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Session 1999-2000
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Delegated Legislation Committee Debates

Draft Code of Practice in Industrial Action Ballots and Notice to Employers

First Standing Committee on Delegated Legislation

Thursday 13 July 2000

[Mr. Jimmy Hood in the Chair]

Draft Code of Practice on Industrial Action Ballots and Notice to Employers

4.30 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I beg to move,

    That the Committee has considered the draft Code of Practice on Industrial Action Ballots and Notice to Employers.

The purpose of the draft code is to revise the present statutory code of practice with the same title issued in 1995. The revisions are mainly to reflect the changes made by the Employment Relations Act 1999 to the legislation dealing with industrial action ballots by trade unions. We have also taken the opportunity to shorten and clarify the code's provisions. At the same time, we have tried to retain material found useful in the past by unions, employers, balloting organisations and those who advise them.

We intend, subject to parliamentary approval for the draft code, to bring it and the 1999 Act changes into effect from Monday 18 September. The code will be issued under the powers in the 1992 Act that allow the Secretary of State to

    issue Codes of Practice containing such practical guidance as he thinks fit for the purpose (a) of promoting good industrial relations, or (b) of promoting what appear to him to be desirable practices in relation to the conduct by trade unions of ballots and elections.

Like the present code, the amendments will impose no legal obligations and failure to observe it will not by itself render anyone liable to proceedings, but its provisions can be taken into account in court proceedings relating to the statutory requirements.

Taken together, the revised code and the amended legislation are designed to provide a framework to promote the orderly conduct of industrial ballots and good industrial relations practices in the, fortunately, now relatively rare cases in which industrial action is contemplated.

The code is designed to fulfil the Government's commitment to simplify the law by making it easier for trade unions and their members to understand their rights and responsibilities. That should reduce the risk of legal disputes over technicalities, which are in no one's real interests, while preserving the key elements of the present legislation.

It might help the Committee if I briefly outline the legislative context in which the code would operate. Generally speaking, encouraging people to break contracts can give rise to a liability to pay damages to parties who suffer loss as a result of the breach. The organisation of industrial action by trade unions is a long-standing exception from this general principle, so long as certain conditions are met, allowing the union to benefit from what are often called the statutory immunities.

Unions must meet various conditions if they are to enjoy those immunities, including, for instance, a requirement that the industrial action relates to a trade dispute between workers and their employer. However, the conditions that concern us today are those that prevent the immunities from applying to industrial action organised by trade unions unless the action is sanctioned by a majority vote in a properly conducted ballot and unless certain information is provided to the employers about the union members who are to be balloted or who are subsequently encouraged to take industrial action.

The law places several duties on unions. The Committee may be relieved to hear that I do not propose to go through them in great detail today, although I will briefly summarise the changes made by the 1999 Act that give rise to the need for the revised code that we are considering.

The 1999 Act does away with the requirement for unions in some circumstances to give employers the names of their members whom they intend to ballot or to call on to take industrial action. We said in the ``Fairness at Work'' White Paper that we did not believe it right to force unions to disclose their members' names, possibly against those members' wishes. Unions will be required to give employers information to enable them to make plans and to bring information to the attention of the workers concerned, which was the original intention of the legislation. The 1999 Act makes it clear that unions will no longer be under any obligation to include their members' names as part of that information.

The other changes to the 1999 Act are as follows. First, it will become easier to suspend or to postpone industrial action by agreement between the union and employer, for example, to allow talks to proceed. Secondly, the new code will rationalise the requirements placed on unions to provide employers in multi-employer ballots with information on ballot results and samples of voting papers to be sent to their workers.

Thirdly, the restrictions on whom a union can call on to take action after a ballot will be rationalised. A union can currently call on members to take action who were not balloted because they were not members at the time, but who have subsequently come into the workplace. That provision is being extended to cover workers who were members of the union at the time of the ballot, but who were not balloted because it was not then reasonable for the union to believe that they would be called on to take industrial action. Such a situation may arise, for example, when a member is unexpectedly transferred to the group of workers that the union intended to call on to take action.

Fourthly, the changes to the code will simplify the existing complicated requirements governing when a union can hold a single ballot of members in different workplaces for the purposes of ascertaining whether they favour industrial action. Fifthly, the changes will end uncertainty by defining overtime and call-out bans as action that is short of a strike for the purposes of the law on balloting. That will overturn a recent High Court judgment that overtime bans were strike action. They will also remove uncertainty about the status of call-out bans.

Sixthly, the statutory health warning that must appear on ballot papers to reflect the new unfair dismissal rights introduced elsewhere in the 1999 Act, which entered into force on 24 April, will be amended. Seventhly, the existing limited flexibility designed to facilitate the balloting of merchant seamen will be extended. Finally, the code is designed to give the courts greater scope to disregard small accidental failures in the organisation of ballots that would not affect the result.

