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Session 2005 - 06
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Standing Committee Debates

Second Standing Committee on Delegated Legislation

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Second Standing Committee on Delegated Legislation

The Committee consisted of the following Members:


Miss Anne Begg

†Barlow, Ms Celia (Hove) (Lab)
†Bone, Mr. Peter (Wellingborough) (Con)
†Dhanda, Mr. Parmjit (Gloucester) (Lab)
†Fabricant, Michael (Lichfield) (Con)
†Hendry, Charles (Wealden) (Con)
†Joyce, Mr. Eric (Falkirk) (Lab)
†Lamb, Norman (North Norfolk) (LD)
Luff, Peter (Mid-Worcestershire) (Con)
†McCarthy, Kerry (Bristol, East) (Lab)
†Miller, Andrew (Ellesmere Port and Neston) (Lab)
†Mole, Chris (Ipswich) (Lab)
†Pelling, Mr. Andrew (Croydon, Central) (Con)
Reid, Mr. Alan (Argyll and Bute) (LD)
†Southworth, Helen (Warrington, South) (Lab)
†Stewart, Ian (Eccles) (Lab)
†Sutcliffe, Mr. Gerry (Parliamentary Under-Secretary of State for Trade and Industry)
Sian Jones, Committee Clerk
†attended the Committee

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Monday 18 July 2005

[Miss Anne Begg in the Chair]

Draft Code of Practice on Industrial Action Ballots and Notice to Employers

4.30 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I beg to move,

    That the Committee has considered the draft Code of Practice: Industrial Action Ballots and Notice to Employers.

The Chairman: With this we may consider the draft Code of Practice: Access and Unfair Practices during Recognition and Derecognition Ballots.

Mr. Sutcliffe: I welcome you to the Chair, Miss Begg. I hope that our proceedings will be quick, efficient and effective, because we dealt with this issue at great length during the debates on the Employment Relations Act 2004.

Both codes of practice are central to trade union and industrial action law. I will start by discussing the draft code of practice on access and unfair practices during recognition and derecognition ballots. The draft code provides practical guidance to employers, unions and others in operating key aspects of the statutory recognition and derecognition procedures. It can also be taken into account by the Central Arbitration Committee and the courts in deciding complaints about inadequate access or unfair practices.

As hon. Members may recall, the Government introduced the statutory recognition and derecognition procedure in the Employment Relations Act 1999 and we undertook a thorough review of that Act during 2002 and 2003. The review concluded that, broadly speaking, the statutory procedure had worked well, although the review pinpointed some areas where it was encountering problems and could be improved. The 2004 Act therefore contained provisions to amend the statutory procedure in line with the review’s recommendations.

Two groups of changes are relevant to today’s deliberations. First, section 9 of the 2004 Act revised the obligations on the employer to provide the union with reasonable access to workers in the bargaining unit during the period of the recognition or derecognition ballots. Access often involves the organisation of workplace meetings. In essence, section 9 of the 2004 Act makes it clear that the union’s access must be private, and that the employer should not seek to record, or otherwise interfere with, the union’s meetings.

Secondly, sections 10 and 13 of the 2004 Act prohibit the use of unfair practices by either the employer or the union during the period of such
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ballots. Those sections create protections for workers to ensure that they are not subject to intimidation by either party during the balloting period and that they can cast their votes free from coercion and undue influence.

The Secretary of State is empowered to provide guidance on both access and unfair practices in the form of codes of practice. The basic aim of the draft code is to ensure that its guidance reflects the new provisions that I have just outlined in the 2004 Act.

We initially consulted ACAS on the draft code in accordance with our statutory obligations, We then consulted more widely in December last year by issuing the draft code as part of a formal consultation document. About 250 copies of the consultation document were sent out to unions, employers and other interested bodies. The three-month period of consultations ended in February 2005. We received 23 responses in all. We have issued a response document summarising the views of consultees. Copies of that document have been placed in the Libraries. To assist our deliberations today, copies are also available on the Table for Committee members.

