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Finally, let me turn to the part of the Bill that deals with the ASLEF judgment. A range of problems have been identified in the concessions the Government have so far made in the other place. I believe they will impede the implementation of the spirit of the Government proposals, particularly with regard to the detail of what is required of a union in identifying what political party
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the member they are dealing with belongs to and how that can change over time. Other fairly onerous requirements will undermine the implementation of the European Court of Justice’s decision on the matter. We will look at amendments as this Bill proceeds through Committee and on Report, but I think there is agreement in every part of the House that it is most important that we ensure that trade unions have the freedom not to have to accept as members those who hold offensive views and act offensively.

That leads me on to another issue to do with our public services, which I think may be addressed in this part of the proposed legislation. We already have rules and regulations that prevent British National party members from serving in the police and prison services, but we do not have those rules for BNP members who work in other sections and Government Departments, such as the Department for Work and Pensions, where they are meant to be serving a multicultural community. I would like the Government to look at from what other areas of service beyond the police and the Prison Service we should bar the employment of BNP members or bar their continued membership of the BNP, because I believe that holding those views and being a member of that party infects their role in serving a multicultural community. We should do everything we can and employ the full legislative force to prevent BNP members from operating in those sectors and thereby undermining the ethos of fair and equal service to the public.

I hope to work through those issues during the Bill’s progress because, by doing so, I believe we have the opportunity to implement employment legislation that addresses some of the key issues that face many of our work force today.

Mention has been made of the Warwick agreement and the discussions taking place at present about Warwick mark 2. On that, I wish to repeat my disappointment that we have not had the opportunity within this Employment Bill to assert in law, as is the case in the rest of Europe, the basic human right of someone to withdraw their labour, including by secondary action—sympathetic action—in solidarity with other workers. Until we can secure that right once again, people will continue to be exploited; there will be bad employers who seek to undermine their wages and conditions, and the balance between employer and employee will still be out of kilter. I urge the Government to look again at this Bill to see whether we can include once again in British law this protection and the basic human right to withdraw one’s labour.

5.55 pm

Sarah Teather (Brent, East) (LD): We are discussing employment at extremely short notice. I do not wish to labour the point; others have said that the Government are frightened of Catholics in by-elections. [Interruption.] Did I hear a sharp intake of breath from the Minister? A by-election’s timing over which the Government had total control is a poor reason for delaying for three months the passage of other legislation and for introducing this Bill at very short notice—and nor does that aid scrutiny.

This is the 29th piece of employment legislation that this Government have brought before the House. Nevertheless, it is largely welcome in that it repeals
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some previous legislation that was highly burdensome and bureaucratic for business. We shall be supporting the Bill’s Second Reading, but there are a number of issues on which we would like significant progress to be made in Committee. Some areas will need careful scrutiny, but our principal areas of concern about the Bill are to do with sins of omission.

Let me begin by acknowledging the changes that we support. The Gibbons review of the Employment Act 2002 and its 2004 consequential regulations clearly stated that the aims of that legislation had simply not been achieved. The original purpose of the legislation—to encourage conciliation as an alternative to a tribunal—had not been successful. As the Government’s response to the Gibbons review says, the procedures imposed a high administrative burden, and far from encouraging amicable settlements appeared to have encouraged involvement of lawyers at an early stage. However, that failure masks a more important negative philosophical shift.

The 2002 Act divided opinion between those who believe that procedure matters in and of itself because it validates an individual’s worth, and those who believe that procedure is merely a means to an end. A liberal would say that procedure matters, because treating people fairly matters in and of itself independent of whether the outcome would have been the same. It is very much to be commended that the Government have reviewed the 2002 legislation and are now repealing it, even if their change of mind has been brought about only by unintended side effects rather than a true conversion of principle.

I welcome the reversion to the Polkey principle, which recognised that fairness does matter—dismissal under such principles may be found to be unfair on procedural grounds. However, the principle also recognises the merits or otherwise of the case, and allows a tribunal to reduce the compensatory part of the award in proportion to the likelihood that dismissal would have gone ahead anyway if correct procedure had been followed. The acceptance by the CBI and others of a reversion to Polkey principles has, however, been dependent on a promise of simplification of the ACAS code of practice. Employers want a code of practice that they can actually follow. The new draft code, which was published during the consideration of the Bill in the other place, will need to be carefully scrutinised in Committee to ensure that it is a genuine simplification and that it is clear. I suspect that a considerable proportion of our time in Committee will be spent in examining that draft code.

Several Members have spoken about the ASLEF judgment. We acknowledge the changes made following the debate in the other place to specify more clearly the grounds on which a union may prohibit someone from membership on the basis of their affiliation to a political party. While recognising that the abolition of closed shops should give unions greater freedom to decide their own membership, we nevertheless thought that the original wording in the Bill was drawn far too broadly. The new definition adopted in the other place meets many of our original concerns. However, we will also want to re-examine that and explore it further in Committee. The hon. Member for Huntingdon (Mr. Djanogly) raised one particular issue relating to previous as well as current membership of a political party.

