Lord Hunt of Wirral:

Moved by Lord Hunt of Wirral

128: Clause 55, page 75, line 23, at end insert—“(8) The provisions inserted by this section do not apply to small businesses.(9) For the purposes of subsection (8), a “small business” means an undertaking which employs fewer than 50 employees.”

My Lords, in moving this Amendment, I will also speak to Amendments 129, 131 to 134 and 145 in my name and that of my noble friend Lord Sharpe of Epsom. What we are talking about here is the extent to which the Government’s sweeping changes to trade union access rights, including the unprecedented extension of digital access, should apply to small businesses. These changes were introduced without any proper explanation on Report and they have generated serious concern, particularly for our small and medium-sized enterprises, which may suddenly find themselves subject to obligations they neither anticipated nor are equipped to manage.

These amendments have been directly endorsed by the Federation of Small Businesses, the principal organisation representing the voice of small employers right across the country. I quote from it directly:

“New growth and jobs in local communities rests squarely on our SMEs, which make up over 99 per cent of all UK businesses and employ around 16 million people—disproportionately recruiting those furthest from work.

The Federation of Small Businesses (FSB) supports this amendment, which recognises the distinct nature and limited resources that small employers face when it comes to managing industrial relations in what in many cases are more like family units or teams, than big corporates.

They simply do not have the HR infrastructure or legal teams that big firms rely on to navigate complex union access procedures and negotiations. This amendment provides a necessary and vital safeguard by ensuring that SMEs are not automatically subject to trade union access requests or changes to recognition thresholds.

Our recent research found that 92% of small business employers are deeply concerned about the measures proposed in the Employment Rights Bill, with 72% specifically worried about the increased cost of compliance, such as the need for specialist HR or legal support. These figures further demonstrate the importance of maintaining proportionate, practical and measured safeguards, such as those contained within this amendment.

We hope that Conservatives and Liberal Democrats will back the amendment to delay these measures, and that the Labour Government will agree to it, to guarantee proper consultation, and assessment of the practical impacts on SMEs, and that Parliament considers these before Ministers turn on these provisions”.

I beg to move.

My Lords, I support all the amendments in this group but will speak specifically to Amendments 129, 131 and 145 tabled by the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, to which I have put my name.

Increasing the right of trade union access, as well as lowering the membership thresholds and the required percentages for action, is, as we know, applying right across the board, whatever the size of the business or organisation. It is Part 4 of the Bill, as the noble Lord, Lord Hunt, just highlighted, that is causing considerable alarm and nervousness among SMEs, particularly small, micro and family business owners. I know this through multiple meetings with business owners and the steady flow of emails into my inbox.

At this point I remind the House of my interests as a chair of, adviser to and investor in a range of small start-ups and scale-ups. One of the key issues that keeps being raised by entrepreneurs and business owners is workforce culture, performance and collaboration within teams, which are so vital to achieving productive, profitable and ultimately sustainable businesses.

These employers are not simply against any sort of unionisation of their workforce. In many cases they can see the merits, but they are very concerned about the enhanced provisions of access in the Bill and the potential impact on owner/employee relations, teamwork and, indeed, the increased time that will need to be devoted to changing induction paperwork, negotiating with staff and their unions, facilitating meetings and possibly having to work with the Central Arbitration Committee and the fair work agency, which will have the right of entry to their businesses and, indeed, to their records.

In an era when we as a nation desperately need to see real economic growth, especially per capita growth and productivity advances, this part of the Bill threatens to dampen those prospects and distract owners and management from this core mission. Among small businesses, there is also the danger of creating divisions unnecessarily between owner and workforce and, indeed, between members of the workforce itself. I know this is not the Government’s intention, but we run the risk of damaging these unique cultures that we see in start-ups and family businesses.

In short, whatever the Government’s rather confusing claims on consultation, the SME community—which, as we have heard, accounts for nearly 17 million jobs and £2.8 trillion turnover per annum—clearly does not feel that it is being heard, let alone consulted. Amendments 129 and 131, in particular, seek to address this, in what I believe is a considered and structured way.

First, we need to see structured and representative consultations across micro, small and medium-sized businesses, across the key sectors, and involving start-ups, scale-ups and family businesses, from those employing two to three staff to those employing 20, 50 or 150 staff. These are very different enterprises, not just in size but in stages of development.

Secondly, we need to see coherent impact assessments for each of these groups, not the one-size-fits-all approach that dominates so much of this Bill, and not just by size but by sector. From agriculture to technology and telecoms, they will be impacted in very different ways. As we have heard, SMEs will need time and fair notice—certainly not before April 2028—to be ready to deal with the potential consequences of these clauses.

