Relevant documents: 7th Report from the Constitution Committee, 20th Report from the Delegated Powers and Regulatory Reform Committee. Northern Ireland legislative consent granted, Welsh and Scottish legislative consent sought.
1: Before Clause 1, insert the following new Clause—
“PurposeThe purpose of this Act is to—(a) improve the fairness and security of employment;(b) facilitate cooperative arrangements between employers and workers, including the protection of workers’ rights and wellbeing;(c) make provisions about pay and conditions in certain sectors; (d) facilitate constructive workplace relations between employers and workers representatives, including trade unions;(e) make provisions about the enforcement of labour market legislation.”Member’s explanatory statement
This amendment inserts a new Clause at the beginning of the Bill to set out its overarching purpose and provides a framework for understanding the aims of the legislation.
My Lords, in moving Amendment 1, I will also speak to Amendments 283 and 327.
In February 2023, Keir Starmer launched Labour’s five missions. The first is to get the UK’s economic growth to the highest sustained level in the G7 by the end of Labour’s first term. I need hardly remind your Lordships that it is with that mission, and the four others, that the Labour Party went on to win the general election with a majority. Since then, the Government have unwisely raised employers’ NICs and introduced this Bill. It is through those lenses that business views the Government’s attitude towards it.
Amendment 1 is an attempt to set this legislation in context, and I thank the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for also signing it. It was quite difficult to come up with wording that the PBO would let past its eagle eyes, but I am sure that the Minister will not find much of this objectionable. For example, proposed new paragraph (a) sets out the need for “fairness and security” as drivers for the Bill; I am sure the Minister will agree with that. Proposed new paragraph (c) is well represented in this Bill, as large parts of it set out new rules around trade unions.
However, I will spend some time discussing proposed new paragraphs (b) and (d). I cannot read this Bill without the feeling that it envisions just two states of employment—happy workers represented by unions and abject employees working in non-unionised concerns—but, of course, that is not true. Even in the very welcome conversations with the Minister, there seems to have been little recognition that the vast majority of people in this country are in employment where the facilitation of co-operation agreements between employers and workers is not automatically dependent on their union status. Let us remind ourselves that, for most people, those co-operative arrangements work pretty well, and that the proportion of UK employees who are trade union members is around 22% in this country. Constructive workplace relations can be forged in many ways other than via direct representation of employees by their unions.
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It has proved a step too far to include an explicit mention of SMEs in Amendment 1. However, any effort to improve employment relations and a culture of fairness at work will not succeed unless it meaningfully supports and engages SMEs. This depends on clear, proportionate and practical regulation. In that regard, as Committee progresses, we will seek to make things easier for SMEs—and, indeed, for all other businesses.
At this point, I highlight the following measures. There needs to be a change in the polarity of the guaranteed hours obligation offer to offer a more streamlined right to request. There also needs to be a recognition that the current arrangement does not work in the case of seasonal jobs; we will come to that. There needs to be a confirmation that the probation period will be nine months; this should not be left hanging while the Act commences. The statutory sick pay arrangements for SMEs need to be changed to ensure that the costs are shared. There needs to be a clearer picture of the role of tribunals, with the ability quickly to strike out cases that cannot succeed, and a better understanding of how the public funding of claimants will work.
Overall, your Lordships needs to understand what the statutory guidance will look like. We need to know how this Act will work and what it will mean in practice. In many respects, the Government are asking your Lordships to stand back and allow them to formulate the details of the Bill gradually, as more and more government amendments flood in and consultations still progress—with outcomes set well after the Government hope to finish the Bill. Some might say that they are making it up as they go along, but I will not. Either way, this is not the way to formulate important legislation such as this. We need to know what it actually is. The consultations should precede, not succeed, the drafting of a Bill. Government amendments should be few and trivial, not many and fundamental. The operational details of the proposed legislation should be clear and obvious, not opaque.
