Employment Bill

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Mr. Hammond: I do not agree with the logic of the Minister's position. Is he saying that no order will be made under subsection (2)(b) until the review is completed?

Alan Johnson: Yes, I am. The clause is focused on a review that will commence early next year.

Amendment No. 50 concerns the application of the standard and modified procedure, and the hon. Member for Runnymede and Weybridge raised pertinent questions about how we intend to deal with them. It is important that I take a little time to explain this. Schedule 2 contains four statutory procedures. Two deal with dismissal and discipline matters, and two with grievances. Within each pair of procedures, there is a standard three-step procedure and a modified two-step procedure. We recognise that grievance and disciplinary issues come in all shapes and sizes. One set of minimum steps may not fit all circumstances, which is why there is a need to set out two types of procedure. The modified procedures are shorter and reduce the need to meet or, in the case of grievances, cut out the need to meet altogether.

The schedule does not specify in which cases the standard or modified procedure acts as the minimum. That will be set out by the regulations under clauses 30 and 31. The hon. Gentleman is right, and it would help the Committee if I explained Government thinking on the circumstances in which the two types of procedure will apply.

With grievances, we feel that the modified procedure should apply to former employees. Cases, most notably for constructive dismissal, are often taken after people have left their employment. It is impractical to insist that people in that group should return to their former place of work to discuss the issues in person. We must also recognise the fact that both parties will feel less need to invest time in dealing with grievances after the employment relationship has ended. For them, an exchange of correspondence should be sufficient as a minimum. That is the two-step procedure.

On dismissal procedures, the modified two-step procedure comes into play in dealing with the special case of instant, summary dismissal resulting from

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extreme cases of gross misconduct. The circumstances may involve violence or serious criminal wrongdoing and will require an urgent response. The question at issue will be the fairness of the decision to dismiss. Reflecting that fact, the modified procedure provides for an appeal meeting to take place at the request of the employee concerned to review the decision. As I said, the regulations made under clauses 30 and 31 will define the circumstances in which the two sets of procedures will apply. The powers are contained in subsections 30(3) and 31(5)(a).

The hon. Member for Runnymede and Weybridge talked about impenetrable language. All of us who have to grapple with Bills would sympathise with that, but the powers are clearly set out. There is no need to use the order-making power in clause 29 for that purpose and the amendment is therefore unnecessary.

Amendment No. 51 deals with circumstances in which an employer or employee should not be obliged to follow the statutory procedures. Again, it is important to set out our thinking on that. The statutory procedures merely set out a minimum, and the schedule should therefore be seen as setting out the core elements of procedures that should be applicable in all or nearly all circumstances—I say ''nearly all'' because there will be rare cases in which it is inappropriate for parties to use even those minimum procedures. For example, it might be unreasonable to expect people to meet face-to-face in cases where a manager has assaulted or otherwise seriously harmed the employee—or vice versa, for that matter, since the exemption could work in the opposite direction, where the employee has acted violently towards the manager.

Exemptions might apply in other areas and we do not want to create unnecessary duplication of procedures. If an issue has been raised as a collective grievance, we see no reason why we should force parties to raise individual grievances on the same issues, such as in a sex discrimination case where a group of employees share a grievance about the employer's policy towards training or promotion, which has been taken up by their union as a collective grievance. In such circumstances, it would be more efficient to deal with the linked grievances collectively. In such cases, we would not want to require individuals to use the statutory procedure to bring separate cases.

We intend to set out special exemptions in regulations, again using the regulation-making powers in clauses 30 and 31 for that purpose. There is therefore no need to use the order-making power in clause 29, as the amendment seeks to do. All the orders and regulations in the clauses are subject to affirmative scrutiny. I am sure that no correction on that will be forthcoming; this time, I have the right part of the Bill. I hope that the hon. Gentleman will, in the light of my explanation, withdraw his amendment.

