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6 pm

Mr. Hammond: The Minister says that the average compensation for unfair dismissal was £2,700, but he suggested earlier that the average award at a tribunal was somewhat lower than that. We therefore need to consider the uplift in the context of the average award made at tribunals and not just for one particular class of action.

Alan Johnson: The average cost award was £300, but I am now referring to the average compensation for unfair dismissal. That is not the same. I am referring not to vexatious or even frivolous litigation, but to a clear-cut case found against an employer in which it was discovered that no written statement of particulars was issued. In that context, the average award of £2,700 for unfair dismissal is perhaps more relevant than the average cost award of £300.

Mr. Hammond: The Minister is missing my point, but I may be missing something too. Let my try to clarify my question. Claims other than those for unfair dismissal go to tribunals and I was hoping that the Minister would give the House the average award—not the costs and not just the average award made at cases of unfair dismissal—that tribunals made in the last year for which figures are available.

Alan Johnson: That is a fair point. I do not have the figures for average awards across the board. However, I know that the majority of cases—about 51 per cent.—are for unfair dismissal. In a sense, however, this issue is irrelevant to the argument.

The argument is whether the system was needlessly complex when it left the House. We were convinced by the debates in the House of Lords that it was and that we could simplify the system. We do not believe that we have taken away a tribunal's discretion to decide, and the provision is not linked as closely as it was to failings in the statement of employment terms and conditions. We have given more discretion to the employment tribunals but in a different way, with the matter being based on between two and four weeks' pay. I urge the House to agree to this sensible amendment.

Lords amendment agreed to.

Lords amendments Nos. 38 to 55 agreed to.

Clause 39

Compromise agreements

Lords amendment: No. 56.

Alan Johnson: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendments Nos. 88 to 90 and 92 to 95.

Alan Johnson: The lead amendment will delete clause 39, which is on the expansion of the scope of

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compromise agreements. Grouped with it are a number of consequential amendments that undo various repeals and revocations that we would have had to make through schedule 8 had the clause remained in the Bill.

Clause 39 was debated in great detail in Committee in the other place in March, and some serious concerns were raised about potentially damaging effects. The Government promised to consider those arguments, which we duly did. On 30 April, in answer to a question from Lord McCarthy, my noble Friend Lord Sainsbury announced that the Government had decided to delete the clause. That was done on Report in the House of Lords. We explained in that debate that we did not necessarily agree with all the legal arguments advanced by Lord Wedderburn about the meaning of the case law, and especially with his interpretation of the recent BCCI v. Ali case in regard to the scope of compromise agreements.

In a sense, it is a question of risk assessment. In our view, Lord Wedderburn rather overstated the risk that widening the compromise agreements might enable employers to draw up general waivers preventing their employees from ever enforcing their employment rights. We continue to think that that would have been invalid and illegal even if clause 39 had remained. However, we acknowledge the risk, and any risk of such an undesirable outcome is unacceptable. It is undeniable that recent case law has created uncertainty.

Even more important, we recognise the risk that, even though such an agreement would in our view be invalid, a small minority of employers might none the less attempt to persuade their employees to sign one. If that happened, the fact that its legal validity was highly questionable would not alter the fact that, having signed the agreement, an employee would be most unlikely ever to go to a tribunal because he would believe that he no longer had the right to do so.

As we have now made clear on several occasions, the Government are adamant that no employee should be deterred in that way. That was not what clause 39 was about. Its aim was simply to address the concerns of a number of employment lawyers that the scope of compromise agreements was unnecessarily restrictive and that it should be widened to match the scope of settlements conciliated at ACAS. That is a reasonable enough aim, and one with which we agree—but not at the risk of jeopardising employees' rights.

We considered amending the clause in a way that addressed all the concerns while retaining the original policy objective. In our judgment, there was no legally watertight way of doing that without also having to tinker with the scope of ACAS-conciliated settlements—the so-called COT 3 agreements. COT 3s have worked very well for several years and we had no wish to change their legal scope. We therefore concluded that we should delete the clause completely.

I hope that the House will agree to Lords amendment No. 56 and to the others grouped with it.

