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7.4 pm

Mr. Frank Doran (Aberdeen, Central): I start by declaring an interest. I am a member of the GMB and secretary of the GMB parliamentary group.

I have another interest to declare. We have heard much from Opposition Members about the problems of business, particularly small business. I used to run a small business when I practised as a solicitor; I employed about 10 people before I came to this House first in 1987. I agree to some extent about the problems of small businesses and the difficulties caused by any change in legislation. People in business want stability and certainty. Even good regulations made me unhappy because I had to spend some time thinking about how to manage their implementation. However, we must balance that against the interests of employees. The Bill contains some important provisions, which I welcome.

Mr. Prisk: Does the hon. Gentleman recognise that his qualification as a solicitor made him uniquely qualified to deal with many such proposals? Many people who go into

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business, whether they run a local post office or a corner shop, are not as qualified and therefore will struggle with the proposals.

Mr. Doran: I have practical experience of the fact that the gardener's garden is usually the untidiest one in the street. Somebody in the office looked after those matters for me.

My experience is relevant, but I want to concentrate on two aspects of the Bill with which I am less comfortable: both have been raised by my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) and, in his intervention on the Secretary of State, by my hon. Friend the Member for Manchester, Central (Mr. Lloyd).

I am concerned about the provisions that will lead to greater formalisation of the employment tribunal system. I worked for 10 years as a solicitor and was involved in many tribunal cases, mostly under the provisions of the Trade Union and Labour Relations Act 1974. I know that the system has changed and that there have been modifications, but the basic principles have not changed.

The 1974 Act was about accessibility. It allowed workers to present cases relatively informally and ensured that workplace grievances had an outlet. It did not change the basic relationship between an employer and an employee. In the absence of clear statutory guidance, courts and tribunals interpreted that relationship in the context of the common law, which militated against the interests of employees. The common law provisions, with which I am sure most people are familiar, were fairly straightforward. The employer had the right to hire and the right to fire—full stop. There was not a lot in between. The employment tribunal system introduced under the 1974 Act was extremely important as it gave rights to employees for the first time.

I had a glorious start in the old industrial tribunal system. In my very first case, I represented an employer. When I look back at the case now, as a Labour MP, I take a bit of pride in it. The tribunal decided to make an award of compensation against the employer, and at that time it was the largest ever made against an employer by a tribunal in Scotland: no class betrayal there, then.

I acted for employees as well as employers. I represented many trade unions. As most Members know, trade union officers tend to conduct their own industrial tribunal cases, but for their more complex ones they employed legal advisers. I was privileged to represent trade unions in a number of cases.

Mr. Hammond: Given the hon. Gentleman's background and experience in this field, how does he feel about the proposals to make third-party representatives personally liable for awards of costs when they are remunerated, as in the case of a solicitor, but not when they are unremunerated, as in the case of a union representative?

Mr. Doran: If the hon. Gentleman wants an honest answer, I would have to say that it is not such a good idea and will be difficult to implement in practice.

When I represented employees—in many cases, former employees—I experienced some difficulties. Access was relatively easy for the employee. There was no legal aid

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scheme for the tribunal hearing, although at that time most solicitors who were prepared to engage in such work on behalf of employees were able to make fairly constructive use of the legal advice and assistance scheme. The schemes in Scotland and in England were slightly different, but the difference was not so great as to be relevant.

The case could be prepared under the legal advice scheme, usually with extensions of the basic limit. Representation was on a no-win, no-fee basis, which put considerable pressure on the agent to try to find a settlement. I certainly felt such pressure when acting for employees. ACAS—the Advisory, Conciliation and Arbitration Service—was involved, and we tried to negotiate in many cases and were usually successful.

It is wrong to proceed on the basis that the fault always lies with the employee. In my 10 years of practice, I handled many cases in which employers refused to negotiate—partly because they were that kind of employer, but partly because their legal advice suggested that they should not settle. In many cases, employers did not come across with an offer until the eve of the tribunal. Many people might suggest that they did so because they had realised that the legal costs were ticking away, but usually offers had been made and employers had refused to accept them.

My only industrial tribunal case that resulted in the award of expenses against anyone involved an employer in exactly that situation. That fact is important. I was concerned when I read the consultation document—"Routes to resolution: improving dispute resolution in Britain"—published earlier this year, because its language suggests that employees are the problem.

I was also concerned about the report's use of the word "litigation". Lawyers have taken over the industrial tribunal, mainly because employers have become so defensive and have brought them in. It is not unusual to go into an industrial tribunal and see a row of QCs, not because they are necessary or because the cases are of such legal complexity, but because employers have decided that they or the business require that level of advice. Any push that the Government give towards increasing the degree of formality in the Bill will cause serious problems for the tribunal system. It will have to adjust to the participation of many more lawyers and to a new ethos.