Mr. Tony Lloyd: I hesitated about whether I should follow the hon. Member for Runnymede and Weybridge in discussing workers and employees because it might be more appropriate to do so at another stage, but it is an important debate. The purpose of the clause, and of schedule 2, is to provide a regime under which disciplinary and grievance

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procedures can go ahead. The definition of employee and employer is narrow and restrictive under the present law. A broader definition is used in other legislation, such as on the minimum wage.

My hon. Friend the Minister gave a commitment to the hon. Member for Runnymede and Weybridge on timing, stating that he does not intend to use subsection (2) before the review is completed. That commitment has been given to the Committee and is now in the public domain. All of us recognise that those who fall outside the definition of an employee are often the most marginalised people in the work force—although other non-employees can be among the best paid and best protected. There is a huge range of conditions among workers who fall outside the formal definition of being employed. However, those who are entitled to only minimum levels of protection are among the most marginalised people in the workplace.

I hope that hon. Members on both sides of the Committee agree with that point. When the hon. Gentleman winds up, perhaps he will say whether he accepts that there is a need to consider carefully whether we have adequate disciplinary and grievance procedures for those who will not be covered if my hon. Friend does not at some point use the subsection.

Mr. Hammond: I am grateful to the Minister for clarifying the issues raised by amendments Nos. 50 and 51. That was helpful, but he did not address the point raised by the Law Society. I deliberately quoted its brief, rather than paraphrasing it, because I wanted to put the Law Society's view in the forum of the Committee in the hope that the Minister would respond. I was not necessarily endorsing its view, but I quoted it in the pursuit of knowledge. The issue is still dangling and needs to be addressed.

I was interested in what the hon. Member for Manchester, Central said about amendment No. 79, and I was pleased that he raised a concern that Conservative Members have had for some time. There is a myth that everyone who is a worker but not an employee is part of the downtrodden and oppressed. I could give examples of people who fall within the definition of worker and are not employees who are far from downtrodden and oppressed, as the hon. Gentleman made clear.

In an increasingly flexible and fast-moving economy, there will be people who, for their own interests and those of the companies for which they work, wish not to be employees. Admittedly, the Paymaster General recently made the attraction of not being an employee somewhat less than it was for a number of those people. If we are going down the route of reviewing the distinction between worker and employee, I agree with the hon. Member for Manchester, Central that there needs to be a clear distinction between people who, according to any reasonable interpretation, have the character of employees but have been excluded from that definition by subterfuge, and people who are genuinely not employees.

The National Minimum Wage Act 1998 uses a definition of worker. Although interesting philosophically, the issue is not particularly important

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in practice, because by definition those highly paid people who are not employees but are workers will not be caught by the minimum wage. As I recall, we had various interesting discussions about whether people such as computer programmers were covered by the minimum wage, which will always be of purely academic interest unless the supply and demand balance in the market changes dramatically.

When we consider employment law more generally, however, that point will become more important. My colleagues and I resist the temptation offered by some Government Members to go with the broader definition of worker for everything. However, I think that I can safely say that in doing so, we are not seeking to defend those who artificially exclude people from the protections of the status of employee by subterfuge that the Inland Revenue should be seeking to unravel.

Alan Johnson: IR35.

Mr. Hammond: I am sure that you would not welcome a broad debate on IR35, Mr. Benton, but it is massively over-simplifying matters to suggest that that debate is only about people trying to avoid tax.

Our concern is primarily to avoid creating sclerosis in a fast-moving economy in which sectors are changing and evolving quickly, and where employers need to engage the services of highly skilled individuals in a flexible way but, for all sorts of legitimate reasons, may not be able to burden themselves with the continuing obligations of employment imposed by the full panoply of employment protection laws.

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One would hope and expect that those individuals would be suitably remunerated for not having the kind of protections and security that someone with employee status would have. That concern with maintaining flexibility at the cutting edge of the economy drives Opposition Members' arguments.

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