None of this is unreasonable in my view. These amendments would help the Government to avoid damaging the SME ecosphere at a time when we need to proceed with care and caution, and especially if we want SMEs to be the engine of real economic growth.

My Lords, I will speak to Amendment 130 in my name. It is purely an amendment to rectify a small perceived mistake in the legislation, whereby a trade union can, in theory, put in a demand to meet its members in a company immediately, without any delay or warning. This means that a company’s management must always be in fear of a sudden disruption to the company’s ongoing work.

I am sure that the Government did not intend to torment companies with this possibility. I have put forward this amendment with a view to giving the Government an opportunity to agree that some kind of advance notice—I am suggesting a delay between request and meeting of at least two days—is a good idea, and that the length of that advance notice should be put in the Bill.

We all agree that business is the engine of economic growth and the ultimate creator of jobs. Therefore, we all in this House must be agreed that helping business accomplish its ends is important. The Government want the economy and jobs to grow—they have told us so repeatedly. They do not want companies worrying unnecessarily about sudden disruptive swoops from the union. We can see at once that there are many circumstances where a request to meet immediately just would not work. Imagine, for example, the air traffic controllers having to suddenly down tools. Imagine a complex, just-in-time process of many interlocking parts suddenly being interrupted, with an appalling domino cascade of interruptions and failures as a result. Imagine a complicated safety audit being disrupted.

I am sure that the Government have no intention of this and I imagine that the Minister will tell us that it is not at all the intention. However, while it might not be the intention, the opportunity is there in the Bill for the trade unions to act in this way. Therefore, why not, in the Bill, prevent that opportunity?

We all agree that untrammelled regulation is a “boot on the neck” of business—we were assured that that was the case just last week by the Chancellor of the exchequer herself—yet here in Clause 50 we have yet another regulator, not the first one that we have discussed that has been created for the Bill, with fining powers. Last week, in the same Bill, it was the FWA; now, we have the Orwellian-sounding central arbitration committee, again with fining powers.

Noble Lords:

Oh!

Noble Lords should read the Bill. Payments will be made if the Central Arbitration Committee decides that a request to meet was unfairly refused. I checked it all this afternoon. I did not really expect noble Lords to challenge me on it.

I think the reaction from noble Lords was to the use of the word “Orwellian”. No one is questioning the facts; it is the suggestion that a central arbitration commission is Orwellian.

My Lords, a central arbitration commission might not be Orwellian but I feel that a Central Arbitration “Committee” is. We can agree to disagree on that, but the word “committee” is in the actual name.

Imagine how all this will be taken by the neck on which this regulatory boot is going to be placed by the Bill. All my Amendment does is suggest some small limit to when a trade union might announce the date on which it wishes to meet its members. That would provide a proper, proportionate and fair way of giving both sides, company and union, what they need. Indeed, the delay would actually help the union, by allowing it to find a time when more staff were present for the mooted meeting.

The Bill gives the union three months in which to complain if management refuse the proposed time to meet. Surely if three months can be given to the union, two days is not too much to ask for the employer to consider any such request.

My Lords, I support my noble friends’ amendments. There are good reasons to exempt small businesses, which make up the backbone of our productive economy, from the measures in Clauses 55 and 56, both for the statement of trade union rights and for trade union access.

We know, as we discussed in Committee, how rapidly trade union membership is falling, and that it has fallen particularly in the private sector. We know that, although it has gone up in the public sector, it still represents a much smaller proportion of trade union members than in 1995, when statistics began. Small and medium-sized businesses account for 99.8% of our productive economy. If we impose additional compliance costs on 1.16 million micro businesses of up to 10 employees and on 4 million sole traders, we are saddling them with the kind of compliance costs to which noble Lords have already referred.

I wholeheartedly support my noble friend’s amendments to exempt the Majority of small, tiny and medium-sized enterprises from the compliance costs of furnishing a letter and the costs—indirect, perhaps—of access arrangements for trade unions, when there may be no trade unionists in the workforce of these small, entrepreneurial businesses.

My Lords, I rise briefly to mark that this is the moment—21 July, at 8.59 pm—when the Labour Government are going to put such unreasonable demands on small businesses that they will all come together and say, “This Government are not our friend. This Government are distracting us from growth, from employing more people and from productivity”. Just as small businesses are getting over Making Tax Digital, Covid and tariffs, this legislation will do irreparable harm. I wanted to make that point because I assure noble Lords that there will be future reference to this very moment.