That last point is why I have included in this group Amendment 283, on a code of practice, and Amendment 327, which would tie commencement to the publication of a code of practice. These would allow the Government to set out all of the issues that need to be clarified, including how the Bill will operate in practice if and when it becomes an Act, and would ensure that the Act does not commence until this process has happened. In other words, the details would be nailed down firmly before the Act gets under way.
At first sight, Amendment 283 might seem like a long list but, in fact, it is not half of how this Bill will reach into working life. The amendment would require the Secretary of State to publish a code of practice that provides employers with guidance on complying with the Act. The code should set out best practice, compliance monitoring and enforcement procedures. It should ensure necessary consultation with stakeholders and would enshrine a review every five years. We need to see a draft of this code before this Bill progresses to its final stage; I would be happy to discuss with the Government how to make this happen. I beg to move Amendment 1.
My Lords, briefly, I thank the noble Lord, Lord Fox, for bringing forward this important purpose clause amendment, which I must tell him—I know he is always surprised when I praise him—is a very cleverly worded amendment to which my noble friend Lord Sharpe of Epsom and I were very happy to add our support.
I do not know why this Bill has had to be rushed through within 100 days. Given the significance of this legislation, surely it would have been better if the Government had committed themselves to ensuring thorough and proper scrutiny. However, we have seen the introduction of 160 amendments on Report in the House of Commons—amendments which, in many cases, received no or little meaningful examination.
Even more concerning is the fact that the Government have tabled 27 amendments for Committee in this House. We have received a letter from the Minister warning us that there are more amendments in the pipeline on fire and rehire, the fair work agency, employment Bill time limits, trade union reform and maritime employment. What on earth is going on? Why was not this Bill properly prepared? This has meant that the letter to which the noble Lord, Lord Fox, referred is virtually saying to the House of Lords, “Please, on behalf of all the employers—and, indeed, all the businesses in the UK—we rely on you in the House of Lords to scrutinise this Bill properly”. I just do not think that this is the right way to treat Parliament. We owe it to the legislative process and to the public we serve to ensure that our scrutiny is neither rushed nor compromised.
No doubt the Minister will argue that a purpose clause is completely unnecessary. However, we respectfully disagree, and not only for the reasons raised by the noble Lord, Lord Fox. It is vital for the Bill clearly to articulate its overarching aims: not simply to modernise employment rights in name but to set out a clear ambition to create a fairer, more secure labour market; to encourage genuine co-operation between employers and workers; to protect rights and well-being in the workplace; to ensure proper standards for pay and conditions across sectors; and to guarantee robust enforcement of labour protections. I have to say that, without a purpose clause, this Bill risks being directionless and, worse, risks unintended consequences that neither workers nor businesses can possibly afford.
My Lords, I will speak to Amendment 1 and avoid the temptation to engage in a mini-debate across the whole width. So far, I feel I have been sitting in a Second Reading debate. I have given speeches in this House before, reflecting similar sentiments to those in this amendment about fairness and co-operation. These are the words used in the amendment from the noble Lord, Lord Fox. I gave them in the context of the debates on Conservative anti-union laws, which we have addressed in this House in my time. Sadly, no one on the Conservative Benches, except for the noble Lord, Lord Balfe, who is in his place, paid any heed. The laws then proceeded to the statute book and the result was an imbalance in British employment law very much in favour of employers.
The Bill goes some way towards correcting that. Once it has been implemented, I hope we can look again at a system of mature collective bargaining of which we all can be proud. But first, we must replace the imbalance, and do so speedily, because it is glaring. Change is desperately needed; our labour market is characterised by high inequality—only two OECD countries have a bigger gap between rich and poor and between top earners and the very low-paid.
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Wages are stagnant. Living standards and skills are poor compared with our European neighbours’. How many people have recently been shocked to find that the gap with Ireland is as wide as it is? We know that productivity, which we have debated in this House, has languished for quite a long time. Insecure forms of work have been growing. There are negative effects on health outcomes in this country compared with others. Large-scale inequality is really bad news.
