Enforcement notices

241.     Clause 33(1) amends section 19(3) of the 1998 Act. Subsection (1) makes it clear that an enforcement notice exclusively concerned with compelling future compliance (and not relating in whole or in part to the payment of arrears of the national minimum wage) may relate to more than one worker. Subsection (2) ensures that this amendment does not apply in relation to the agricultural minimum wage in Scotland.

Enforcement officers for the agricultural wages legislation

242.     Clause 34(1) inserts a new section 11A into the Agricultural Wages Act 1948. Subsections (1) and (2) of new section 11A, as well as continuing to allow the appointment of officials from the Department of the Environment, Food and Rural Affairs, permit officials from other government departments, bodies or ministries to act as agricultural wages officers in England and Wales. Subsection (3) of new section 11A provides that agricultural wages officers must be able to produce a formal document showing that they have the authority to act as officers. Subsection (4) of new section 11A obliges agricultural wages officers to identify themselves as such in certain circumstances.

243.     Clause 34(2) makes consequential amendments to section 12 of the 1948 Act - removing or substituting wording that would otherwise contradict or duplicate the requirements of new section 11A.

244.     Clause 34(3) preserves the validity of appointments of agricultural wages officers made prior to the coming into force of the new section 11A. It deems the appointment of officers under the old provisions to have been made under the new section 11A.

PART 5: THE CERTIFICATION OFFICER

Clauses 35 and 36

245.     The Certification Officer ("CO") is an independent statutory officer established under the Employment Protection Act 1975. His functions (prior to the 1999 Act) included:

• maintaining lists of trade unions' and employers' associations;

• the auditing of accounts;

• annual returns;

• financial affairs;

• overseeing the political funds of trade unions;

• ensuring observance of statutory requirements governing mergers between trade unions;

• certifying the independence of trade unions;

• determining complaints concerning trade union elections.

246.     The 1999 Act enlarged the CO's role, most significantly by giving him the power to determine certain complaints from trade union members on alleged breaches of trade union law or trade union rules. The enlargement of the CO's role means that he can effectively serve as an alternative to courts as a means of resolving disputes. The law does however place some requirements on complainants to use internal procedures before going to the CO.

247.     The 1999 Act also gave the CO the power to refuse to hear complaints made by individuals whom the courts or the EAT had categorised as "vexatious litigants".

248.     The review of the 1999 Act recommended that the CO should be given similar powers to employment tribunals to "strike out" weak, vexatious or misconceived cases. Clause 35 provides this new power, whilst building on the CO's current powers in relation to vexatious litigants. The Review also recommended that the ability of the employment appeal tribunal (EAT) to place "restriction of proceedings" orders against vexatious litigants is widened, by enabling the EAT to take into account complaints to the CO (provided for in clause 26).

Striking out by Certification Officer of applications or complaints

249.     Clause 35 inserts new section 256AA into the 1992 Act.

250.     Subsection (1) of new section 256AA provides that any part of an application or complaint to the Certification Officer can be struck out at any stage in the proceedings. The power relates both to the nature of the complaint/application itself, and to the way in which the applicant (or representative) has conducted the proceedings.

251.     Subsection (3) of the new section clarifies that the CO may strike out a case on his own initiative or on the application of the union member or trade union concerned. Subsections (4) and (5) of the new section require the CO to notify the party against whom he proposes to make a striking out order, allowing the party to challenge the proposed order (but not if the party has already had an opportunity to do so orally).

252.     Subsection (6) of the new section relates to the CO's general power to self regulate. It clarifies that the CO will still be entitled to make further provisions about the striking out of proceedings.

Restriction of proceedings orders: proceedings before the Certification Officer

253.     Clauses 36(1) to (7) amend section 33 of the Employment Tribunals Act 1996 ("the 1996 Act"). Section 33 of the 1996 Act sets out the circumstances in which the EAT may make a "restriction of proceedings" order. Such an order prevents vexatious litigants, in the main, instituting further proceedings before employment tribunals or the EAT, without the permission of the EAT.

254.     Subsections (1) to (7) insert references to the CO into the current provisions of section 33. This permits the EAT to take into account vexatious proceedings and behaviour before the CO (as well as before employment tribunals and the EAT) when deciding whether to make a restriction of proceedings order. It also enables a restriction of proceedings order to prevent a person from bringing proceedings before the CO without the leave of the EAT.

Amalgamations: approval; listing and certification

255.     Clause 37. Under the 1992 Act, the Certification Officer may grant a listed trade union a certificate of independence. Where two (or more) unions merge to become one newly amalgamated union, the amalgamating unions cease to exist as separate trade unions. They are removed from the list of trade unions held by the CO, and their certificates of independence (if they had one) are cancelled. The newly formed union would then be required to apply for listing and a new certificate.