The changes were made following a series of detailed consultations. In the ``Fairness at Work'' White Paper, we asked for views on the ways in which the existing legal framework could be simplified or clarified. We received a large number of suggestions in response, which we studied carefully, rejecting those that would have undermined an essential protection or feature of the existing law, that were unworkable or that gave rise to problems in legal interpretation. The remainder were incorporated into the 1999 Act. We then revised the code of practice to reflect the changes and, in April, we published a consultation document containing a draft code.

My officials held a public meeting during the consultation process, which gave an opportunity for interested parties to raise concerns and to seek clarification. By the end of the consultation period, we had received 34 responses from a variety of quarters including the Confederation of British Industry, the Trades Union Congress, individual trade unions, employers' organisations and individual employers, lawyers and employment relations specialists. A list of respondents has been placed in both Libraries.

More than half the responses—from both sides of industry—welcomed the Government's aim of simplifying the 1995 code, and most of them said that they believed that the consultation and draft code had fulfilled the objective. Several suggestions for further improvements were made. Inevitably, we were not able to accommodate all of them. Some, for instance, were contradictory and some were directed at the underlying law rather than at the code itself. However, the draft code takes account of many of the comments that we received and is the better for that.

As well as updating the code to reflect the 1999 Act changes that I have already outlined, we have made clearer the distinction between exhortation, restatement of the law and guidance with regard, for example, to reasonableness tests, which are of use to those conducting industrial action ballots and which can be taken into account by the courts. The new code cuts down on repetitive explanatory material that might have been useful when the provisions were new, but has become less so in the light of experience. It replaces or removes unnecessarily prescriptive wording. The new code is 15 per cent. shorter than the current code and, in my view, is clearer and easier to understand.

We are living in a time of relative industrial harmony. The number of days lost through industrial action is near its lowest level since records began in 1891. We are pursuing a partnership agenda aimed at keeping it that way. We are pursuing a partnership agenda aimed at keeping it that way. The changes that we are proposing to the code and which are made by the 1999 Act will further contribute to that process by maintaining the fundamental principles of the current law while removing unnecessary burdens and red tape, clarifying unions' obligations and narrowing the scope for legal disputes to arise.

4.40 pm

Mr. Nick Gibb (Bognor Regis and Littlehampton): I welcome you to the Chair, Mr. Hood. I shall endeavour to refer to you by the right sex throughout our proceedings; that will put me one up on the Prime Minister.

The Opposition are concerned that Government measures are incrementally causing a deterioration in industrial relations in this country, despite the Minister's remarks. In the 1970s, Britain was crippled, both economically and in terms of its overseas reputation, by strikes and disastrous industrial relations. In the 1970s, an average of 12.9 million days were lost each year as a result of industrial action—or, rather, industrial inaction. By 1995, that figure had fallen to just 415,000 working days. That was one of the many great achievements of Margaret Thatcher's period as Prime Minister. The reforms to the trade union legislation that she established were controversial at the time, but they were necessary and they transformed the British economy. They changed not only the legal framework but the psychology of this country.

The change was too fundamental to be damaged overnight by this Government, but we are seeing a gradual alteration in the atmosphere of industrial relations as a result of measures such as the Employment Relations Act 1999. For example, the TUC survey published a few weeks ago showed that the number of strike ballots was increasing dramatically. The unions organised 983 ballots in 1999, compared with 464 in the previous year. In other words, the number of ballots more than doubled in that time. Although the proportion that resulted in actual industrial action fell from 40 to 32 per cent., the number of actual cases of industrial action rose to 314 from 185 the year before. Although the argument that the ballot is increasingly used simply as a negotiating tactic has some weight, there is clear evidence that the number of cases of industrial action is increasing. That is a genuine cause for concern.

Labour inherited an enviable economy from the previous Conservative Government. Unemployment had been falling for seven consecutive years and there was steady growth and low inflation. Squandering that inheritance is a difficult task. However, mountains of new regulations, a range of costly stealth taxes and changes to the trade union regime are putting that inheritance at risk in the medium to long term.

As the Minister explained, the new code replaces the previous one, which was issued in 1995 and has been updated principally to reflect changes in the law on the conduct of workplace ballots that were made in the Employment Relations Act 1999. Paragraph 6 of the code states:

    A union should hold a ballot on industrial action only if it is contemplating the organisation of industrial action.

