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Employment Rights Bill

My Lords, I broadly support this group of amendments and, in particular, Amendment 49 in the names of the noble Lords, Lord Sharpe and Lord Hunt. My noble friend Lord Vaux’s more straightforward Amendment 50 would reduce the length of the qualifying period from two years to a minimum of six months, during which an employee may not claim unfair dismissal.

I am happy to agree with the Government that the current two-year period for effective probation, from my experience as an employer, is excessively long and merits revision. Like others, I understand that the Government are consulting on the length of the IPE, the initial period of employment, and that nine months is being suggested. However, given that most permanent employees have a formal annual review at 12 months, during which their remuneration and performance are reviewed, I think it is fair and transparent that the 12-month review also represents the end of the probationary or qualifying period. That provides clarity to both sides and, I believe, is sufficient time for the employer to assess the employee’s performance, competence and cultural fit.

I accept that, in the majority of cases, performance issues during probation surface within the first six months. A proactive employer should then step in to either articulate a performance improvement plan for the next six months, with clear markers and milestones, or come to an early conclusion that this is not going to work out and move on to dismissal. But if we overly squeeze the probationary period, we will deter employers, particularly entrepreneurs, from the creation of new jobs by reducing their appetite to take a risk on new recruits, as we have heard, which is surely not what the Government intend.

Clause 23 and Schedule 3 threaten to be a real menace for two groups of employer in particular. The first, as we have heard, is those sectors with naturally high staff attrition rates given the nature of their business, such as retail and hospitality. The second, perhaps less obviously, is those businesses that rely on particular job functions that carry higher risk and performance requirements, in particular sales, marketing and business development jobs that run across so many of our economy’s key sectors: everything from

sales on the floor, in the park or in the kiosk, and, yes, telesales—which we all try to avoid—to those involved in B2B business development and client account management. I know from personal experience in advising start-ups and scale-ups that these are critical, revenue-generating roles with strong personal performance criteria where much of the remuneration comes—quite correctly—in the form of performance-related pay. We will do real damage to productivity and economic growth if we do not allow fair and proper time for assessment of these types of roles without the threat of unfair dismissal hanging over employers’ heads prematurely. That said, I will support Amendment 49 if it is put to the vote.