Contribution
My Lords, I have two amendments in this group, Amendments 50 and 67, which, like the amendments the noble Lord, Lord Sharpe, has just spoken to, which I have also added my name to, relate to day-one unfair dismissal rights. I thank the noble Lords, Lord Leong and Lord Katz, for making time to discuss this issue with me, for which I am very grateful.
The introduction of day-one dismissal rights will have a range of consequences: in particular, additional costs to business, which the impact assessment says will run to hundreds of millions a year and the Government themselves says will fall disproportionately on smaller businesses; and greater numbers of tribunal cases on an already overloaded tribunal system. But the most important impact is on people who are looking for work, especially those with riskier profiles: young people trying to get their first step on the employment ladder; people trying to get off benefits; people with health issues; people changing careers; ex-offenders and so on. The Government rightly want to get all of these into work, but the Bill will make that more difficult, not easier.
The current law, with the two-year qualifying period, allows an employer to take a risk on someone—to give them the benefit of the doubt—without facing the risk of an employment tribunal claim if it does not work out. This Bill ends that. An employee will be able to claim for unfair dismissal from day one, and the only valid grounds for fair dismissal will be capability or qualification to do the job, conduct by the employee or some other undefined substantial reason relating to the employee. These reasons are essentially the same as the current reasons for fair dismissal after the qualifying period in today’s law, and they cannot be changed by the regulations that the Government intend to use to create a new—again undefined—type of probation period. Employers will no longer be able to let someone go during a probation period because it is not working, without risking an unfair dismissal claim.
So what will be the result? Simply, employers will now have to think twice before hiring anybody with a less than perfect employment record. The Bill will make it harder for an employer to take a chance on such people, to give them the benefit of the doubt. To quote the Federation of Small Businesses:
“all it’s going to do is make small employers more reluctant to recruit and fearful of being open to vexatious claims … It’s those furthest from the jobs market who will then suffer, because the less risk small employers can afford to take, the fewer second chances, fresh starts and first jobs they’ll be able to offer”.
If anyone is in any doubt, the Government themselves state the same effect in the impact assessment. I will not repeat what the noble Lord, Lord Sharpe, quoted, but this is what the Government also know and think.
We already have a million young people not in employment, education or training—the so-called NEETs. If we want to solve that, we need employers who want to take them on, who will take a chance and give them that first all-important opportunity. So, why on earth would we want to make it riskier for employers to take that chance?
You would think, therefore, that there must be a good, well-evidenced reason why this Government would decide knowingly to make it more difficult for young people to get their first opportunity to work. I have asked several times during this process for evidence that the existing law is in fact causing any problem. There is no evidence given in the impact assessment, and I have had no real answer to that question. In Committee, the Minister’s answer was:
“We have worked with academics who are looking at this subject. I reassure the noble Lord that we have looked at this and are confident that the benefits in this particular case will outweigh the risks”.—[Official Report, 21/5/25; col. 333.]
That really is not good enough to take action that the Government themselves acknowledge will damage the life chances of the most vulnerable or those just starting out.
Employers do not dismiss people lightly, even during a probationary period; hiring and training are expensive and time-consuming, so employers are strongly incentivised to try to get it right. But it is a fact of life that sometimes, with no fault on any side, things do not work out.
As the Minister knows, the noble Baroness, Lady Finlay of Llandaff, wanted to speak in this debate, but, unfortunately, she cannot be here today. She has asked me to point out the impact this change could have on GPs. Not being able to let someone go if the fit or culture is wrong is extremely serious for a small business—as the noble Lord, Lord Sharpe, described—but in a GP practice it could put lives at risk. GP practices tend to be small teams who must work together well and with great understanding and support. An employee who does not fit with the rest of the team could lead to miscommunication, appointment issues and so on. In healthcare, such errors could compromise patient welfare and could even have fatal consequences. It is essential that people can be easily let go if it is not working out in the early stages of their employment.