I say to the Conservative Party that it needs to recognise that the Thatcher experiment with deregulated labour markets and some unwise privatisations—think Thames Water—and an economy heavily dependent upon a volatile financial sector that too often resembles a giant casino or adventure playground for private equity and hedge funds, and generates low rates of investment outside property, has failed comprehensively.
It is a time for a change of approach, and this Bill, together with a new industrial strategy which is being worked on, can help provide it. I call on the Opposition, probably in hope rather than expectation, to give it a fair wind.
My Lords, I am generally somewhat nervous about purpose clauses, but I can see the argument in the case of this Bill, because there is a lot of confusion about what it is trying to achieve. Indeed, it serves to highlight the incoherence of this Government’s approach to generating economic growth, because it places far too much of a burden on businesses and will deter them from innovating, recruiting and investing in skills training, which we know is so very important right now.
That is particularly pronounced within the tech sector, which is one of the Government’s priority sectors because it has the potential to drive a vast amount of growth, but it is also one where we need to do far more to encourage investment so that our homegrown tech firms can scale and compete around the world. We must not forget that investors have a choice as to where they invest, and they will not go to countries where the costs are higher.
Although it is not properly an interest to declare, it is perhaps worth reminding your Lordships that until very recently, I chaired the Communications and Digital Select Committee of your Lordships’ House, and during my term in the chair we looked at the tech sector quite a bit, as noble Lords would expect. Our final inquiry was about scaling up in AI and creative tech.
I am sure the Minister, who is also a DSIT Minister, has seen that techUK, the industry’s trade body, has this morning raised some genuine concerns about the Bill. Its website says:
“With no economic modelling underpinning these proposals, businesses are being asked to shoulder new burdens without a clear understanding of the impact. There is a growing risk that entrenched positions will lead to a worst-case outcome, one that stifles innovation and investment in jobs. This is counter to the government’s pro-growth mission. We urgently call for further discussion and refinement to ensure the Bill supports businesses and protects workers”.
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When the Minister generously gave her time to meet with me on this Bill, she explained that discussions between government, employers’ organisations and the unions had been constructive and amicable. I am sure they were, but those selfsame employers’ organisations have also raised serious alarm over this Bill. The British Chambers of Commerce, the CBI, the IoD, the FSB and Make UK all sent a joint letter, which I am sure all noble Lords have received and read. The B5, as it is known, is not alone: all manner of industries—including hospitality, food and drink, and employment agencies—have raised serious concerns about the Bill. The telling phrase in the B5 letter is:
“For us the challenge has never been what the government wants to achieve, but the unintended consequences of how they implement it. Unfortunately, the Bill locks in several irreversible policy directions that will force business to make difficult choices between jobs, investment and growth”.
The Minister may well say that she is getting equally forceful lobbying from the unions. Indeed, I believe that the noble Lord, Lord Hendy, will provide ample evidence of that with his later amendments. She may say that the Government are pitching this Bill in the middle of these respective positions—and she may claim, on that basis, that the Bill is in the right place. However, Governments are elected not to work out the average position of policy but to make the right decisions. I ask the Minister to take on board the concerns of business and, importantly, to recognise that there are issues in this Bill, which, if not addressed, will impede the Government’s chances of delivering their mission of economic growth.
Small and medium-sized enterprises are the backbone of the UK economy, accounting for a huge proportion of the business population and employing approximately 16.7 million people—around 61% of private sector employment, according to data from the Federation of Small Businesses. In that regard, the Minister should recognise that the impact of many of the measures in the Bill will disproportionately affect small and medium-sized businesses. These smaller businesses have neither the administrative horsepower nor the reservoir of human energy required to meet the collection of tasks that the Bill will introduce. Given their economic footprint and vital role in local communities, SMEs must be central to the purpose of the Employment Rights Bill. Placing SMEs at the heart of the Bill’s purpose offers an opportunity to foster better employment relations while supporting enterprise, resilience and long-term growth.