My Lords, I too will be brief. I thought it might be helpful to inject a bit of balance into the debate. Noble Lords might recall that in Committee I spoke of how often there are positive voluntary agreements between employers and unions about access, because everybody recognises that in a modern, civilised society, workers should have the right to speak to a trade union. It is their choice whether to join, but it ought to be seen as a basic right to be able to meet a union at the workplace. In my experience, very often you go in and have a cup of tea and you get a chance to meet the workers, who will make up their own minds about whether they want to join.

I remind noble Lords that I also spoke about some pretty appalling situations, where we know that workers are being exploited badly. We have been forced to stand on roundabouts in the rain, out of the view of CCTV cameras, because workers are terrified of being seen talking to a union. I hope most noble Lords would agree that that is just not right in a civilised society and that workers should not experience that fear. They should have the right to meet a union at their own workplace.

It is important to see this as a right for workers. It is very much built on the premise of agreement between an employer and a union about what is reasonable. It is not about turning up out of the blue and busting your way into a workplace; it is about coming to an agreement. I am sure that those noble Lords who talk so often about their business responsibilities will understand the importance of agreement when it comes to industrial relations.

Finally, there are 6 million workers working for small and medium-sized enterprises; I think it is around a third of the private sector workforce. The idea that they would be denied that right just because they happen to be employed by a small employer seems wrong to me. I remind noble Lords one final time that this is about the rights of workers to speak to unions in their workplaces and doing so with agreement. The CAC becomes involved only if you cannot come to an agreement between the union and the employer. I am afraid I very much oppose these amendments and support the Bill as it stands.

My Lords, last week the chairman of the junior doctors—or, now, resident doctors—committee of the BMA put out a tweet saying, “You do not have to tell your employer if you are striking”. I thought of that as I listened to the noble Baroness, Lady O’Grady, talking about how reasonable, collaborative and useful this union participation was. There is a difference between people wanting to work together and people seeking to inflict maximum disruption, as is plainly the case in the doctors’ strike. I have to say, by the way, that the Secretary of State for Health in Another place has made the same point that I have: he thinks it is extremely disruptive and has said all the right things about it. But can we really blame the BMA or any other union for walking through a door that is being so ostentatiously unbolted with the passage of this legislation?

I do not want to get into a Second Reading speech, but I agree with my noble friend Lord Leigh of Hurley: we have done extremely well with low unemployment, unlike almost every other country in Europe. With the financial crisis and Covid, we have had structurally low unemployment because of a flexible labour market. That is beyond this Amendment, but I do not see how anyone could reasonably oppose the amendment just put forward by my noble friend Lord Moynihan of Chelsea. If we are in a world of wanting to be collaborative, it seems to me that informing an employer before coming and organising in that company is a matter of minimal courtesy. It seems to be an oversight in the legislation, and I hope that Ministers will at least be able to concede that point.

My Lords, I have to say that this is probably the most difficult summing up from our group of all the amendments throughout Committee and Report, because I can see the merits of both sides of this argument.

On the one hand, the noble Lord, Lord Hunt, is quite right. We are naturally suspicious of any new amendments on Report, as they have not had consultation or examination. Having said that, as a group, we have to be consistent, and our approach is that SMEs need the most support. They are the people who are the most insecure and who email me more than anyone else, and so you might think that I would be minded to support these amendments.

However, on the other hand, these amendments, in our view, would create the two-tier employment situation which we have consistently opposed throughout the legislation. I have stood here night after night saying that I cannot agree with amendments because we want one set of legislation for the entire SME sector. A two-tier arrangement would throw more upheaval and uncertainty on small SME businesses, leading them to wonder whether or not they qualify and whether they are in or out.

On balance, and probably for the first and only time in this Chamber, if this issue is pushed to a vote, our group will, unusually, abstain. That does not mean that I am not supportive of the thought behind the amendments, but we feel very strongly that there could be unintended consequences. The legislation should be clear, concise and uniform. This would cloud it a little, as it is looking for a two-tier arrangement. On balance, we are unable to give this group of amendments our full support tonight.

My Lords, I am grateful to all noble Lords who have spoken. I may not agree with some of the sentiments of some noble Lords, but I have listened to all the arguments in the last few years, such as when minimum wage was debated. The scaremongering that businesses will go bust does not hold water with me.

We are not anti-business; you cannot find someone more pro-business than me. I have started businesses and been a small business person myself. I strongly believe that this Bill works for workers and for business.

Before I address the amendments in the names of the noble Lord, Lord Sharpe and Lord Moynihan of Chelsea, let me say this: the Government are committed to supporting SMEs. We accept that they have been subject to a challenging operating environment and global uncertainty. That is why the Government have set up the new business growth service, to streamline access to support, and why the new strategy will span key areas, including access to finance, market expansion, business capability development, entrepreneurship, and the creation of a strong and stable business environment. In combination with our industrial strategy, trade strategy and, I hope, our SME strategy, which will be published shortly, it is a key part of this Government’s plan for change to encourage growth and put more money in people’s pockets.

