Employment Bill

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Mr. Hammond: The hon. Gentleman makes a sensible point. Perhaps he should have tabled an amendment to amendment No. 68, proposing a different threshold. Is he suggesting that there is an argument for going easy on new employers who have, perhaps, one employee, for a period of time after they first become employers? I readily accept that there are some very small firms of highly remunerated professionals who are not in the unfortunate position of the window cleaner who has just managed to take on his first employee.

Mr. Lloyd: Opposition Members should remember that size is not everything. That is important in all aspects of life, but particularly in employment legislation. The amendment is the wrong way to

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approach the issue and it is counter-productive because it fails to recognise that small firms have obligations, just as large firms do.

Mr. Prisk: I do not want to take the phrase ''size does not matter'' too far, but does the hon. Gentleman not recognise that it is important, wherever possible, to remove hurdles to small firms taking on their first members of staff? We should remember that small firms often deal with those who are struggling to find a job, particularly in the current jobs market. We want to probe the issue with the Minister so that the Government understand it. We may constantly talk about small businesses, but without constant pressure, their needs will sometimes be forgotten.

6.15 pm

Mr. Lloyd: The educative process that the Opposition are going through is very instructive. Of course we should consider the arguments about how we help firms to make the transition and how we help growing businesses, but even new businesses must recognise their obligations, particularly to others who are vulnerable. The employee in a small business is as vulnerable as the employer. Theirs is a mutual relationship, and their rights and obligations are counterbalanced. It is therefore wrong to approach the issue on the basis of size.

It is important that information is available to the employee, and there are different ways to ensure that the small employer is aware of their obligations and to assist them in making information available to employees. If Opposition Members considered such approaches, I would support them, as I am sure the Government would.

Mr. Hammond: At the risk of rerunning the entire Second Reading debate, may I ask whether the hon. Gentleman recognises that micro-businesses, which may be taking on their first employee, often face the unfortunate problem of competition with the informal sector? Their competitor is not a firm with five or 10 employees that does what it should do, but the chap round the corner who pays no tax or VAT and has no cognisance of his obligations as an employer. Our concern is that the small man who tries to run a legitimate business is not hampered in a way that makes him vulnerable to competition from the black economy.

Mr. Lloyd: The hon. Gentleman will probably be pleased to know that that was one of the best points to be made on Second Reading, and it is very important. However, we must be careful not to respond to the black economy by eroding standards in the formal economy. It is right to call those who compete by avoiding their obligations to society cheats. We must establish that they indulge in a form of cheating, which is not noble or acceptable. They cheat society of what it should receive and they certainly cheat the honest employer, who tries to conform to acceptable standards. I recognise the need to consider measures to assist growing businesses, and all hon. Members hold that aim in common, although we might disagree about individual aspects of it. I certainly concede that

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we must deal with the black economy, although I would do that by stamping down hard on it. I hope that Opposition Members would be at one with me on that.

My contribution has been much longer than I had planned, and I conclude by urging my hon. Friend the Minister to stick to his rather robust approach, reject the Opposition's blandishments, ignore their nagging and confirm that small firms will have to meet their obligations, just as slightly larger firms will.

Alan Johnson: This has been a fascinating debate, but much of it was not about the amendment. I shall not get involved in a debate about small businesses—

Mr. Hammond: Oh!

Alan Johnson: Are Opposition Members seriously suggesting that no employment rights—that would presumably also include the minimum wage because that is included in schedules 3 and 4—would apply to companies with fewer than six employees? Come along to Third Reading, when I shall be pleased to engage in that debate. The problem is that Opposition Members are under a misapprehension. The reason why I will not answer the five questions or unravel the golden thread of the hon. Member for Boston and Skegness is because I would run into the same problems as the hon. Gentleman and step outside the remit of the clause and the amendment.

The hon. Members for Wealden, for Hertford and Stortford, for Boston and Skegness and, it seems, for Runnymede and Weybridge are under a dreadful misapprehension if they think that the amendment would help small businesses. I hope that they will agree to withdraw the amendment.