Thirdly, we welcome the effort to toughen action against those who fail to pay the minimum wage. The new powers proposed for inspecting officers seem sensible,
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and the possibility of trying serious cases in the Crown court is also welcome, as it increases the fine possible in serious cases. I, like the hon. Member for Hayes and Harlington (John McDonnell), am disappointed that the Government have not taken the opportunity of this legislation to end the national minimum wage’s discrimination against young people through the lower rate. People under the age of 21 do not get a discount in shops for being young, and it is hard to justify why young people should be paid less for doing the same job.

I am also disappointed that the Government have not used this legislation to deal with the issue of people using tips as an excuse for not paying the national minimum wage. As a consumer, I want to know that any tips I pay are extra money that will go to people who are probably working extremely long hours for the minimum wage. The Minister reassured us that the Government are examining the issue, but I hope that they will do so in time to table amendments in Committee. The Government have the whole summer in which to consider the matter, because according to the programme motion the Committee will not sit until October. I hope that they will work with people in all parties who clearly feel strongly about the issue to introduce a practical means of solving that problem.

The new formulae for calculating the arrears of employers who fail to meet minimum wage legislation are a welcome step forward. Using the current rather than historical rate of the minimum wage is not only a fairer way of calculating arrears for employees, but gives employers an incentive to settle arrears today rather than to delay until next year. I heard what the Minister said in reply to my intervention about interest rates and tax, but I hope that we may still explore the matter in more detail in Committee to see whether there is a means of getting round the problem. It is unfair that employers are able to have an interest-free loan at the expense of an employee.

New formulae are all well and good, but the chance of a business being inspected for a breach of national minimum wage legislation remains extremely low. Moreover, even if an employer is inspected and found to be in breach of the law, the chance of their being prosecuted is almost non-existent. Just three of a total of 14,500 or 15,000 cases of arrears have ever been prosecuted—the Minister gave the exact figure in his speech. Why is that figure so low? I would like to think that an amicable result was found in all cases, but that seems highly unlikely.

The problem of a failure to pay the minimum wage appears to be increasing. The Minister mentioned that the average arrears for each individual is now more than £200, which compares with the previous financial year’s considerably lower figure of £130. Enforcement is vital not only for individuals who are inadequately rewarded for their work but, as the Minister mentioned, for employers.

Lorely Burt: Does my hon. Friend agree that certainty of detection and of subsequent prosecution would be two of the most important factors in getting recalcitrant employers to commit to, and to implement, the national minimum wage?

Sarah Teather: I agree with my hon. Friend. Employers who pay the minimum wage, however reluctantly, feel very aggrieved when a competitor down the road undercuts them on price because they are cheating the law. Employers
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who flout minimum wage legislation often deny other statutory rights, such as the right to paid holiday, statutory sick pay and paid maternity leave—the citizens advice bureaux have found evidence of that in the cases that they have dealt with. Concern about those rights, particularly for temporary and agency workers, lead to pressure on the Government, particularly from some Labour Back Benchers, to equalise rights with those of permanent employees. The trade unions, the Government and the CBI appear to have found a compromise on this matter, and we await legislation in this area in the next parliamentary Session so that we can scrutinise just how the Government intend to deal with it.

I remain concerned that merely creating new rights will not necessarily yield an improvement for workers unless there is a practical way of enforcing them. I recognise that the Bill strengthens powers to inspect employment agencies, but, in practice, most vulnerable workers who wish to take action against exploitation must battle through the tribunal system, which, for many of them, is not a practical solution in enforcing statutory rights. The system is lengthy, stressful and legalistic, and even when it finds in favour of the employee it may fail to yield a payment to the individual.

There is an obvious need for an agency that is able to work across fields to tackle issues of non-compliance in a proactive way. The hon. Member for Hayes and Harlington touched on the issue of information that is permitted to be exchanged in the Bill and whether there is a more proactive means of tackling non-compliance. A number of suggestions have been made, including a broad-based fair employment commission, extending the work already done on the national minimum wage. I wonder whether the Minister’s winding-up speech will inform the House as to whether the Government are actively considering that possibility—I know that they have considered it in the past.

The problem that many workers have with the employment tribunal system is that even if they manage to navigate it and get a ruling in their favour, which is no mean feat, many employers just fail to pay up. Citizens Advice, which works with employees exploited by rogue employers, estimates that it sees about 1,000 cases of unpaid employment awards every year. I have seen such cases in my constituency, and they are incredibly stressful for the individuals concerned. Citizens Advice estimates that across the country the level of non-payment of tribunal awards may actually be as high as one in 10 of the 13,000 monetary awards made by tribunals each year. The only route for claimants in that situation is to take action through the civil courts, but, yet again, that process is complex, time-consuming and often prohibitively expensive.

