Lord Sharpe of Epsom (Con)

My Lords, in some ways, we are continuing a theme with Amendment 313 in my name. The Government have talked about supporting those on the fringes of the labour market; this is a goal that I hope we all share. We know that different individuals face different work challenges, whether due to educational background, employment history, health circumstances or socioeconomic factors. The question before us is whether this legislation achieves that laudable objective or whether it inadvertently makes it harder for precisely those individuals whom the Government claim they want to help. I start with the day-one right concerning unfair dismissal, and I pose a fundamental question: why would any employer take on what might be considered a high-risk hire? Why would they take a chance on a young person seeking their first opportunity? Why would they hire a student who did not attend a top-tier university? Why would they consider a person from a lower socioeconomic background, who may lack conventional credentials but definitely possesses untapped potential? When employers face immediate legal liability for dismissal decisions, they naturally become more risk averse in their hiring practices. They gravitate towards candidates with proven track records, established credentials and minimal perceived risk. This is not callousness; it is rational economic behaviour in response to the regulatory environment. The Government’s refusal to include a meaningful probationary period at this stage compounds the problem significantly. I have little doubt that, fairly soon, the Government will be arguing that they intend to consult and to continue with a light-touch probationary regime, which, it is suggested, could last for up to nine months. That is all well and good, but what does it mean in practice? What does the phrase “light-touch” mean and how will it be defined? Who are they going to be consulting, and on what? What are the Government thinking about this? It needs to be in primary legislation. Make no mistake: this uncertainty is affecting business decision-making now. It looks as if the Government fundamentally fail to understand that employment relationships involve mutual discovery. In the short term, virtually all jobs represent a cost to business. Employers hire workers not because they are immediately profitable but because they are confident that, over time, these workers will develop skills, reach their peak performance and productivity, and ultimately become a net benefit to the company or employing organisation. This process of development and mutual learning requires flexibility. It requires the ability for both parties to recognise when a match is not working and to part ways without excessive legal complexity. By removing this flexibility from day one, the legislation creates a powerful incentive to hire only the safest and the most predictable candidates—precisely the opposite of supporting those on the fringe of the labour market. The same perverse logic applies to the day-one right to sick pay. Consider the position of someone who has been absent from the workforce for an extended period. There are businesses that will make a point of hiring such individuals, recognising their potential and being willing to provide them with opportunities. But now the cost calculation has fundamentally changed. An employer considering such a hire must now factor in the immediate liability for sick pay from day one, combined with an inability to part ways if the employment relationship proves unsuccessful. The rational response is fairly obvious: avoid the risk entirely. This is not theoretical speculation; it is how labour markets function when faced with regulatory constraints. No amount of academic opinion can state otherwise. I urge the Government to review the impact on social mobility, so that they can adapt the legislation to avoid the unintended consequences I have highlighted. Like my noble friend Lord Deben on the last group, I would like to be proved wrong on this. If I am, I invite the Government to gloat to their hearts’ content about that, but I think we need the evidence. I beg to move.