Employment Bill

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Alan Johnson: The motive is that many of those 299 cases, although not the majority—the majority will have been withdrawn on the basis that a deposit was ordered and the people involved decided not to take the case any further—will be struck out before the hearing.

The number of employment tribunal applications has trebled in the past 10 years. There is some tidying up to do, and we might as well address an anomaly at the same time. This amendment to the 1996 Act might help if the number of cases continues to rise. It would be quite wrong of us to create a system wherein cases could be struck out at pre-hearing reviews, which do not hear evidence, when the judiciary think that there is an arguable case that should not be struck out at a pre-hearing. To do so would be to deny people justice. Furthermore, if a case is struck out at the pre-hearing stage, the applicant or respondent will have the right of appeal to an EAT. That might answer some of the concerns that were voiced on Second Reading and by my hon. Friends.

Rob Marris (Wolverhampton, South-West): The Minister's use of the word ''respondent'' raises another issue. Does that mean that the regulations will provide a two-way street such that the cases of respondents as well as applicants can be struck out for having no reasonable prospect of success, as is currently possible under the civil procedure rules?

Alan Johnson: That important point needs to be clarified. My hon. Friend is correct: the procedure would apply to both respondents and applicants.

Mr. Prisk: It is not clear whether the Minister is saying that the system of demanding a deposit is not operating sufficiently well, or that it is but the deposit is not high enough so the power to strike out cases is required.

Alan Johnson: We increased the deposit from £150 to £500 only in July, so it is too early to ascertain what effect that is having on the number of cases that go forward. It is ludicrous to have a system in which it can be decided at a pre-hearing that a case has no reasonable prospect of success, but the tribunal nevertheless has to allow a full hearing to take place, although it can insist on a deposit. It should have the power to strike out the case at that stage if it believes that there is so little chance of success that it is not

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appropriate even that a deposit should be paid and the case heard. That it does not is an anomaly in the system.

We are not making a radical change. We are tidying up employment tribunal procedures. It is questionable whether there was ever an intention to prevent employment tribunals from striking out cases at the pre-hearing stage. However, the reference in the Bill to preliminary consideration implies that there must be a full hearing, irrespective of how unreasonable and misconceived the case is. We are trying to tidy up that anomaly.

Mr. Hammond: I do not wish to be pedantic, but the Minister made a significant slip of the tongue. He spoke about striking out a case that has so little prospect of success that the tribunal does not think it reasonable to allow it to proceed. I assume that he meant to say that it would be reasonable to strike out where there is no prospect of success.

Alan Johnson: I am happy to indulge in semantics—the hon. Gentleman is right and I apologise for my slip of the tongue.

While I am apologising I may as well mention a previous slip of the tongue. I am pleased that the hon. Gentleman said that there was very little difference between the affirmative and negative procedures, because I was thinking that the Committee had moved on to part 3. We are still discussing part 2, which is all dealt with under the negative procedure. I know that he will not worry about that, given that he perceives very little difference between the two, but it is important that I set the record straight.

The power to strike out exists at other stages in employment tribunal proceedings, but not at the pre-hearing stage. That is another aspect of the anomaly. It is important to stress that it will be appropriate to strike out cases in which the facts have already been either subject to litigation or settled, and the applicant has no fresh or different evidence but insists on pursuing the case. It is appropriate to strike out cases in which the facts are not in dispute, but the interpretation laid upon them is wrong. It is also appropriate to do so in cases in which a party's application is not itself sufficient to lead to a successful outcome and that party has stated at the pre-hearing review that no further evidence or witnesses will be called.

Those are examples of where tribunals could reasonably strike out the case. The clause will remove the anomaly. Amendment No. 42, which I think is a probing amendment, is unnecessary in that respect. I assure the hon. Gentleman that the strike-out provision will be in the regulations and I hope that on that basis he will withdraw the amendment.