Mr. Hammond: I have no quarrel with the substance of what is being done, but it is worth the House taking a moment to consider how near we came to what might have been a legislative disaster. Clause 39 was not debated in Standing Committee in the Commons, because of the operation of a timetable. That meant that the Bill went to the Lords without the clause having been

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discussed in the minute detail that it was in the other place. By the Minister's own admission, Government legislation went through the House of Commons essentially on the nod. Fortunately, the intervention of Lord Wedderburn in the other place drew to the Government's attention what the Minister acknowledges are possible dangers with the clause.

I have nothing to say about the substance of the issue. I am prepared to defer to Lord Wedderburn's analysis and to assume that the Government, having had the problem drawn to their attention, have considered the matter carefully and decided, on the balance of potential harm, that it is better to delete the clause. However, I ask the House to consider what would have happened had the regime of rigorous timetabling that now dominates and controls all proceedings in this place already been extended to the other place. The House of Lords frequently annoys the Government's business managers by voting when they would like it not to vote and, occasionally, by winning Divisions that they did not sanction it to win. Sadly, except on Fridays, this place seldom does that.

I hope that, in announcing the Government's decision to remove clause 39, the Minister acknowledges the vital role that the other place often, sadly, has to perform on its own because we do not have the opportunity to do our job properly under the timetabling regime. Having recognised that vital role, I hope that the Minister will at least place on the record his determination never to support any attempt to curtail debate in the other place.

Mr. Lloyd: I understand the hon. Gentleman's point, but he might want to reflect on a couple of things, one of which is the role of Opposition and Labour Back Benchers in ensuring that time allocated in a timetable motion is used to concentrate on the most important aspects of a Bill. If there is a failure, it is a collective one for which the Opposition themselves have to take some responsibility. One way to avoid the problem is to consider seriously pre-scrutiny of legislation. I know that discussion of that would take us wide of the amendments and I do not want to detain the House on such matters, but the hon. Gentlemen should consider whether pre-scrutiny would have helped the House enormously on clause 39.

Mr. Hammond: I do not accept the premise of the hon. Gentleman's first point. By and large, the Committee managed its time well. Very few clauses were not discussed as a result of the guillotine. The fault and responsibility must lie with those who needlessly impose a guillotine on a Bill's consideration in Committee.

I am interested in the hon. Gentleman's comments on pre-legislative scrutiny. I intend to watch with great interest the Government's response to the communications Bill, which is undergoing pre-legislative scrutiny. Their response to the previous Bill that went through pre-legislative scrutiny was not to change it, notwithstanding the Committee's hard work. I hope that the Government will respond constructively to the recommendations this time. However, I am surprised that I have managed to say so much on that subject, Mr. Deputy Speaker, and I shall not try your patience further.

I look forward to what the Minister has to say about what was a narrow escape. I hope that he will give credit where it is due to our noble Friends collectively—Lord

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Wedderburn of course sits on the Labour Benches—for rescuing the Government from what could have been a serious embarrassment.

Mr. Prisk: I share my hon. Friend's surprise at the pattern of events. In all the consultation and during the Bill's proceedings in this House, clause 39 did not divide opinion, although unfortunately we did not have much time to discuss it. Its sudden last-minute removal suggests either a fundamental flaw that was overlooked or that some undue pressure, to which I hope the Minister did not succumb, was brought to bear.

I have a couple of points to raise. The Government's original case for clause 39 was that it would create consistency with ACAS's conciliation process. Indeed, the Government's explanatory note states:

There was a clear intent to bring the two together. The clause's deletion suggests that one part of the Bill is going in a different direction from the rest of it. I hope that the Minister will clarify that.

My second point relates to the benefit that many business representatives thought would arise. The clause provided closure because it meant that there would be a complete settlement. For example, had a severance package been settled for a redundancy, the clause would have allowed it to hold and it could not have been challenged subsequently. It appears that, out of the blue, unexpected case law has railroaded the clause to one side. Why has the Minister decided not to amend the clause? Is it because it is unamendable, or at least unamendable in the time remaining? Do the Government intend to reintroduce the substance of the clause at a later stage? It would help us all to hear answers to those questions.

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