The relatively low response is an indication that the draft code was broadly acceptable to most organisations. That said, respondents did identify some problem areas, and we have sought in the latest draft before us today to take account of their concerns. Of course, on some issues, trade unions and employers expressed diametrically opposed views. On those topics, it was obviously not possible to find wording that will completely satisfy everyone.

It was open to us to produce two separate codes: one on access and the other on unfair practices. We rejected that approach and decided for simplicity and ease of reference to provide a single code of practice combining practical guidelines on both topics. Respondents to our consultation overwhelmingly welcomed that approach.

As Members may know, there already exists a code of practice on access to workers during recognition and derecognition ballots, which reflects the original access provisions in the 1999 Act. Much of the wording on access in the existing code has been retained. It has worked well in practice, and we did not receive representations that the existing wording should be significantly changed. However, some new wording has been added. On access, the new wording is concentrated in section D of the code. We have provided more guidance about the privacy of meetings in particular. As I explained earlier, that is one of the issues on which the 2004 Act clarified employers’ duties. Section D describes how the privacy of meetings should be maintained and states that employers should not pressurise workers to disclose what happened at a union’s meeting or record what took place.

Section D presents clear, sensible guidance and few should take issue with it. However, the section addresses some delicate issues—in particular, it discusses whether it would be appropriate for the union to control attendance at any large-scale meeting that it held. The code acknowledges that there will be
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occasions on which the union may rightly consider that the presence of certain individuals would disrupt its meetings or deter other workers from speaking at them. We are thinking primarily of managerial or supervisory staff who are part of the bargaining unit and might be seen as representatives of the employer.

However, we are mindful that those workers are also entitled to hear the union’s case. The draft code therefore suggests that the union should consider holding a separate meeting for such individuals on those relatively rare occasions when it would be reasonable to exclude them from the more general meetings.

Norman Lamb (North Norfolk) (LD): I have a quick, uncomplicated question. How many complaints are made each year to the central arbitration committee about the issues in this code of practice?

Mr. Sutcliffe: If the hon. Gentleman will forgive me, I shall come back to him on that issue, which will become clear during our debate. He raises a fair point.

It is important that the employer and the union should behave responsibly if access arrangements are to work satisfactorily. That is an essential feature of the access arrangements and we have therefore expanded the paragraphs about behaviour in section D. For example, the draft code refers to the behaviour of both unions and employer representatives in not disrupting meetings, including meetings organised by the employer. Furthermore, the employer should refrain from offering inducements to workers not to attend union meetings.

Section E is an entirely new part of the draft code that provides guidance to parties on unfair practices and responsible campaigning during recognition or derecognition ballots. In drafting this guidance, we had to balance a number of considerations. Although neither party needs to campaign during such balloting periods, it is a fact of life that in many cases they will. Indeed, workers often need information to help them understand the issues before casting their votes. However, there can be a fine line between fair comment and the issuing of threats.

Likewise, there can be a fine line between a determination to get one’s message across and behaviour that is overbearing or intimidating. Furthermore, different individuals will perceive the same behaviour in different ways—what is acceptable to one worker might be seen as intimidating by another. To assist parties, the code gives examples of unfair practices by employers and unions. However, the code should not focus solely on unfair practices; it should also act as a guide on responsible campaigning.

By steering parties towards responsible campaigning, we are likely to reduce the potential for acrimony in the workplace. By campaigning responsibly, parties will almost certainly avoid breaching the law by committing an unfair practice.

The draft code provides guidance on the conduct of employer and union representatives in any campaigning activity. That includes guidance to outside parties such as consultants, who may act as
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agents of the employer or the union. The draft code discusses what the main forms of campaigning should be, how campaigners should put across their message and how to engage with others’ arguments in a reasonable manner.

