High Pay Centre calls for the strengthening of the Employment Rights Bill

The HPC publish a briefing for Lords scrutinising the Employment Rights Bill

17 Apr 2025| News

Ahead of the 2nd reading of the Employment Rights Bill in the House of Lords, the High Pay Centre (HPC) has published and distributed a briefing to peers in the House of Lords on their analysis of the current state of the Employment Rights Bill.

The High Pay Centre is an independent, non-partisan think tank focused on the causes and consequences of economic inequality, with a particular interest in top pay.

The briefing calls on parliamentarians to support the bill, while making three main recommendations on where the substance of the bill could be strengthened:

In order to truly deliver ‘fair pay’ the negotiating body that will oversee new ‘Fair Pay Agreements’ that will apply in the social care sector (and potentially other sectors in future) should have a remit to cover excess pay-outs to owners and executives at the top of companies providing social care, as well as under-payment of social care workers in the middle and at the bottom.
The vital and welcome new requirement for employers to provide workers with a statement of their trade union rights could also cover other key employment rights including rights to the minimum wage, sick pay or consultation rights. Many workers – particularly lower earners lack awareness of their rights at work generally, and ensuring they are informed of key rights when they start a new job would go a long way to ensuring these important rights are actually applied.
When workers vote to recognise a trade union, this should give the union rights to consultation on major business decisions that would affect their members. This would give people more voice and control over their working lives, and improve a situation whereby the UK ranks 26th out of 28 European countries for worker participation in decision-making at work. HPC’s submission to the consultation on the UK’s Modern Industrial Framework making this argument was endorsed by 12 Professors of Employment Relations from leading UK Universities.

Further detail behind these recommendations can be found in the HPC’s ‘A Charter for Fair Pay‘, which sets out a a series of policies for empowering workers, enabling a more participatory business culture, boosting pay and productivity and reducing income inequality.

The debate in the Lords included a proposal from Green Party peer Baroness Jones to introduce a ‘maximum pay ratios’ amendment in line with the Green Party’s long held policy of limiting the pay ratios between executive and worker pay to 10:1. HPC have previously published research looking at the hypothetical impact of capping top pay and redistributing the excess across the wider workforce.

In the briefing, the HPC states:

“We strongly welcome the Employment Rights Bill as a means of directly strengthening voice in the workplace for UK workers, as well as measures boosting job security that should empower workers indirectly. This will put workers in a much stronger position when negotiating their pay, leading to fairer pay outcomes, reduced inequality and enhanced pay for low- and middle-earners.

In particular, the requirement for employers to inform workers of their right to join a trade union and the rights guaranteeing trade unions reasonable access to relevant workplaces are vital mechanisms for ensuring workers are able to make a free and informed decision over trade union membership. The positive relationship between trade union/collective bargaining coverage and higher wages is well documented by extensive research. Research has shown that diminished union strength in the UK was reducing wages by between 15% and 25% as of 2022, resulting in a wage loss of £100 a week for the average worker. An analysis by the US Treasury looking at studies of pay differences between union and non-union workers in similar occupations found evidence of a union pay premium of between 10 and 15%.

Measures such as expanding collective bargaining coverage or improving worker awareness of their fundamental employment rights will also put workers in a better bargaining position by enhancing job security, giving them greater confidence to request pay increases. Civil servants’ assessment of the Bill’s impact recognise that the main economic consequence of the reforms will be to secure for workers a larger share of the wealth created by their labour, and that most of the ‘cost’ it imposes on business will represent higher pay for workers.”

You can read the full briefing here.