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The Minister of State, Department of Health (Mr. John Hutton): I beg to move, That the clause be read a Second time. The Chairman: With this we will take Government new schedule 1— Partnership Arrangements: transfer of staff. Mr. Hutton: The new clause and new schedule are important. I will explain to the Committee why we are introducing them. They deal with protecting the employment rights of staff who may be transferred under the provisions of the Bill. Care trusts need stability for their staff. There will be integrated partnerships of staff from local authorities and the national health service. We want them, where appropriate, to be able to transfer in the knowledge that their terms and conditions will be secure, and the new schedule is designed to ensure that that happens. It will enable the Secretary of State or the National Assembly for Wales to make an order transferring staff to ensure that the terms and conditions of employment are properly protected. The proposals would enable orders to be made replicating the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 and make provision for pension rights. I want to reassure the Committee that this is not legislation for legislation's sake. Apparently, there is some doubt about the extent to which TUPE regulations apply when there is a transfer within the public sector from one agency to another. That uncertainty has arisen from a recent decision of the European Court of Justice about the Henke case that arose in Germany. We need to remove such doubt, which is precisely what the new clause and new schedule will do. They will allow for regulations to be made requiring consultation about the proposals and the options for the staff. They will preserve the terms and conditions of employment for staff and ensure continuity of service under the transfer. We have also made provision to deal with cases in which the employee works partly for the transferor and partly for the transferee, so much of the contract that is transferred to the transferee will also be similarly protected. Under the TUPE regulations, pension rights are not currently protected. An order under the new schedule 2A will mean that pension rights can be fully protected in such circumstances. The provision allows flexibility as different people may wish to do different things about their pension when they transfer employment. We want the staff employed by care trusts to deliver the highest possible quality care. That will be made much easier if staff feel properly valued and their own employment rights are properly protected. I am sure that all of us would want that for ourselves, and it is what we want to deliver to staff who will be affected by the new arrangements. I reassure members of the Committee that the new clause and new schedule are fully compatible with the Cabinet Office's statement of practice on staff transfers in the public sector. Paragraph 5 of the statement says that, in circumstances in which TUPE does not apply in strict legal terms to certain types of transfer between parts of the public sector, the principles of TUPE should none the less be followed, where possible using legislation to affect the transfer. It also states that the staff involved should be treated no less favourably than they would have been had the regulations applied. There should be appropriate arrangements to protect occupational pensions, redundancy and severance terms for staff in all those types of transfer. That is what the new schedule requires. Mr. Swayne: I want to ask one or two questions that have probably arisen from a poor understanding of the technical language of the provisions rather than from issues of substance. I would welcome some reassurance from the Minister. Paragraph 2(2) of new schedule 1 states:
I became confused—[HON. MEMBERS: ``Oh.''] At least I have read the new schedule, which I suspect is more than can be said for some members of the Committee, whose attention to such matters could be described as transitory—perhaps ``sporadic'' might be a better word to use. Paragraph 3(1)(b) of the proposed new schedule refers to the contract of employment having
I should appreciate the Minister's reassurance about the position of redundancies. One's right to a redundancy payment is determined to an extent by one's original employment date. One accrues rights according to one's length of service. I had begun to suspect that the beginning of the contract date would be the date of the transfer—that was my impression from the language used—rather than the original date that the employee began with the transferor. Will the Minister give me an assurance on that matter? Paragraph 3(5) of new schedule 1 refers to the rights of an employee for whom
Mr. Hutton: I can put the hon. Gentleman's mind at rest on those issues. We are trying to put staff who have their employment transferred under such arrangements in the same position as if the TUPE regulations applied. The TUPE regulations have been on the statute book for more than 20 years. A substantial body of case law and precedent have been established that demonstrate and clarify some of the practical concerns and issues that he raised. With the greatest respect to the hon. Gentleman, I shall not detain the Committee by listing those precedents to establish the parameters of the TUPE regulations. I shall try to deal with the three points that the hon. Gentleman made. The purpose of paragraph 2(2) is to make it clear that there will be proper consultation with the work force and trade unions affected by the changes before the Secretary of State issues an order under the new schedule and new clause. That is designed to ensure best practice in employment relationships between the employers concerned. The hon. Gentleman asked me to say exactly what the requirements will be, but we have not yet prescribed them. I can only describe them generally by referring to the consultation that he would expect to apply. The other two points made by the hon. Gentleman related to what I accept are difficult issues—ensuring continuity of the employment contracts when there is a transfer between employers, and continuity of the obligations and responsibilities of the employer. It is not only contracts that must be transferred smoothly in such circumstances, but continuous liabilities of employers. He asks me to explain through practical examples the set of circumstances that have given rise to his concern. Again, with the greatest respect to the hon. Gentleman, it would not be helpful for me to do that, partly because if I did so we would be here until next Friday lunchtime. Mr. Hammond: Could the Minister touch on an issue that he and I discussed in relation to another Bill in Committee? Is he satisfied in his own mind that paragraph 5, which deals with divided employments, is fair and reasonable? Is it fair and reasonable to impose on an employee the obligation to split his employment into two part-time employments: one continuing with his former employer and one with a new employer? Is the Minister entirely comfortable with that? Mr. Hutton: We cannot force employees to do anything under such provisions, which I am sure that the hon. Gentleman understands. If an employee does not want to work under those arrangements once the transfer has taken effect, he or she is perfectly able to express that preference. The TUPE regulations provide a framework within which there can be continuity of employment rights and continuity of the responsibilities of the employer. It is important that there is no confusion about that. The hon. Member for New Forest, West (Mr. Swayne) had another query about paragraph 3(5) and the meaning of ``substantial change''. All I can say is that a body of case law has developed during the past 18 or 19 years since the TUPE regulations were enacted. Attention has therefore been directed to precisely the points that he raised. Clearly, I do not have chapter and verse of that case law to which to refer this afternoon, but the principles have been fully explored in employment tribunals and higher courts. A clear body of case law will set out the circumstances in which the provision can be triggered, and how any issues can be resolved. Mr. Hammond: The schedule is intended to deal with the creation of care trusts. In the substantive debate on the subject, the Minister of State, the right hon. Member for Southampton, Itchen (Mr. Denham), said that it would be possible to unwind a care trust and revert to the previous arrangements. Will the Minister of State, the hon. Member for Barrow and Furness (Mr. Hutton), tell us whether there will be a return ticket for employees if a designation as a care trust is terminated? Will staff return to their employer with no loss of seniority or any other accrued privileges they would have had if that designation had never been given? Mr. Hutton: I can give the hon. Gentleman that assurance. The new provisions are to cover the transfer from one public-sector agency to another. The traffic is not all one way. If, as an example, the parties applied to the Secretary of State and he made an order to dissolve a care trust under clause 45, the provisions would apply in the same circumstances as those that we are discussing. I am grateful to the hon. Gentlemen for attempting to clarify some of the issues. I hope that I have reassured them that we are not reinventing the wheel but building on a substantial body of case law and precedent. The provisions are designed largely around existing regulations that have stood the test of time. Question put and agreed to. Clause read a Second time, and added to the Bill.
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