Norman Lamb: The Minister describes a respondent who is not legally represented. However, someone might be legally represented but use up substantial management time in instructing lawyers and preparing statements. Does the Minister envisage that the regulations will allow an award of both legal costs and preparation time where the respondent is legally represented?
Alan Johnson: Yes. I shall come to that, because I want to touch on the points about overlapping.
Under the current rules, parties can recover only costsprimarily legal coststhat they have actually incurred. There is no provision for litigants in person to recover their costs at tribunals, as is the case in civil courts and in employment appeal tribunals. There is no power to compensate a party for time spent preparing for a tribunal case. That makes little sense in a system that we say should not encourage legal representation.
Mr. Hammond: The Minister has painted a vivid picture of an applicant or respondent spending hours or days at the kitchen table preparing a case, and being unable to recover anything under the present system for that time input. However, under the system that he proposes, would not the vast majority of applicants or respondents still be unable to recover anything for that time? I understand that he proposes to limit the recovery of costs to vexatious or improper applications. Where is the justice in that for someone who, having spent large amounts of time responding to a case, wins it, even though it might not be vexatious? That seems iniquitous.
Alan Johnson: That has little to do with the amendments. The hon. Gentleman may be under a misapprehension, which is why I made it clear that we are talking about costs awards, not about the 96 to 98 per cent. of cases in which the individuals concerned feel that they have a just case. Those people might turn out to be wrong, but they are not just taking a punt. Their cases are not vexatious. They feel that they have an argument. We are not trying to do anything about those cases. We are dealing with the basis on which costs are now awarded, not extending it.
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Preparing for an employment tribunal can be time consuming and costly, particularly if a party is pursuing a case without a representative and must do all the work unassisted in their own time. The current provision fails to recognise that. We also intend compensation for preparation timethe point made by the hon. Member for North Norfolkto apply beyond litigants in person. It could also apply to represented parties. For example, it might be payable for an applicant who was represented by his union, but who still needed time off to put together his case, or for an employer who engaged representation for the hearing but who had to spend part of the working day putting together the documents and evidence.
As with any new measure, we will take great care in framing the regulations. Specific points raised on these matters included one about the overlap and double counting. Given that the tribunal that will decide on compensation for unfair dismissal will also decide on costs awards, there is no problem. In that regard, the strange arguments advanced by Law Society representatives on both sides of the House cancelled each other out. Neither understood the argumentsearch me for an explanation! In any event, costs awards will be decided not by a separate body but by the same party.
Rob Marris: I confess that I am slightly mystified by that explanation. Subsection (1B) states that costs will
Alan Johnson: I will take a rain check on that. Previously, a costs award of more than £500 could be made, but it would have to go through the county courts. In July, we increased that figure to £10,000. There is a complication in respect of employment appeal tribunals and county courts, but if my hon. Friend will allow me, I shall get back to him on that. The regulations should make it absolutely clear that there must be no double counting, and we shall deal with that point when we frame them.
The hon. Member for Weston-super-Mare raised a number of important points. We envisage compensation in respect of other employees' time, but productivity loss will probably not be included in a costs award because it would be too difficult to calculate. We will bear the point in mind.
We envisage taking witness time into account, although the employment tribunals service already pays expenses to cover that. Calculation of applicants' time, particularly for the unemployed, was raised by several hon. Members, including my hon. Friend the Member for Amber Valley. It should be possible to make such calculations on the basis of the rate of pay of an unemployed person's last job, but we will consult on the regulations. We must have a feasible system for assessing the unemployed.
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Mr. Prisk: How would the Minister calculate the time of the self-employed?
Alan Johnson: On the basis of the value of their time. We must find a way to calculate what an hour of a person's time is worth, whether that person is employed or self-employed. I believe that such calculations are made in the civil courts.
This issue is important and requires care. Amendment No. 15, which was tabled by the hon. Member for Runnymede and Weybridge, seeks to ensure that regulations enabling tribunals to make awards in respect of preparation time also contain some mechanism for assessing the amount of such awards. According to the amendment, the mechanism should involve taxation or settlement by other means, or fixed sums should
A sensible basis in regulation will deal with the disparity between the resources of the employer, given a scenario in which the employer is the respondent, and those of the applicant, who might be unemployed. The tribunal is always obliged to consider such issues on the basis of what is reasonable. That is why the average cost award last yearthere were 247 of themwas £295. In all cases of cost awards, the tribunal takes into account the reasonableness of the award, and that will be no different under the regulations. We shall not exceed £10,000 costs; awards must be within that figure.
My hon. Friend the Member for Wolverhampton, South-West suggested that an award could be a percentage of the total. That is a valid point, and we shall look at it in the consultation. I would not rule it out at the moment. However, I would rule out deciding on an issue-by-issue basis. I think that we all agree on the need for clear guidelines for tribunals.
Judy Mallaber: I am unclear whether my hon. Friend the Minister is saying that if the applicant is successful in being awarded preparation costs, those costs will be limited to his hourly pay rate or, if the person is unemployed, to his former hourly pay rate. Even if there is a limit on the costs, there will inevitably be substantial disparity between the hourly rates that could be awarded in costs to the applicant and to the respondent.
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Alan Johnson: The actual costs would be the figure. Some 19 per cent. of employment cases concern professionals, so in the case of, say, Robbie Williams, on whatever he earns each week, the figure would be based on the actual costs.
Mr. Hammond: Who is Robbie Williams?
Alan Johnson: The hon. Gentleman has just about caught up with the Beatles now that two of them have died.
My hon. Friend the Member for Amber Valley is correct in that disparity exists, but there is disparity only in the amount that an individual would lose. Whether an applicant is a postman or a solicitor, the cost is based on something tangiblethe time used. While there will be disparities, they will be fair and just.
Rob Marris: I should like to probe that point and the broader issue of witnesses, to which the Minister adverted before. Witnesses receive expenses for attending a tribunal. They do not receive expenses for preparation time. More and more frequently, tribunals make orders for witnesses, or parties with their witnesses, to produce statements before the tribunal in order to clarify issues. That often requires the prospective witness to spend an hour or more with a representative or with the applicant.
There is not only disparity between the hourly rates of, say, a managing director and a postman. There is further disparity in that there is generally only one applicant. I know that there can be group actions, but it likely that one postman might get together with former colleagues and fellow workers to put his case.
In the case of a companyparticularly a large companya board of directors would have to meet to discuss, for example, a race discrimination case brought by an individual, as the board of directors of the Ford Motor Company in Dagenham might have done when it faced cases brought by the Transport and General Workers Union. When considering preparation time, should we add in the preparation time of the managing director, the chief executive, the chairman, the treasurer, the company secretary and perhaps 15 people sitting round a table? Upwards of a dozen people on the respondent's side may deal with a case and expend preparation time, whereas there will usually be only one person on the applicant's side, and possibly some witnesses. That increases disparity. Will the guidelines cover that scenario, in terms of caps and percentages?
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