First, let me remind the Committee of the purpose of the provisions in the Bill that deal with written statements. Most employees who work for their employer for one month or more have the right to receive a written statement of the main particulars of their employment. The clause will not change that, apart from in respect of the exemption. The amendment would not change that. Why should not employees be entitled to that information? Employers and employees need to know the basic terms and conditions on which the employee is engaged. After working for an employer for two months, employees are entitled to receive a written statement, and the amendment will not change that at all. The written statement sets out the key features of the employment relationship, which is fundamental to understanding rights and responsibilities in the workplace. In an environment where 48 per cent. of businesses who come before employment tribunals do not have internal procedures, employment tribunals complain, time and time again, that their work is dogged by the problem of getting to the core of the employee's terms and conditions. Whether a dispute is about holidays, redundancy or pay, both sides need to know what the basic terms and conditions are.

Mr. George Osborne: The Minister implies that small employers do not have to give any notice of disciplinary procedures but, as I understand it, when

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they employ someone, they must indicate to whom a complaint should be referred and how the complaint should be dealt with. He is now proposing that that should be included in a lengthy document, which sets out all the details in schedule 2, although he admitted in a previous debate that many of the 960,000 micro-businesses do not use written communication very much. Indeed, some may have limited clerical facilities. There is already a procedure whereby the window cleaner who employs an assistant says, ''If you have a problem, come to me.'' That can be delivered orally or in writing. The Minister is now suggesting that that window cleaner must also give his assistant a formally set out copy of schedule 2, even though he may not have access to a typewriter or word-processor. The Minister is misleading the Committee if he is suggesting that small businesses do not already have to comply with certain procedures, and those procedures are adequate.

Alan Johnson: I am not implying anything of the sort. I am merely stating that one of the things that bedevils employment tribunals is the absence of a written statement. The law already insists that an employer should give an employee a basic written statement, and the amendment will not change that. That is fundamental to an understanding of rights and responsibilities in the work place. It forms a record of the basis of the relationship between employer and employee, clarity on which is essential to prevent disputes from arising.

As matters stand, all written statements must include information about handling grievances, but only those issued by employers with 20 or more staff are required to cover disciplinary procedures. That is not to say that disciplinary procedures need not exist in the case of other employers, but that there is no obligation on the employer to include them in the written statement. It is arguable that that situation is anomalous, but it would be more so in the light of the changes that the Committee merrily agreed, which is that the basic three-step and two-step procedures should apply in all workplaces. That is not in dispute. It has already been dealt with.

In future, under the Bill, all employers will have to operate statutory minimum disciplinary and grievance procedure, or something better, but that is not because of changes to the written statement requirements; other clauses imply those procedures, and they give employers and employees incentives to follow them. For example, they provide for awards to be increased or reduced when the procedures are not followed. The changes to the requirement for a written statement ensure only that employers have to inform employees about their disciplinary and grievance procedures.

It is important that all parties are familiar with the procedures. When we come to clause 37, the Committee will see that we have made them easier in several respects. At the moment, the employer cannot include the procedure in the contract of employment; it has to be made as a separate statement. Furthermore, the law implies that it cannot be handed to the employee until after he has begun his employment; that prevents it being sent with the letter

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agreeing to employ that person. We are using clause 37 to sort out such ridiculous anomalies. However, it does not change the responsibility of employers to ensure a basic procedure.

One of our arguments has been that in 62 per cent. of cases no one in the workplace has discussed the issue. That is why small businesses without such procedures find themselves dragged before employment tribunals when they could have resolved those disputes in the workplace. The right place for such clarity to be provided is through the written statement; as all employers will in future be obliged to operate the procedures I believe that it is right that they should all be obliged to spell them out.

My hon. Friend the Member for Wolverhampton, South-West was right in his persistent questioning. Removing the 20-employee threshold will not create a new requirement on smaller employers to issue written statements. That is already required. Nor will it oblige them to introduce minimum procedures, as that will be required under other clauses. It will merely ensure that, when issuing the written statement, the employer must include information about its discipline procedures as they apply to the employee.

The effect of the amendment would be that employers would have to have a discipline and grievance procedure; and that they must issue a written statement. Those procedures would exist, but there would be no obligation on employers of fewer than six employees to tell those employees what the procedures were. With the best will in the world, it is a ridiculous amendment. I hope that it will be withdrawn.

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