Employment Bill

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Norman Lamb: A lawyer?

Mr. Hammond: The hon. Gentleman has it in one. If the Government are proposing that an employee undergoing the procedure is entitled to be accompanied by a lawyer, that would be a radical departure from practice hitherto. The language should mirror section 10 of the 1996 Act. There is no good reason to deviate from that. The wording that amendment (v) would insert is more specific. It would remove the discretion of the Secretary of State, and makes it clear that the person allowed to accompany is a fellow employee or a representative of

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a recognised trade union. I would be equally happy with an assurance from the Minister that he will move an amendment to provide that the right to be accompanied extends to the same categories of people as specified in section 10 of the Employment Rights Act 1996.

Amendment (k), tabled by the hon. Member for North Norfolk, deals with a similar matter by referring to section 10, rather than defining the class of person entitled to accompany in the Bill. I hope that the Minister is not creating more work for lawyers. Nothing he has said pre-disposes me to think that he is the great friend of the toiling mass of my learned friends. I hope that he will not disabuse me of that notion by creating more fee-earning opportunities for that group of much-respected members of society.

Amendment (aa) would insert paragraph (kk) after paragraph (k). It can be a complicated because of the way the clause has to be handled, which is beyond the discretion of any of us. The amendment would provide that when an employee exercises his right to be accompanied, the employer has a reciprocal right. At first glance, that might sound strange.

The Minister for Employment and the Regions (Alan Johnson): It does.

Mr. Hammond: Well, let us consider the idea. The manager of a large concern—the human resources director of a big company—should not need someone to sit next to him in most cases. If the Minister tells us that the ''friend'' that the notes refer to could be a lawyer representing the employee, I withdraw that remark. Even the HR director of Big Co. plc might need his lawyer sitting next to him, and of course not all employers are the HR director of Big Co. plc. We may be talking about the owner and operator of the local corner shop, who may have less access to support and information about his rights and the law than his employees who belong to a trade union. I could suggest many scenarios and cite many examples of employees who read the stuff that their union sends out and are well aware of their rights, how they go about exercising them and the procedures that they have to use.

Employers should be aware of the details of the statutory provisions that apply to them, but many small employers are not until they come up against a problem. The amendment would apply to all employers, but it is reasonable that a small employer at least should have the right to be accompanied if the employee is accompanied. That would simply ensure a level playing field and a similar level of support. It would not be unreasonable for an official of one of the small business organisations to accompany the employer to ensure that he follows the procedure correctly and does not inadvertently slip up and give the employee cause for complaint, possibly with reference to an employment tribunal.

Rob Marris (Wolverhampton, South-West): Has the hon. Gentleman undergone a Damascene conversion? Does he now recommend that all employees join trade unions and have access to the wonderful range of facilities that such unions offer their members?

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Mr. Hammond: Anyone who embarks on the impenetrable process of trying to exercise his rights under any legislation is wise to seek advice, and trade unions are one source of advice. It is equally possible that a non-unionised employee would trot along to his local citizens advice bureau or, worse, to his Member of Parliament's constituency surgery to seek advice. Indeed, he could even request that the MP accompany him and be the friend in that process. Such a request is not unknown to many of us, but I suspect that most Members would be wise to resist it.

Norman Lamb: Does anything in the Employment Rights Act prevent that?

Mr. Hammond: The hon. Gentleman may be right. I do not profess to be an expert on the detail of the way in which the Employment Rights Act works. If the situation is as he suggested, the Minister will say so and the matter will be dealt with. I do not know the answer, but fairness would normally suggest an equal number of people in the room on each side in such a discussion.

If there is any danger of the discussion becoming adversarial, having six or seven people lined up on one side of the table, but only one or two on the other does not in my experience usually lead to a fair and balanced discussion. Of course, it depends on who the one is and who the six or seven are. Opposition Members are more than usually aware that quantity is often outweighed by quality. [Interruption.] It is probably best that I move on, for fear of spoiling the consensual atmosphere.

Amendment (y) would insert new section 80GG after new section 80G to deal with benefits enjoyed by employees who, by virtue of their rights under the provision, achieve a reduction in their working hours. In order not to create a disproportionate increase in costs, or an increase in costs per hour or unit of time for the employer, it will be necessary, when an employee reduces his hours in relation to part-time work, to allow the employer to reduce pro rata any benefits that he receives. Otherwise, there will be an effective per hour increase in employment costs, which would not be right, and which would be burdensome.

However, if a person is employed full-time, and his contract says that he is entitled to a car or BUPA—we know that many trade union members like to take advantage of private health insurance schemes offered by their employers—it is not immediately obvious that when he applies for, and is granted, a right to work half-time, he loses those benefits. I stand to be corrected on that by the employment lawyers in the Committee. Clearly, it is not easy to lose half a car, or even half a private health care insurance subscription—[Interruption.] It may be that Johnson motors in Hull deals in what I believe are called ringers, as the Minister seems to know quite a lot about half-cars. Let us hope that that is not the case. I am sure that it is a thoroughly reputable business.

The issue is ensuring that employers are not put in a situation in which they have to agree to part-time working. They might willingly agree to part-time work but find that, because there is an existing contract, and because of the way in which the legislation works, they

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will still have to provide the part-time worker with a full-time car and a full-time BUPA subscription. I am not seeking to advertise BUPA—there are many fine providers of health insurance packages.