Let me turn first to Amendments 132, 133, and 134. We introduced a streamlined route through the Central Arbitration Committee, which was established in 1975. It is a decision-making process for model access proposals to ensure that genuine and reasonable requests for access are not subject to unnecessary delay, while maintaining appropriate safeguards where complexity or dispute remains.

Regarding Amendments 129, 131 and 145, we believe that strong trade unions are central to tackling issues of insecurity, inequality, discrimination, enforcement and low pay across the economy. Right of access is key to this. The access framework allows for flexibility for SMEs. Unions and employers can negotiate an access agreement and employers may challenge proposals they consider unsuitable. Where an access agreement cannot be agreed, the CAC determines whether access should be granted, and this decision will be guided by matters prescribed by the Secretary of State.

On Amendment 128, the intention behind this measure is to ensure that all workers are informed of their legal rights at work without imposing undue burden on employers. Making it a requirement for employers to inform workers of their right to join a trade union is about fundamental fairness and transparency. Too many people, especially in low-paid or insecure jobs, do not know that they have this right. We are not telling anyone to join a union; we are simply making sure that they know it is an option. Just as employers are expected to inform staff about health and safety rules or their right to paid leave, they should also be clear about the right to union representation.

Will the Minister agree that it is a bit heavy-handed to require an employer to furnish a new employee, at the same time as giving them the agreed terms and conditions of employment letter, with a statement on their right to join a trade union? I cannot see that that is proportionate.

It is just like any other right that employees expect, such as health and safety, annual leave and all that. The right to join a union does not mean that they have to join a union; it is still their choice. It is a small step that empowers workers and supports a fairer and more balanced workplace.

The statement of trade union rights will be provided at the start of employment, alongside an existing written statement of particulars already required under Section 1 of the Employment Rights Act 1996 and at other prescribed times. Given that it builds on an established process, we believe that this measure places minimal burden on employers, including many small businesses. We will consult on the practical details of Clause 55 before this is set out in secondary legislation.

On Amendment 130, the right to access is a complex policy and will involve detailed practical consideration. We will therefore provide for the operational details of a responsible and regulated access framework in secondary legislation. Ahead of doing so, we will publicly consult on the operational details this autumn, including on model access terms that the CAC must consider reasonable for both employers and unions to comply with, and the appropriate amount of notice a union must give before access takes place. Consulting before setting out these operational details will ensure that we cater for a variety of scenarios and workplaces and will ensure that these measures are fair and workable in practice. We believe that providing for this operational detail now, ahead of consultation, would be premature. I therefore respectfully ask the noble Lord, Lord Hunt, to withdraw Amendment 128.

My Lords, I say with great regret that the response we have received today is totally unconvincing. At no point throughout the progress of the Bill have Ministers offered a satisfactory explanation as to why sweeping changes to trade union access rights, including digital access, were introduced on Report in the other place, with no consultation, no impact assessment and no regard for the realities facing small and medium-sized businesses. There has been no clarity whatever regarding how these measures will work in practice.

How right the noble Lord, Lord Londesborough, is to stress that there has been no recognition of the burden they will place on the thousands of small and medium-sized employers across the country. There has been no proper answer to my noble friend Lord Moynihan of Chelsea, who was supported by my noble friends Lady Lawlor and Lord Leigh of Hurley. I have no need to reply to the noble Baroness, Lady O’Grady of Upper Holloway, as she was shot out of the water by my noble friend Lord Hannan of Kingsclere. All I will say is that there has equally been no proper consideration of the broader impact these changes could have on the labour market, particularly on hiring, retention and business confidence, at a time of economic uncertainty.

I regard the noble Lord, Lord Goddard of Stockport, as consistent, but I disagree with him fundamentally. I hope he will issue a detailed explanation to the Federation of Small Businesses as to why he has felt unable to follow its guidance that there has to be a recognition of the special needs of small and medium-sized enterprises. I can well understand that the arguments that the noble Lord, Lord Londesborough, introduced in support of Amendment 129, together with Amendments 131 and 145, provide a simple and proportionate safeguard. Given the seriousness of these issues and the complete lack of justification for how this has been handled, I shall seek to test the opinion of the House on Amendment 129, but, in the meantime, I beg leave to withdraw Amendment 128.

Amendment 128 withdrawn.

Clause 56: Right of trade unions to access workplaces