ugly together, but none more ugly than the shameful years when she suffered untold misery, abuse and threats simply for being a young, Jewish, female, Labour MP. It is a time that really shamed our party and, on behalf of us all, I am deeply sorry for what she had to endure. Her dignity, strength, courage and grace during that time was inspiring and incredible. She did not hide; she stood up to the bullies and the antisemites and made the Labour Party and the wider world take action.

We on these Benches are so lucky to have my noble friend, as are we all in this House. I know that she will make a brilliant, principled and fearless contribution. On a selfish note, I look forward to spending the next 30 years hanging out—probably 40 years, in her case. We are also living proof that Muslims and Jews can be very good friends, which I feel is quite timely.

I now turn to the topic of our debate. There are many speakers and experts, especially from the trade union movement, who will make more detailed points, but I want to make a few broad arguments. We have seen and heard some predictably negative discourse about this Bill and its aims. I do not understand people who say that it is all too much and that giving workers more rights will somehow mean that the pillars of the temple will fall down. I remind my colleagues that the same was said about the introduction of the national minimum wage and giving parents more rights.