Subsection (2) of our proposed new section deals with the situation in which it is impossible to divide a benefit: a car would be a good example. It proposes monetisation of the benefit, so that the employer can say, ''It costs me £300 a month to provide you with this car. You are now working half-time, so we are withdrawing the car, but you will have £150 a month in lieu of provision of the benefit.'' That may not be a perfect solution, and there may be alternatives—they may already exist, buried deep in the mire of impenetrable legalese. If so, will the Minister explain how that issue can be addressed in practice?

Amendment (w) inserts into proposed section 80H(1)(b) the concept of materiality in relation to incorrect facts. That mirrors the discussions that we had in relation to tribunal procedures. The Government have accepted—and the Employment Rights Act 1996 has been amended accordingly in the course of our consideration of the Bill—that mere procedural errors, when they do not have a real bearing on outcome, should not be a ground for unravelling the whole process. The amendment would make it clear that there would be a ground of challenge when an employer has rejected an application for reasons that include, or are based on, incorrect facts, but only when those facts are materially incorrect, and the conclusion could not have been properly drawn.

For example, if the employer's grounds of refusal were that he had advertised for a part-time worker for six months, had had no applicants, and could not therefore recruit appropriate labour to cover for the employee in question, and it turned out that the advertisement had been displayed for only five and half months, that would not be a materially incorrect fact. However, if it turned out that the advertisement had been displayed for only five and half minutes, that would be a materially incorrect fact, which ought to be taken into account. I hope that the Minister will accept that that is common sense. If we failed to put it in, we would risk entrapping employers involved in tribunal proceedings in tiny procedural or factual errors that have no material bearing on the case—something from which changes to the Employment Rights Act sought to save employers.

10.30 am

Amendment (x) addresses an important issue with regard to remedies. It is necessary because of the way in which the proposed legislation will interact with the sex discrimination legislation, and with the body of case law that has developed as a consequence of that. Under sex discrimination law, there is no limit to the amount that can be awarded. An award can be made for matters such as injured feelings and hurt pride, as well as for economic loss. I assume that the Minister wants the legislation to be treated seriously, and that he wants employees who are seeking a flexible working pattern to use it.

We have not been fully informed about the Government's proposals with regard to

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compensation, but it will be limited to employees' earnings—a certain number of weeks or days has been mooted. Because it will be limited, the proposed legislation will offer a less attractive route than the sex discrimination legislation—in a claim for indirect sex discrimination, compensation could be unlimited.

The Minister should carefully consider how he will address that problem. If he wishes the legislation to be properly used, he should ensure that there is no double jeopardy. The legislation specifically deals with requests for flexible working, but there is another piece of legislation, with a bigger pot of gold, for people who suffer a wrongful refusal of a request, and there is a clear incentive for those people to go down that route, rather than that which is set out in the Bill.

The amendment refers to the loss sustained by the complainant, and it focuses on economic loss, rather than on what is in the Bill, which is the compensation that a tribunal considers to be just and equitable in the light of all the circumstances. That needs to be replaced by a reflection of economic loss, and it needs to be limited.

I believe that the Minister's intention is to limit and, if that is the case, he will inform us about that. Someone might say, ''I would like to come into work 20 minutes later, so that I can take my child to school. The alternative is that I have to drop my child at the child minder's at half-past eight; they take my child to school at 9 o'clock, and I have to pay them £20 per week.'' In such a case, economic loss is demonstrated and quantifiable. That is the route that a tribunal should follow, in looking at cases where an employer has wrongfully refused an application under this section of the legislation.

Proposed new section 80G is the core of the clause as, in it, the Government have at their disposal the mechanism for gold-plating the legislation if they want to. The Minister will recognise that there is a delicate balance. It is a procedural test at the moment, and the burden of proof lies with the employee, having made his application, to show that it was wrongfully refused. The provisions for regulations under new section 80G would allow the Government to gold-plate the legislation by moving the goal posts, shifting the burden of proof and moving towards an objective justification for an employer's decision. The comprehensive view from business, both large and small, is that that would be a line in the sand beyond which business would not be prepared to go in trying to meet the Government constructively.

The proposals outlined in the Bill are just about acceptable across the piece, but the Government must make a commitment that there will not be any creep on the legislation. Professor Bain has a reputation for being a skilled craftsman of measures that are capable of being as innocuous or deep-biting as Ministers want. That probably accounts for his popularity in Whitehall and Downing street, and we will want to be assured that the measure has not been designed to soothe at the outset but then be ratcheted up in the medium-term.

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We are concerned to ensure that we do not move into territory in which tribunals start to probe the basis of business decisions beyond establishing that the facts on which they have been made are not correct. It has been put to me that, whatever the Minister's good intentions at this stage, there is a danger of them being undermined by case law. Tribunals and courts may evolve a view that allows the employer's response to be probed more deeply than the Minister intends. There is a danger, too, that the legislation will have a negative impact on the good informal arrangements that operate in many workplaces, and we must be alert about that. The legislation will be used mostly in difficult cases, and the good practice in many workplaces, with flexible working patterns agreed on a daily basis, will in some cases be threatened. The Minister must tell us how he sees the legislation fitting in with the existing body of case law in relation to indirect sex discrimination and whether he is alert to the dangers that are presented by the different remedies available under the measure and existing sex discrimination provisions.

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