Mr. Hammond: The Minister has given the assurance I sought. It is still not entirely clear to me how prescriptive the regulations will be on the question of when a case should be struck out and how much discretion the tribunal will have, but I suspect

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that that might more appropriately be debated when the regulations have been published. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Hammond: It is right that it should be possible to strike out or otherwise deal with vexatious or trivial cases in a way that does not impose huge burdens on either the tribunal system or on a respondent who is forced to prepare a proper case against an application that may be entirely without merit. We have heard a lot during our deliberations about the growth of the compensation culture—although I do not think that anybody apart from me has used that term. The idea that whatever happens, someone is always responsible and must compensate for it lies behind many of the problems.

To many people, bringing a case before the tribunal system appears at times to be an opportunity with a potential upside, but little potential downside—a lottery ticket for anyone who feels that he has a grievance to exploit. That is not to denigrate the large number of people who have genuine cases founded on real issues that need to be dealt with, but I do not think that the Minister is trying to deal with such people. The Bill is aimed at those at the margin who are abusing the process. The proposal is sensible, but the Minister's remarks do not make clear to what extent it will be used. I should have expected there to be a significant number of cases that could be struck out.

Let me make a suggestion to the Minister. He recently raised the maximum deposit from £150 to £500—no doubt that caused consternation in certain quarters. If the only weapon is a deposit of £150, to raise it to £500 is a dramatic change in the structure of the playing field. However, if another weapon—that of striking the case out altogether, so that the applicant and the respondent have no opportunity to put their case—is available, I question whether placing a maximum limit of £500 on the deposit makes sense.

If the tribunal holds the nuclear option of striking out the case altogether, should it not have a wider range of intermediate options such as higher deposits—or even unlimited deposits, at the tribunal's discretion? In such circumstances the tribunal might think, ''We could justify striking out this case, but we will instead set a high deposit''. If a company is involved and the case appears to be 99 per cent. cut and dried but a scintilla of doubt remains, should not the tribunal have the capability to say, ''We think this case could very well be struck out, but if the respondent is prepared to put up a substantial deposit because he believes that he has a case to present, let us allow him to do so''? I understand why the increase was limited to £500 maximum when a deposit was the only remedy, but I invite the Minister to ponder whether in a world where strike-out is a remedy, a higher cap on the deposit or an unlimited deposit at the discretion of the tribunal might be a solution.

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Rob Marris: The hon. Gentleman's suggestion is interesting but potentially counterproductive. I can envisage tribunals setting the larger deposit he suggests rather than striking out cases that should be struck out. The case would then go to a hearing and the applicant or respondent might lose that deposit. It is the nature of things that applicants and, perhaps to a lesser extent, respondents go to a tribunal only once. They might learn lessons, but in doing so they will clog up the tribunal system.

Mr. Hammond: It might be counterproductive, but the clogging of the tribunal system is linked to resources, so the question of who gets the deposit might become interesting. If the tribunal system is reimbursed for its time and trouble, perhaps no harm is done. I make the suggestion because I cannot see the logic of having—if I may use a military analogy—on the one hand the nuclear bomb of strike-out and on the other hand a 1895 Lee Enfield self-loading rifle, with nothing in between. I wonder whether the Minister thinks a better-graded range of options should be available to the tribunal.

Alan Johnson: I am pleased that the hon. Gentleman recognises the value of clause 28. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is right. It is an enlightening statistics that the number of deposits ordered last year before the £500 limit came into effect—we are therefore talking about the £150 deposit—was 234, of which 48 were paid. On being told that they could take the case forward but that there was a deposit of £150, the majority of other applicants did not make the deposit. That statistic does not suggest that there is a problem, now that the limit has been increased to £500.

The hon. Member for Runnymede and Weybridge raises the interesting question of whether in the new situation where we have the nuclear option, we should do something else with the deposit. That matter would best be considered by the employment tribunal system taskforce, where reference can be made to precedence, users, representatives of small businesses, the TUC, the CBI and the Advisory, Conciliation and Arbitration Service. We have asked the taskforce to look at the good operation of the procedures, including the effect of the new procedures. I do not think we need to explore that idea; it is on the record and the taskforce is best equipped to consider it.

Question put and agreed to.

Clause 28 ordered to stand part of the Bill.

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Prepared 13 December 2001