For some rogue employers, the knowledge that the enforcement route is so difficult makes non-compliance a gamble worth taking, allowing them to flout the system with near impunity. The cost of the non-payment of awards to individuals is considerable. Citizens Advice estimates that of the 1,000 cases it dealt with in the past financial year, the total value of unpaid awards was in the region of £4.5 million—the sums involved for the individuals concerned are thus considerable.

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In recognition of that problem, the Government made some changes to the system in the Tribunals, Courts and Enforcement Act 2007. Principally, the Act made the registration of non-payment of an award at county court automatic and free, and it also allowed enforcement action to be taken without registration. Those provisions will come into force in April 2009, when this Bill is also due to come into force. Although those changes were welcome, it is not the process of registration of non-payment at the county court that is so difficult for claimants; the problem is the process that follows, which is prohibitively expensive and complex.

That brings me to my gravest concern about the omissions in the Bill. How clear people’s statutory rights are and how efficient the tribunal system is are of no matter if, when the tribunal rules in favour of the claimant, they are simply unable to go the next leg of the journey to wrench the money that they are owed from their employer. The Bill is a serious missed opportunity, and the Government must find a way of giving claimants access to the fruits of the justice that they have already attained.

Mr. Siôn Simon (Birmingham, Erdington) (Lab): I might have missed it, so could the hon. Lady say a bit about what her Front-Bench team recommend the Government should be doing? She has identified what she sees as an omission, but I would be grateful if she let us know how she would like to see the gap filled.

Sarah Teather: I just mentioned one thing—an employment commission—and I am about to move on to the next one, if the hon. Gentleman sits tight and listens. I hope that he will serve on the Public Bill Committee, that we will be able to explore these matters in great detail together and that I might get his support from the Back Benches.

We intend to examine non-payment in detail in Committee, and I hope the Government will look favourably on the ideas proposed by a number of people, principally Citizens Advice, which has done detailed work on the issue and tackled it on the front line. The issue is really about using the state to take the risk that at the moment is borne by individuals. At the moment, individuals have to pay to go through the county court process. They will get the money back, if they win, but I want the Government to consider whether the state could take on the risk for very low-paid individuals. The state would get the money back, but the burden of risk would be shifted from the individual to the state. NACAB has suggested using High Court enforcement officers.

There are many approaches to the issue, and I hope that we will be able to have a detailed discussion in Committee about the various methods. I feel strongly that the good aspects of the Bill will not come to fruition without some means of taking the next step. It is an important issue for individuals, and I hope that the Government will consider closing the loophole.

There are some good aspects to the Bill, but some issues are missing. The principal issue is how we can give individuals the opportunity to claim the money that they have already technically been awarded but cannot get their hands on, and I hope that the Government will consider our amendments in Committee.

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6.11 pm

Mr. Oliver Heald (North-East Hertfordshire) (Con): I first wish to make a general point that is relatively important in the context of clause 4. When I first started appearing before industrial tribunals in 1976 I did so for free, as a trainee lawyer with the Free Representation Unit. In those days, tribunals were very informal, the rules of procedure were limited and the chairman would often be able to decide what sort of evidence he wanted to hear and how. The person representing the employee was often a trade union representative or someone free—like me—and the employer would simply send along the personnel director. In that atmosphere, the people there—including the members of the tribunal—understood the workplace and the industrial scene. The three who made up the panel—the employer’s representative, the employee’s representative and the lawyer who acted as chairman—were an integral part of that atmosphere, which was that of an industrial jury that decided industrial concerns on behalf of people who all understood the workplace.

The atmosphere has changed a lot over the years and industrial tribunals—now employment tribunals—have become much more formal places with more legalism. It was inevitable that that would happen. That area of law was very exciting in the 1970s, because it was constantly changing as new Governments came and went. The Industrial Relations Law Reports came out every week, so more law was reported in that area than in almost any other. Gradually, the effect of all the new cases and the need for precision ensured the change to a more legalistic environment.

However, the tripartite decision making has remained throughout, with an employer’s representative, an employee’s representative and a chairman. That is very important for cases that address issues such as the terms and conditions of employment or questions of unfair dismissal. Once the employer has shown the reason for dismissal, it is up to the industrial jury to decide whether the decision to dismiss was reasonable. The issue of reasonableness in that forum is well decided by a tribunal made up of representatives who understand the workplace. Anything that erodes that approach would be a bad thing.

So when clause 4 of the Bill talks of fast-track decision making without a hearing, alarm bells begin to ring. Will that mean that the chairman decides cases on his own? Last year, we had a consultation document, “Transforming tribunals”, from the Ministry of Justice, and chapter 9 included suggestions that employment tribunals had scope for more decision making by chairmen alone, as it would not always be necessary to involve the lay members.

The issue was taken up in the other place by Lord Wedderburn, who pressed the Minister on it. I wish to do the same and press the Minister to confirm that the Government have no intention of cutting back on tripartite decision making by the tribunal on important issues such as reasonableness of dismissal and terms and conditions of employment. The lay members add something to the decision making on those issues and I hope that the Minister will be able to reassure me on that point.

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