256.     Clause 37 provides that on the amalgamation of two or more listed unions in accordance with Part I Chapter VII of the 1992 Act, the amalgamated union will automatically be listed by the CO, subject to the provision of specified information. Where all the amalgamating unions held a certificate of independence, a certificate of independence will automatically be issued to the new union.

257.      Clause 37(1) amends section 98 of the 1992 Act, by replacing the existing subsection (2). The new subsection sets out the requirements to be satisfied before an instrument of amalgamation can be approved by the CO. The instrument must comply with the requirements of any regulations in force under the Chapter. Further, the name of the new union must not be one already listed; this requirement is based on the requirement in section 3 of the 1992 Act which prohibits a union from being listed with such a name. However, the CO can approve an instrument of amalgamation where the name of the new union the same as that of one of the amalgamating unions.

258.     Clause 37(2) inserts new sections after section 101 of the 1992 Act. New section 101A provides that where the amalgamating unions are already listed when the CO registers their instrument of amalgamation, the he must enter the name of the newly amalgamated union on the list of trade unions. He must also remove the old names. The change to the list will have effect from the date of amalgamation. New sections 101A(3) and (4) provide for the automatic issue of a certificate on independence to the amalgamated union, where both or all of the original unions had such a certificate in force at the time of the amalgamation.

259.     New section 101B(1) and (2) provide that once a newly amalgamated union is registered and listed by the CO, it must send him the information set out in subsection (1) and the applicable fee. Under subsection (3) both must be sent within 6 weeks (or longer if the CO directs) from the date on which the instrument takes effect. If the union fails to comply with these requirements the CO must remove it from the list of trade unions. Clause 37(3) applies the new provisions in 101A and 101B to unincorporated employers' associations, and amends cross-references.

Restriction of grounds of appeal from Certification Officer

260.     Clause 38 amends sections 9 and 126 of the 1992 Act.

261.     Section 9 provides that where an organisation of workers is aggrieved by the refusal of the Certification Officer to enter its name on the list of trade unions (or a decision to remove it), or to issue it with a certificate of independence, it may appeal to the Employment Appeal Tribunal. Section 126 similarly provides for an appeal by an organisation of employers against the CO's decision not to enter its name on the list of employers' associations (or a decision to remove it). As the legislation stands, an appeal extends to questions of fact and law.

262.     In both cases the EAT is effectively permitted to substitute its decision for that of the CO.

263.     Clause 38 (1) and (2) amend sections 9 and 126 respectively, to limit appeals to points of law only, thereby bringing the sections in line with other parts of the Act providing for appeals from the CO. These amendments mean that it is no longer necessary to require the EAT to direct the CO to issue or withdraw a certificate or list a union or employers' association or remove it from the list. Therefore, sections 9(3) and 126(2) are repealed (by clauses 38(1)(b) and 38(2)(b)).

PART 6: MISCELLANEOUS

Additional case in which election for president of union not required

264.     Clause 39 amends section 46 of the 1992 Act, which sets out election requirements for certain positions in trade unions. Under section 46 as it is at present, every person holding the position of:

• President (or equivalent) - subsection (2)(c);

• General Secretary (or equivalent) - subsection (2)(d); or

• member of the executive - subsection (2)(a) and (b);

must be elected to that position by virtue of a postal vote of all the union members.

265.     However, there are a number of circumstances where this requirement does not apply. This clause adds another exemption, applying only to the position of president.

266.     Subsection (3) of the clause inserts a new subsection (4A) in section 46 providing that Chapter 4 (elections for certain positions) of Part 1 the 1992 Act does not apply to the position of president if:

• the holder of the position was elected or appointed to it in accordance with the rules of the union;

• at the time of his election or appointment as president he had already been elected, in accordance with the Act, to some other position for which an election is required by section 46;

• it is less than five years since he was last elected to that other position or he was elected to it in accordance with the Act after his election or appointment as president; and

• ever since his election or appointment as president he has held another position for which election is required by section 46, having been elected to in accordance with the Act.

267.     The practical effect of new subsection (4A) is that a union will be allowed to elect or appoint a president (provided it is in accordance with their rule-book to do so), so long as the president already holds the position of General Secretary or is a member of the executive and has been properly elected to that position by a postal vote of all the union's members in accordance with the Act. It therefore removes the need for a second election.

268.     The other subsections of the clause make minor and consequential amendments to section 46, that are desirable because of the insertion of new subsection (4A) and do not change the substance of the law.

Removal of rule preventing appointment of body corporate as auditor

269.     Clause 40 amends sections 34, 36 and 37 of the 1992 Act. These sections concern the appointment and rights of trade union auditors. By virtue of section 131(1) of the 1992 Act the amendments also apply to the appointment and rights of auditors of unincorporated employers' associations.