The CBI was concerned that the Government might delete that section from the code under pressure from trade unions, which are using ballots as a way of negotiating. The Minister is to be congratulated for resisting that pressure. Holding a ballot on industrial action seems like a smart negotiating tactic, and 95 per cent. of the ballots to which the TUC survey referred resulted in a ``yes'' vote. In each case, the union's negotiating arm was strengthened. However, the danger with that approach is that it damages industrial relations in general and often leads to actual industrial action.

The key measures in the Employment Relations Act 1999 on workplace ballots are incorporated in the code. First, they extend the validity period of a pro-strike ballot result by up to four weeks, to eight weeks, with the agreement of union and employer. Secondly, as the Minister said, they allow greater scope for the courts to ignore minor accidental procedural errors in the ballots. Thirdly, they clarify the process of aggregating ballots that are conducted on separate sites. Fourthly, they remove the requirements for unions to give to the employer in some circumstances the names of the members whom they are balloting.

On the extension to eight weeks, the Opposition's view when the measure went was debated in Committee last March was summed up by my hon. Friend the Member for Daventry (Mr. Boswell), who said:

    This clause will impose a welcome additional element of flexibility for unions and employers to reach agreement. It introduces a slightly more flexible deadline, so the Opposition welcome it.—[Official Report, Standing Committee E, 18 March 2000; c. 467.]

The Committee will be pleased to hear that, despite a change of personnel in the shadow Department of Trade and Industry team, that remains the Opposition's view. As for accidental failures and errors in procedures, it is equitable to ignore minor transgressions, provided that they are not negligent.

We also welcome the drafting change to paragraph 23. It states that the cumulative effect of all minor accidental failures to comply with requirements will be considered in assessing whether they are minor and likely to affect the result of the ballot. That must be the right approach.

During the passage of the Employment Relations Bill through the other place, my noble Friend, the formidable Baroness Miller, succeeded in persuading the Minister, Lord McIntosh, to amend the health warning that has to appear on a ballot before there can be strike action. It warns trade union members that, although dismissal as a result of a lawful strike within the eight-week period would be regarded as unfair by an employment tribunal, dismissal as a result of a strike after that period might not. It is interesting to see that the amended wording is included on the example voting paper in annexe 2 to the code. I am pleased that the Minister has put the example ballot paper at the back of the code, as recommended by the CBI.

The procedures for counting the votes in a ballot are set out in paragraph 42 of the code. The existing code says that no votes should be counted at any location until the close of voting. Does the new code include that phrase, because I cannot find it? If it does, where is it and, if it does not, why not?

The most controversial change to the law on workplace ballots introduced by the 1999 Act related to the disclosure of the names of balloted employees. The previous code said that the union had to provide the employer with certain information. It stated:

    In some cases...if the employer would otherwise be left in doubt, more specific information (possibly including names and workplace locations) may be needed.

That interpretation of trade union law was based on the case of Blackpool and Fylde College v. National Association of Teachers in Further and Higher Education, in which the High Court ruled that a trade union might have to name individuals to remain within the law. My understanding is that it was never envisaged that such information would be needed by an employer. The 1999 Act changed the law back to what it was intended to be.

My hon. Friend the Member for Daventry raised one concern in the Committee that considered the Employment Relations Bill. He asked how an employer would know which employees he would need to communicate with to put his side of the argument on a strike ballot. He said:

    Perhaps the Government are driven towards a solution whereby employers, who would not know individual names, would have to send letters to all their employees at their known home addresses to cover union members who might be involved.—[Official Report, Standing Committee E, 18 March 1999; c. 463.]

He said later:

    Any individual communication...must therefore be addressed to all his employees or done inaccurately or capriciously. I am not sure that that would better inform the dispute.

The Minister responded that the information that the union had to provide related to

    the number of employees involved, the type of job that they perform and their workplace—[Official Report, Standing Committee E, 18 March 1999; c. 466-467.]

which should be sufficient to enable appropriate communication. Lo and behold, that passage appears in paragraph 14 of the code, which states:

    In particular, the union must provide as a minimum any information which it possesses as to the number, category or workplace of the employees concerned.

I note that the union will not fail to satisfy the requirement because it does not name the employees. Our concern, which is shared by the CBI and the British Chambers of Commerce is that an employer cannot check the validity of a ballot without knowing the names of those who have been balloted. If the employer does not know who is on strike, as opposed to being ill, deducting pay may be difficult or may result in absentees—those who are not on strike but ill or on holiday—having their pay cut.

Our concerns about worsening industrial relations stem principally from the Employment Relations Act 1999 rather than the code that arises out of the Act, which simply incorporates the provisions in the Act. The code seems to have taken on board some, if not all, of the concerns raised by interested parties such as the CBI. In view of that, the Opposition do not object to the code, except on the matters on which I have expressed concerns today, to which I await the Minister's response.

4.50 pm

 
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