Employment Rights Bill bounces back for a third time

The Employment Rights Bill will return to the House of Commons again, after peers narrowly voted to amend the government's proposed abolition of the caps on compensation for unfair dismissal - now the only outstanding issue still blocking the legislation's passage.

Peers propose the government should carry out a review of the compensation caps - currently either 52 weeks' pay or £118,223, whichever is lower - within three months of the Bill passing into law.

However, the "amendment in lieu" passed by the Lords replaces the provision for the secretary of state to have the power to abolish the compensation caps.

Continuing the "ping-pong", the government may insist again and swiftly send the Bill back to the Lords for a fourth time, in the hope it can garner enough support from peers. After all, there was only a majority of 20 in yesterday's vote and, with Employment Rights Bill fatigue setting in, only 11 peers would have to change their minds.

Ministers cannot easily renege on the deal done with trade unions and business representatives, even though the details of what was actually agreed "in the room" remain doubtful. Indeed, what took place in that room was debated by peers last night.

Vested interests

Lord Andrew Sharpe of Epsom, Conservative, took aim at former deputy prime minister Angela Rayner's comments this week that peers should not disrupt the Employment Rights Bill because of "their vested interests".

He welcomed the concession that the qualifying period for protection against unfair dismissal should now be six months - not two years as it is currently, and not from day one as Labour's manifesto had promised.

"Angela Rayner spoke of disruption," he said, "but the truth is that this house was simply doing what it is supposed to do and what it does best - scrutinising legislation diligently and ensuring that our small businesses and our young people retain at least some chance of building a bright future. Those are our vested interests."

He continued: "However, what followed was the very opposite of proper scrutiny. Without consultation, assessment or, as far as we can tell, any precedent - and without even the courtesy of signalling the change to either house - the government brought forward at the 11th hour a wholly new measure to abolish entirely the compensation caps for unfair dismissal.

"These issues had not been discussed at any earlier stage in the Bill's passage. The constitutional implications of introducing major new policy at ping-pong are profound. This is not responsible government; it is unnecessary, inappropriate and constitutionally troubling."

Sharpe continued: "The government claim that this change reflects an agreement between business groups and trade unions, but I wonder whether this is true."

He said Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), was explicit, and quoted him saying: "For the employer side of the table last week, 'lifted' did not mean 'abolished, right now'.

"We agreed that the 52-week cap should go - it protects ordinary workers better - as part of the deal that retained the qualifying period. We anticipated a further discussion about the future of the cash cap, too. But the decision to go for abolition now, is political."

Sharpe also quoted the Federation of Small Businesses, which told Times Radio this week: "In the agreement between us as business groups and the unions, we agreed that there would be a lifting of the cap.

"We didn't suggest it would be both caps abolished. So that's broader than the agreement, and it helps a very small number of very, very rich people working for corporates."

'Government rationale collapses'

Sharpe explained: "When those alleged to have agreed to this package say plainly that they did not agree to abolish both caps, the government rationale collapses. It is rumoured that there are minutes of these various meetings and, to clear all this up, perhaps, I ask the minister whether that is the case and, if it is, will they place a copy of the minutes in the library?"

Responding for the government, business minister Baroness Liz Lloyd of Effra said: "There are Civil Service contemporaneous notes of the meetings, but they have not been shared with participants or more widely.

"We think that it would be impolite and inappropriate to share the meeting notes without the agreement of those who attended the meetings. The government's statement and update on the Employment Rights Bill, released on 27 November, and the subsequent Written Ministerial Statement laid in both Houses provide the public summary and conclusion of that meeting."

Impact assessment

In what appears to be potentially a further concession by government, Baroness Liz Lloyd of Effra, business minister, told the Lords that it would undertake an impact assessment.

She said: "I can confirm that we will publish an enactment impact assessment for the Bill as soon as possible once the Bill secures Royal Assent and prior to commencement regulations for the entire unfair dismissal package being presented to Parliament. The new impact assessment will be publicly available and include an assessment of the impact of the removal of the compensation cap."

Employment law commentator Darren Newman told Personnel Today it was "weird" to do an impact assessment after the law was passed.

"It makes no sense to govern on the basis of we're going to pass a law, but we're not going to bring it into force if an impact assessment says it's a bad idea. That's not the proper way of doing it at all," he said.

"It was obvious they were just trying to make it sound like they would consult."

To lift or to increase?

Newman wrote in a blogpost this morning: "So the 'deal' that led to this amendment was not put in writing and no one was given notes or minutes of the meeting that agreed it. It is easy to see how the discussion of a 'lifting' of a cap would be understood by some in the room as a clear commitment to abolish it altogether and by others as a rather more vague undertaking to increase the maximum amount that can be awarded.

"Personally, I think if you lift something (like an embargo) then you remove it altogether - but I know other people take a different view."

So what happens next? Newman says he expects "something like" an agreement to carry out a full consultation on the issue, coupled with amendments that would allow the government to remove the cap by secondary legislation.

"This is very much the endgame now. The compensation limit is the only outstanding issue that needs to be agreed. It would be a big surprise if the Government didn't find a way to get the Bill over the line in the next round of ping-pong. But if they want that done by Christmas, they will have to move quickly," he concluded.

Unions are calling on the government to delay the Christmas recess, scheduled to begin on Friday 19 December, so that MPs and peers can debate the Bill over the weekend if necessary. Downing Street has insisted the Bill will pass before Christmas.