The current ethos is not unhelpful to the unrepresented applicant. I have been on the other side of a tribunal from an unrepresented applicant and, in my experience, chairmen bend over backwards to help such people, ensuring that, even when they do not understand the legal complexities, they receive as much help as necessary. I have seen union officers helped in the same way.

I was consulted recently by a woman—she has asked me not to give her name—who had cause to take her employer, a public body, to an industrial tribunal. She decided that, as the public body was employing solicitors and a QC, she, too, needed legal representation. For a three-week tribunal hearing, she received a legal bill for £42,000. That is a recent case. She was fortunate in that she could afford to pay that amount, although it has taken most of her savings, but if that is where the industrial tribunal system is heading, the ethos that was introduced and practised after the 1974 Act will disappear.

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The Law Society of England's briefing on the Bill states:

It is instructive that the Law Society makes such comments. Many of its members who make money from industrial tribunals will be happy with those remarks, which should be welcomed as an honest assessment.

Colleagues have mentioned the Leggatt report. I find it difficult to understand why we cannot wait for the report before implementing legislation, although I appreciate the difficulties of the parliamentary timetable. I accept the point made by my hon. Friend the Member for Stoke-on-Trent, North about the practicalities of government, but it would be helpful if the Minister could assure us that, if the Leggatt report—which will be issued before the conclusion of the Bill's passage—makes specific recommendations about the employment tribunal system and on the increased formality and greater legalisation of that system, he will find time to consider how such recommendations might be implemented. The Secretary of State has already warned us that we might be asked to accept several amendments, so it would be helpful if we could have some assurance about the implementation of the Leggatt recommendations.

Mr. Mark Francois (Rayleigh): The hon. Gentleman touches on an important point. Does he agree that if one of the original intentions of the industrial tribunal system was to protect employees, there is now—especially given what he says—a real danger that the system will become so complex and so expensive that it could have the opposite effect?

Mr. Doran: The hon. Gentleman makes a fair point, but the system is already complex. Last night, I spent some time in the Library trying to read through some industrial relations cases; the system is extremely complex and is difficult for the layman to understand. The key is the removal of barriers to access. Employers will not welcome that, but the importance of a safety valve for grievances in the workplace cannot be underestimated.

Another of my concerns has been raised by my hon. Friends the Member for Stoke-on-Trent, North and for Manchester, Central: the definition of worker and employee. That may seem a pedantic point and not one that should detain us, but that is not the case. Definition of the individuals who will benefit from the legislation is fundamental to it.

I want to take the House back to the publication of the "Fairness at work" White Paper, which introduced some basic principles and set out the way in which the Government intended to legislate. I was fortunate to serve as the Parliamentary Private Secretary to the then Minister of State, Department of Trade and Industry and, because of my legal background, was involved in many of the policy discussions and preparations. I sat in on the presentation made by the TUC and the CBI to the then Secretary of State.

Before the publication of the White Paper, the Government had, in effect, said to the unions and the CBI: "These are the parameters, go off and sort out what you can agree on, what you don't agree on but think you can negotiate on, and what you positively can't agree on. Then

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come back to us and we will proceed." The hon. Member for Twickenham (Dr. Cable) recommended the same process of: consultation between both sides of industry.

At the presentation, everyone in the room was taken aback at the degree to which the CBI and the TUC were able to find agreement. That was an important occasion: for both sides of industry to move forward in that way was a landmark in industrial relations. That was recognised in the White Paper.

Paragraph 1.9 of the White Paper set out the three main elements of the framework that the Government proposed for industrial relations. The first was

What was recognised in the White Paper and what the Government implemented in subsequent legislation was the principle that the work force needed to be flexible to compete in the modern age and that business sought that flexibility, but that there had to be a basic level of minimum standards in the workplace. One of those basic minimum standards was the need to ensure that legal devices could not be used to exclude workers from the benefits of the legislation that was subsequently implemented.

One of the most fundamental ways in which that was done was to get away from the old common-law definitions of employer and employee. The concept of "a worker" was introduced under the National Minimum Wage Act 1998, and the categories of worker to whom the Act would extend were clearly defined. At a stroke, all the legal devices that had been created by employers—home working, agency working, part-time working, casual working—came within the ambit of the minimum wage legislation. Those devices were not excluded; employers could not use them to argue that their workers were not entitled to the minimum wage.

That definition of the term "worker", adjusted for various purposes, was applied to other legislation—the Employment Relations Act 1999 and regulations on working time—introduced mostly because of European social chapter obligations. The definition has continued and it represents the fundamental protection for workers. I am deeply concerned that the Bill contains a different definition of the persons to whom it will apply.

I am not sure whether I have got the numbering right—it is so complicated—but under clause 2 and proposed new section 171ZJ to the Social Security Contributions and Benefits Act 1992, employees are described as those

so it will apply to us as Members of Parliament—

Tribunals and courts will once again be encouraged to apply the Bill to a much more narrowly defined group of people. That will open the door to unscrupulous employers to extend the use of home workers, agency workers and so on.

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