I think also—and I hope the noble Lord, Lord Fox, will agree—that a purpose clause is particularly important where there are a large number of delegated powers to make regulations within it. In effect, the Government are saying, “Please give us the power to do whatever we would like to do whenever we would like to do it”. The committees of this House have, time and again, urged Governments to turn their back on these Henry VIII clauses and present Parliament with clear cases to amend primary law, not do it through secondary legislation.
Well, there is growing concern about this Bill, which is why the British Chambers of Commerce, the Confederation of British Industry, Make UK, the Institute of Directors and, in particular, the Federation of Small Businesses, which between them represent thousands of businesses across the country, have published this open letter to the House of Lords, asking for urgent changes to the Bill. They did so because they are deeply concerned that, as drafted, the Bill will make it harder, not easier to create fair, secure and co-operative workplaces. They warn that the Bill will increase risk and uncertainty for businesses precisely at the moment when we need businesses to invest, to hire and support in particular those who are at the margins of the labour market.
I do not think that the substantive concerns of all the businesses quoted by the noble Lord, Lord Fox, have been listened to. I just hope that the Minister can respond when she winds up this debate. I look forward to the speeches from all sides of the House. I will not quote in detail from the letter, but it does remind me of the words of Milton Friedman. If I am ever to find myself quoting Milton Friedman, I suppose that this is the moment. He said:
“One of the great mistakes is to judge policies and programmes by their intentions rather than their results”.
Well, fine phrases about modernising employment rights and updating legislation are no substitute for carefully considered, properly scrutinised measures that deliver real-world improvement. So that letter from all those businesses is not a warning but a plea to this House. It is a recognition that we as the revising Chamber have a unique and critical responsibility to ensure that this Bill works. They are not closing the door on the Government but offering, at the end of the letter, to work with us all and with Ministers to help improve legislation.
In conclusion, if we are to get all these amendments, can we hear from the Minister how many more amendments we are going to get and when? The Government Chief Whip is constantly referring us to the Companion. I have never quoted from the Companion before, but it has pretty severe words for a Government who choose to table amendments at the last moment, without proper notice. So could we hear from the Minister what further amendments are planned, when we will receive them, and which parts of the Bill will be fundamentally altered? Here we are, at the start of Committee, still not knowing what the Government are proposing.
In an unguarded moment, the Minister disclosed to me that she has an implementation plan, which I understood from her was in draft. This House ought to see the draft implementation plan. Why can we not see it? Perhaps we could help the Minister produce the final draft. We should not get an implementation plan half way through Committee. Could we hear from the Minister on when we will see the implementation plan? A lot of businesses up and down the length and breadth of this country are totally uncertain about what the detail of this Bill will be. It is about time that we heard from the Minister about what the Bill seeks to do, what its purpose is and whether we can see it in its full form before we go any further with Committee.
Alongside techUK, the Startup Coalition, which focuses specifically on start-ups, says in its briefing note on the Bill that it is concerned that without careful tailoring, the barriers the Bill currently introduces into hiring and scaling at the early stages of business development could undermine the start-up ecosystem and the economic growth it drives.
I do not know whether I would have succeeded had I tried to do this, given what my noble friend said about the punctiliousness of the Table Office—and I would be interested to hear more from my noble friend about this—but I suggest that any purpose clause also refers to growth and competitiveness. When the Minister winds up, I would welcome her explanation of how this Bill supports the Government’s growth agenda.
I know, from talking to a range of tech firms and businesses from all sectors and of all sizes, that while they all support good employment practices and condemn those firms that do not uphold high standards—as do I—there is frustration that the good employers are paying the price, literally, for the poor conduct of the bad. For them, the Bill represents a desire by the Government to do something to them that makes it even harder for them to create the economic growth that the Government have promised the electorate and, indeed, their workers. Let us be clear: it is business, not government, that generates economic growth.
As I say, a purpose clause has some merit in the context of this Bill, but I would like growth and competitiveness to feature within it. If we were to do that in the purpose clause and get some agreement from the Minister up front today, that would help to shape the Bill as we go through Committee, so that it actually delivers on what I think it is trying to do: to ensure that there are good employment practices that support economic growth and competitiveness.