270.     Subsection (1) amends section 34. Section 34 provides the eligibility criteria for the appointment of an auditor of a trade union. As the section currently stands, subsection (5)(c) has the effect that a "body corporate" (e.g. a limited company) is not permitted to act as a trade union auditor. Subsection (1) of this clause repeals subsection (5)(c) of section 34, with the result that a body corporate will be permitted to act as a trade union auditor.

271.     Subsection (2) and (3) insert new subsections (1A) and (5) into section 36 which relates to the duty of the auditor of a trade union to make a report to the union on the audited accounts. Taken together the new subsections have the effect that where the auditor is a body corporate or partnership the report is to be signed in its name by an individual authorised to sign on its behalf.

272.     Subsection (4) inserts a new subsection (4) into section 37 (rights of auditors). Under section 37(3) trade union auditors have a right to attend and be heard at general meetings of the union. New subsection (4) has the effect that where the auditor is a body corporate or partnership these rights are exercisable by an individual authorised by it to act as its representative at the meeting.

Means of voting in ballots and elections

273.     Unions are required under the 1992 Act to hold ballots or elections:

• for certain major positions within the union (sections 46 to 61);

• to approve a political resolution for the purpose of enabling the union to spend money on political objects (sections 73 to 780);

• when amalgamating with or transferring its engagements to another union (sections 100 to 100E);

• when proposing to organise industrial action (sections 226 to 234);

Currently, the provisions governing the above ballots and elections require the method of voting to be by post. The 1992 Act also governs recognition and derecognition ballots under Schedule A1.

274.     The general effect of the power contained in clause 41 is to allow the Secretary of State, by order subject to the affirmative resolution procedure, to widen the means of voting that are to be available in ballots and elections conducted under the provisions of the 1992 Act. The order has to specify what means of voting are available in principle in relation to a description of the ballot or election.

275.      An order under this clause may also identify "a responsible person" to determine, in relation to a particular ballot or election of that description, the voting means that must or may be used (these are permitted to be different for different voters in order to take account of the varying circumstances that may apply in relation to different groups of voters). The order must contain factors to be taken into account and criteria to be applied by the responsible person in making this determination. In specifying these the Secretary of State is under a duty to have regard to the need for ballots to meet a required standard such that there is an opportunity to vote, the votes cast are secret and the risk of unfairness or malpractice is minimised. Since the requirements in relation to ballots under Schedule A1 to the 1992 Act are less stringent in relation to these matters than the requirements in relation to other ballots under the Act, it is possible that a responsible person will be able to permit a method to be used in Schedule A1 ballots which he could not permit to be used in other ballots.

276.      Subsection (1) provides that the Secretary of State may make provision, in relation to any description of ballot or election authorised or required by the 1992 Act, that any ballot or election or ballot of that description is to be conducted by one or more "permissible means" specified in the order as determined by "the responsible person".

277.     Subsection (2) of the clause provides that a "permissible means" is a means of voting that the order provides is permissible for a specified description of ballot or election and subsection (3) provides that "the responsible person" is a person specified, or of a description specified, in the order.

278.     Subsection (4) enables an order made under the clause (a) to include provision about the determinations by the responsible person as to what means are to be used or allowed in a particular ballot, including requirements that he is to take specified factors into account or apply specified criteria, (b) to allow different means of voting to be chosen by the responsible person in different circumstances, and (c) to allow the responsible person to permit some or all of the voters to have a choice of means by which they may vote.

279.     Subsection (5) has the effect that the means an order made under the power in the clause specifies as being permissible means must always include (or consist of) postal voting.

280.     Subsection (7) provides that an order made under the clause may modify the provisions of the 1992 Act, exclude or apply (with or without modifications) the provisions of the Act and make provision, in relation to a ballot or election conducted by a specified means, that is similar to any provision of the Act.

281.     Subsection (10) prohibits the making of an order providing that a means is permissible for a description of ballot or election unless the Secretary of State considers that a ballot or election of that description conducted by that means could, if particular conditions were satisfied, meet the "required standard" specified in subsection (12) of the clause, and that in relation to any ballot or election of that description the responsible person will not be permitted to allow the use of the means unless he has taken specified factors into account or applied certain criteria.

282.     Subsection (11) provides that in specifying factors in the order that the responsible person is to take into account or criteria he is to apply, the Secretary of state must have regard to the need for ballots and elections to meet the "required standard" specified in subsection (12).

283.     Subsection (12) provides that for the purposes of subsections (10) and (11) of the clause, a ballot or election meets "the required standard" if it is such that those entitled to vote have an opportunity to do so, votes cast are secret and the risk of unfairness or malpractice is minimised.

284.     Subsections (6), (8), (9) and (13) contain ancillary and procedural provisions.

SUPPLEMENTARY PROVISIONS

Corresponding Provision for Northern Ireland

285.     Clause 44. During suspension of the Northern Ireland Assembly, changes to employment legislation in Northern Ireland are made by Order in Council. Pursuant to the Northern Ireland Act 2000, such Orders in Council are subject to the affirmative resolution procedure.