Intimidation and other forms of undue influence can take many forms. Neither the code nor statute can define them all. However, we have tried to give examples of when they are most likely to occur. For example, the code discusses how parties should deal carefully when discussing the possibility that recognition, or indeed derecognition, could lead to job losses, redundancy or relocation of their businesses. That is a difficult issue, and fair comment can easily overstep the mark and be used to threaten the workers concerned. Unions allege that such threats are commonly used by anti-union employers.

The draft code therefore explains that such discussions can be seen as directly threatening the livelihoods of the workers involved and could give rise to undue influence by implicitly threatening to harm them. However, the Government do not accept the argument that any mention of the issue would represent an unfair practice per se. It might represent fair comment if presented reasonably and with a full business rationale, and would allow the other party to comment on or challenge the basis for assertions that such major consequences would follow from recognition.

I acknowledge that this is a difficult issue. We will therefore monitor how the guidance is being applied in practice.

I hope that hon. Members will agree that the draft code is reasonable and balanced. It provides guidance in a practical and helpful way, which should benefit employers and unions. The code is not weighted towards employers or unions; it gives practical guidance to both.

I now turn to the code of practice on industrial action ballots and notice to employers. We propose some modest changes to the existing code, which we need to revise to reflect changes to industrial action law contained in the 2004 Act. Those changes were limited, so we have not thought it necessary to make many consequential changes to the code. The 2004 Act mainly changed the law on industrial action notices and sections 22 and 25 of that Act redefine the information that the notices must contain. Most revisions to the code, therefore, occur in paragraphs 14 to 18 and 50 to 51 of the code where notices are discussed.

There are two types of notice that unions must provide to employers. One concerns notices in advance of industrial action ballots and the other concerns notices in advance of any subsequent industrial action. The law is very similar in respect of both types of notice and therefore the code’s guidance concerning both types of notice is virtually identical.

We have suggested a few small revisions to the existing code to emphasise the role of ACAS in resolving disputes and to clarify the description of the law on aggregated ballots across several workplaces and employers. We contacted and consulted ACAS
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and issued the draft code for prior consultation. We received 24 responses and, in general, parties supported the overall thrust of our approach. We have produced a response document summarising the outcome of the consultations, which is available in the Library.

I apologise for the length of my introductory remarks, but I hope that hon. Members will understand that there was a fair amount of ground to cover. The two draft codes provide helpful guidance and will assist parties in complying with the law. They both build on existing codes that have worked well in practice. The drafts have been produced following extensive consultation with the affected parties.

On the point raised by the hon. Member for North Norfolk (Norman Lamb), the CAC regularly deals with no more than five complaints each year concerning unfair practices. The new duties have not come into effect and therefore no formal complaints on that matter have been received by the CAC. I am sure that that will come out in our discussions.

The codes are set against the new climate of industrial employment relations that the Government have sought to achieve. I believe that they are well balanced and I hope that the Committee will support them.

4.42 pm

Charles Hendry (Wealden) (Con): May I say at the outset what a pleasure it is to serve under your chairmanship, Miss Begg? It is also a pleasure to see the Minister here. I gather that he was almost stranded somewhere in the north of England this morning, unable to return here by train. If he had not returned, the Whip would have been forced to go through the codes in some detail, and we would have asked a range of questions to challenge his understanding and detailed knowledge of them. It is a pleasure, as always, to see the Minister, and particularly to see him in such a cheerful mood. The last time we considered a statutory instrument he admitted afterwards that he was a little bit grumpy, and to see him back in his usual form is welcome.

The Minister says that the code is reasonable and balanced, and we broadly agree. We certainly broadly support the statute. The provisions impact most significantly on the employers and unions, and it is individual employers and members who will benefit most. I shall consider the orders in the same order that the Minister did.

Implementing measures concerning access and unfair practices during recognition and derecognition ballots will offer employers and trade union members a fairer standing in terms of their rights to representation and better protection against being unfairly influenced by either the union or the employer. As the employment market continues to evolve in Britain, those are important steps forward.

