Employment Rights Bill stumbles at final hurdle

The Employment Rights Bill will now enter a 'ping pong' battle after a number of amendments were rejected by the House of Lords.

The Bill had reached one of the final stages in its path to reaching Royal Assent - the consideration of amendments - but must now return to the House of Commons until agreements on these measures can be reached.

Peers proposed changes to zero-hours clauses, the day-one right to unfair dismissal protections, industrial action ballot thresholds and union members paying a political levy.

They voted 302 to 159 against a proposal in the Bill to require employers to offer guaranteed hours to employees from day one.

Instead, Lord Fox, Liberal Democrat, proposed that employers write to workers at the end of each reference period for guaranteed hours and give them the option to accept or decline.

This would mean workers still have a meaningful offer of guaranteed hours, but have the flexibility to opt in or out of this after an initial period.

He said: "We share the minister's aim to make sure that every employee has the right to move from zero hours to guaranteed hours. Nothing we have ever said or proposed in this House has undermined that from the start."

He added: "For the smaller and medium-sized employer, it is an added burden that does not need to be there if the employee does not wish to leave zero hours."

Day-one unfair dismissal was defeated by 301 votes to 153, with the recent Day One Frights report from the Resolution Foundation urging the government not to proceed with the right in its current form, cited multiple times.

Peers also voted in favour of keeping the 50% turnout threshold for an industrial action ballot of trade union members to be valid by 267 votes to 153.

A proposal to automatically sign up trade union members to pay a political levy was rejected by 249 votes to 142.

Conservative peer Baron Sharpe of Epsom said that day-one unfair dismissal rights would discourage employers from "taking a risk" on young workers, echoing some of the sentiments in the Resolution Foundation's report.

Crossbench peer Lord Vaux of Harrowden said of the measure: "The introduction of day one unfair dismissal rights is the most damaging element in this Bill, in my opinion."

Former TUC leader Baroness O'Grady argued that employers would still be able to dismiss workers "fairly" under the Employment Rights Bill, adding that without day-one protection, workers would "continue to bear the risk that they can be sacked at whim".

What happens now?

The Commons and Lords now enter a back and forth, or "ping pong" process with the Bill being exchanged between them until they both agree on the final version.

There is no official time limit for this, but a Bill could fail to become law if it runs out of time within a parliamentary session.

Only once agreement is reached can the Bill receive Royal Assent and become an Act of Parliament.

Kate Palmer, chief operations officer at Peninsula Business Services, said: "At first glance, employers may welcome this news. If the Bill ends up moving forward with a six-month qualifying service, then employers will retain some of the freedoms they enjoy with current the two-year period when managing new hires into their business, albeit for a shorter time.

"However, with a day-one right to unfair dismissal being a manifesto commitment, it's unlikely the government will back down easily. This means the game of 'ping pong' between the two houses could drag on, adding to the uncertainty businesses are already facing when preparing to implement key measures in the Bill."

Sarah Kerr, HR technical consultant at AdviserPlus, said the back-and-forth would mean continued uncertainty for employers.

"Many business leaders have warned that the Employment Rights Bill will significantly damage business hiring intentions and confidence in the UK economy, so in spite of it being a manifest pledge, the Commons need to carefully consider the risk to our economic future," she said.

"The Lords' revised amendment on guaranteed hours adds flexibility for workers, but for HR this is likely to create more complex admin, as they'll have to be tracking who's opted in or out and ensuring the right offers are made at the right times."HR should hold off on major policy overhauls until the Bill's final form is clear but stay alert. The eventual outcome will likely bring notable shifts in dismissal rights and contract flexibility that will require swift operational updates."