286.     Clause 44 provides for an Order in Council whose purposes correspond to those of this Bill to be subject instead to the negative resolution procedure. This will make it easier for changes to Northern Ireland legislation to be timed to coincide with the changes to GB legislation. Clause 44 does not extend to clauses 32 and 33 of the Bill which make provision for changes to the national minimum wage enforcement regime, since the National Minimum Wage Act 1998 itself applies to Northern Ireland and these amendments so apply as a result of clause 45(6) of the Bill. Public consultation has taken place in Northern Ireland on the review of the Employment Relations NI Order 1999, which mirrored the Employment Relations Act 1999. Consultation is currently taking place in Northern Ireland on the implementation of the EC Directive on Information and Consultation.

PUBLIC SECTOR FINANCIAL COST AND MANPOWER EFFECTS

287.     There are no significant effects on public expenditure or public service manpower. There may however be some small costs resulting from the review of the 1999 Act. Estimates of the effect of the Bill provisions on public expenditure are contained in the Regulatory Impact Assessment.

SUMMARY ON THE REGULATORY IMPACT ASSESSMENT

288.     The Government announced on 11 July 2002 a review the Employment Relations Act 1999. The main conclusions of the review are that the legislation is generally working well; nevertheless, the review identifies a number of areas where changes would improve the working of the Act.

289.     The changes are not expected to change significantly the overall balance of benefits and costs arising from the original Act. There will be some benefits in terms of reductions in time, cost and uncertainty to employers, trade unions and other parties (e.g. the Central Arbitration Committee). Equally, implementation of the changes will incur some limited costs to the parties.

290.     The Bill also contains a power to legislate on information and consultation in the workplace. Consultation on the options to implement the EU Information and Consultation Directive ended on 7 November 2003. It is expected that despite the up-front implementation costs, there will be substantial economic and social benefits from the legislation over time.

291.     The following estimates of the costs and benefits to business are drawn from the Regulatory Impact Assessment:

292.     Information and Consultation. The costs of implementing the Directive will fall mainly on business (but not on small businesses). The costs to employers will depend on the way the Directive is implemented. The consultation document (High Performance Workplaces: Informing and Consulting Employees - July 2003), which includes the draft regulations, sets out the options. A copy is available on the DTI website at www.dti.gov.uk/er/consultation.

293.     The least flexible option (option 2) is estimated to cost in aggregate £113 million in non-recurring costs and £130 million in annual recurring costs. The most flexible option (option 4), allows for the use of pre-existing agreements adapted to individual circumstances. It is expected to cost in aggregate £45 million in one-off costs and £46 million in annual recurring costs. It will only impact on undertakings where there is employee demand.

294.     It is expected that despite up-front implementation costs, there will be substantial economic and social benefits from the legislation over time. Employees will gain the right to be consulted on important decisions and have access to information that could directly impact on their working lives. Employers should see gains from a better informed, more motivated and committed workforce. This should lead to lower turnover of staff and higher productivity, and if employees were more willing to undertake training as a result of greater information and consultation, the result would be a more skilled workforce. Benefits will vary according to the option pursued. These benefits are more likely to be felt under option 4 as it allows for a more flexible approach, taking the individual characteristics of the undertakings into account and allowing existing practices that are working well to continue uninterrupted. Given the nature of these benefits, however, it is not possible to quantify them.

295.     An updated Regulatory Impact Assessment will be available when the regulations have been finalised in early 2004.

296.     Implementing the findings of the review of the Employment Relations Act 1999. The legislative changes being introduced to improve the workings of the 1992 Act and other legislation covering trade unions are not expected to change significantly the overall balance of benefits and costs arising from the original legislation. There will be some modest benefits in terms of reductions in time, cost and uncertainty to employers, trade unions and other parties (e.g. the Central Arbitration Committee). Equally, implementation of the changes will incur some limited costs to the parties.

297.     Many of the costs and benefits are very modest. It is estimated that for employers there will be a net aggregate benefit of £20,000 per year. For unions there will be a net benefit of between £75-108,000 per year set against a one-off familiarisation cost of about £30,000.There will be an annual cost to the Exchequer of about £50,000.

298.     National Minimum Wage. The measures in the Bill are not expected to have an economic impact on employers.

COMMENCEMENT DATE

299.     Under clause 45(2) of the Bill, clauses 31 (power to make regulations on information and consultation), 42 (interpretation) 44 (corresponding provision for Northern Ireland) and that clause will come into force on the day the Bill is passed.

300.     Clause 45(3) gives the Secretary of State a power, by order, to bring all the other provisions of the Act into force on such day as the Secretary of State may appoint, and to appoint different days for different purposes.