As part of the review of the Employment Relations Act 1999, the Government’s review of the statutory recognition and derecognition procedure found that
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there has long been the open potential for employers and/or unions to undermine the position of employees through unfair practices. Building upon the provision of the Employment Relations Act 2004, the draft code offers a significant chance to plug that gap and prohibit such practices in the future. No one could possibly say that bribery, pressurisation or coercion of employees should be allowed to occur, and we share the commitment to stamping out such behaviour.

We welcome the fact that two sets of guidance—on access and unfair practices—are being combined into one code. This improves ease of reference and offers greater clarity and simplification for employers and unions. We know that unions and the industry both support that.

We also share the view that it is right that the provisions should apply to both parties—the employers and the unions. Although in the overwhelming majority of cases both parties will behave in a fair and perfectly acceptable manner, the unfair practices that do occur can be carried out by either side, and it is right that they should be subject to the same controls.

Notwithstanding our broad support, it will not surprise the Minister to hear that I have some questions. We welcome the extent to which the Government have responded to the concerns and views of the organisations and individuals who responded to his consultation document on the draft code. I understand that some 250 copies of the consultation were issued, but only 23 responses were received. How widely was the document distributed, particularly to employer organisations and their representatives? It seems to be cause for some concern that responses were received from only five. Will the Minister assure us that the views of employers as well as unions have been fully taken into account?

On unfair practices, the feedback from the consultation document suggested that the Government could do more to give examples of unfair practices. I am aware that the Government responded to those calls in revising the code, but will the Minister make it clear which examples have been added since the original draft? That would help us to see how far the revised document has built on the concerns that were expressed. Given that the provisions in the order do not represent legal obligations and that no penalty is to be incurred for failing to abide by them, how will the Minister ensure that members or employees are not subject to unfair influences?

A further concern is that the code does not cover campaigning activity that takes place before the central arbitration committee decides that a ballot should be held. Will the Minister explain to the Committee why that decision was taken? It surely places members and employees at risk of being unfairly influenced prior to a CAC decision, particularly where it is fairly clear that a ballot is a likely outcome of the CAC’s considerations. How will the Minister ensure that employees are protected in that respect? Will he commit himself today to continuing to consult employers on the operation and effectiveness of the code of practice, upon
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commencement? It is surely crucial that it be regularly reviewed, so that we can ensure that the interests of employers and trade unions are equally protected.

The Minister will understand my wry smile when he was talking about section E. That deals first with responsible campaigning, and goes on to deal with unfair practices. We had significant discussion on those matters last week on the Floor of the House, but the context was responsible lending rather than responsible campaigning, and the Minister told us that he could not possibly find ways to put such matters into schedules. This is something on which I think that the hon. Member for North Norfolk may agree with me. Although the context is different here, I think that the Minister has again established how clearly the principle can be adhered to and adopted.

We broadly agree with the second code of practice, on industrial action ballots, but we have a few questions. Section C refers to preparing for industrial action ballots. I recognise that some elements of the document are printed in bold and are therefore included in primary legislation, but some clarification would still be helpful.

Paragraph 9 deals with the scrutineer’s term of appointment and defines the time scale in which he must produce a report as

    “in any event not later than four weeks after”

the date of the ballot. Why was a period of four weeks chosen? That seems rather a long time. I recognise that particularly large and extensive ballots may require four weeks, but one would have thought that a shorter period should be possible.

Paragraph 12 states:

    “In some circumstances, it may help ensure adequate standards for the conduct of the ballot or simplify the balloting process if a union gives the scrutineer additional tasks”.

That could reasonably be strengthened to read that it would or should help to ensure adequate standards, making the paragraph rather more definite.

The code of practice pays attention to the importance of accurate information, and considers trade unions’ information on employees, which may be affected. Paragraph 16 states:

    “It is not reasonable to expect union records to be perfectly accurate and to contain detailed information on all members.”

What requirement is there for the employer to ensure that the information that the trade union has is as up-to-date and accurate as possible?

