My view on the Employment Rights Bill

The Employment Rights Bill currently going through Parliament is roundly criticised by business lobby groups. Surveys suggest seven out of 10 UK companies are concerned about potential increased costs and ‘vexatious’ claims from workers - at a time when many are already struggling with higher National Insurance contributions.

I understand the concerns but take a different view, as I scrutinise the Bill with other members of the House of Lords at ‘Committee’ stage. While some areas do need amending, the Bill’s overall ambition – to overhaul worker rights in the UK – should be good for both employees and businesses – and for the future of the British economy.

That view is born out of my experience as a business leader, including 15 years as CEO of Newton Investment Management. Time and again, I saw that treating employees well yielded far more benefit than cost, through higher engagement, productivity and loyalty.

Some of the policies Newton offered – long before I took charge – were undeniably generous – and meant the company incurred an upfront cost. When I joined the firm in 1994 in a very junior role, UK statutory maternity leave and pay was just six weeks, and an employee had to work for two years at the company to be eligible even for that. In contrast, Newton offered enhanced maternity benefits from day one – effectively four months fully paid leave. The HR Director knew I had a two-year-old and was joining from a (much bigger) firm that offered only the statutory minimum; he took the trouble to let me know that I didn’t have to wait another two years to have a second child – and spelled out the more generous package. I was amazed – and grateful, as it made a huge different to my family. I happily put in many hours of hard work.

When I became CEO seven years later, one of my first policy changes was to offer all employees the opportunity to work a 4-day week on pro-rated pay. It was a tricky time for the business and I needed to make cost savings but didn’t want to make redundancies, confident that we would bounce back (which we did). As many men as women came forward to take up the four-day workweek, including some of the most senior fund managers. It helped us retain valuable colleagues and introduced the idea of smart, sustainable working practices long before they became the norm. It also removed any stigma from requests from women to work flexibly after maternity leave. Did we see any drop in productivity? Quite the opposite.

Good employers treat their workers well on a voluntary basis; the Employment Rights Bill raises the standard for all. It will stamp out egregious practices like zero hours contracts and offer more ‘day one’ rights, including protection against unfair dismissal - currently only available to those who’ve worked at a company for at least two years which makes employers more likely to terminate them during this period, even if unfairly.

It will also introduce paternity leave as a day one right. My colleague Baroness Penn on the Conservative benches has proposed additional amendments to enhance paid paternity leave. Britain has fallen woefully behind in terms of paternity leave provisions, rock bottom in Europe and 40th out of 43 OECD countries. We currently have very gendered parental leave arrangements, which holds back women, limits men’s choices, is sub-optimal for children and puts old-fashioned Britain at a disadvantage.

The Bill also strengthens requirements for employers to protect staff from sexual harassment or discrimination. I have tabled and supported amendments to also restrict the use of non-disclosure agreements (NDAs) to silence victims of poor behaviour in the workplace. I am working with five other Baronesses across parties to encourage the government to introduce its own amendments along these lines. The Bill is a perfect opportunity to address the misuse of NDAs, originally intended to protect intellectual property, not buy silence over workplace sexual misconduct. An NDA could still be used at a victim’s request, but a company could not force someone into signing one.

Britain can – and should - take a leadership role in workplace policies, which would help keep our home-grown talent here, and get our economic mojo back. At present, UK annual employee turnover is 34%: a third of workers are so disengaged that they leave within twelve months. The cost of replacing them is huge, up to twice the outgoing employee’s annual salary. Businesses should be looking at the Bill holistically, not just seeing the immediate costs, but the longer-term benefits, including saving those recruitment fees.