What happens, for example, to people who join a company after the date when the ballot is decided on? They will not, presumably, appear on the record, but if they are employed at the time of the ballot they ought to be consulted. More generally, what are the restrictions on how much campaigning to encourage people to vote yes or no can be carried out by a trade union and an employer during the ballot process?

Paragraph 15 says:

    “To avoid the risk of legal action, the union should allow sufficient time for delivery”

of the message to the employer that a ballot is taking place, it should be transmitted by

    “first class post, courier, fax, email or hand delivery”

or by recorded delivery, to ensure that there is

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    “confirmation that the employer has received the notice”.

The hon. Member for North Norfolk and I are smiling wryly at that, because it is the sort of assurance that we were looking for elsewhere in previous Committees—and now it seems that such things can be made clear after all. We are grateful for the clarification in this case, because it is important that people should know that the notice has been delivered and received.

Paragraph 35, which deals with the circumstances in which it would be reasonable for the trade union not to follow the advice of the scrutineer, says:

    “If there is no independent scrutineer, or if a union decides that it cannot follow the advice offered by the scrutineer”,

it should follow various courses of action. In what circumstances does the Minister envisage that, having appointed a scrutineer, the union might decide not to accept the advice of somebody who is independent in the process?

Will the Minister say a bit about who would be responsible for counting the ballot papers? The code says that various organisations might be involved, but that might not be appropriate for small ballots; there are different rules where fewer than 50 people are being balloted. Could the person counting the votes be a trade union official? I am concerned that remarks written on ballot papers in a small ballot could enable somebody to be identified. All Committee members have been through electoral processes and have been required to look, with a returning officer, at spoiled ballot papers and seen the comments that people have written on them. If somebody in a small group of employees wrote a comment about the trade union leader or the employer, it would be possible for the paper to be traced to an individual, which would go against the secrecy requirements of any ballot.

Accidental errors  are difficult to deal with because everybody will claim, however deliberate an error was, that it was accidental. How does the Minister imagine it can be proved whether something was accidental or deliberate? However, I welcome the commitment that accidental errors should be overlooked and understood. The order contrasts with some hon. Members’ experience of constituents involved in farming who have had problems with their IACS—integrated administration and control scheme—reports: when those are completed incorrectly in any way, the whole claim is thrown out. That is unacceptable. A degree of flexibility is important, but it would be useful to hear a bit more from the Minister about how it could be established whether something was accidental or deliberate

Notwithstanding those few questions, we generally support the codes of practice, and I am sure that my colleagues will wish to give the Minister time to answer those few questions.

4.53 pm

Norman Lamb: I too welcome you to the Chair, Miss Begg. It is a pleasure to serve under you. I can keep my remarks brief, because the hon. Member for Wealden (Charles Hendry) asked a number of legitimate sensible questions, and there is no point in going over ground that he has already covered.

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The measures are uncontroversial and designed to bring the guidance into line with amendments to the legislation. The small number of both complaints to the CAC, which the Minister mentioned in response to my intervention, and responses to the consultation, suggest that the legislation has worked reasonably well and is not a source of enormous controversy between the two sides of industry.

The Minister said that there were 23 responses to the consultation. Has he followed up the concerns expressed in any substantive responses? In other words, what responses has he rejected in connection with both codes? I am not sure whether the responses to the consultation exercise are publicly available. Will the Minister tell us whether they are? If they are not, presumably they can be made available. I cannot imagine that there is anything desperately secret about them. It would, however, be interesting to see whether there are any divergences from the Government’s proposals.

The Minister said that the amended codes would be monitored to see how they operated in practice. How does he propose to do that? Does he propose to report back to this Committee, or anyone else, so that we can see how the codes have worked in practice and whether there are any glitches?

Finally, I reiterate the point made by the hon. Member for Wealden. The draft code of practice on access and unfair practices during recognition and derecognition ballots contains a great deal of analysis of the word “unfair”. That is in remarkable contrast to the complete absence of guidance on the meaning of the word in the Consumer Credit Bill, which we considered last week. I would welcome the Minister’s reflections on that subject.

4.56 pm

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