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Clauses 1 to 3 abolish the 2004 regulations, encourage more voluntary conciliation and support ACAS with extra funding. I shall give some of the history behind the boom in cases that led to the Employment Act 2002.
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In the early days of the industrial tribunal, it had a much more limited jurisdiction with far fewer cases. Even in 1988, there were only about 29,000 cases a year. By 2000, that had grown to 130,000 cases a year, and something needed to be done to encourage employers and employees to try to solve their problems without necessarily ending up at an employment tribunal.

One of the great motors for an increase in the number of cases was the Polkey v. A. E. Dayton Services Ltd decision in 1987, because it said that if there was any significant procedural irregularity in the way in which a case was dealt with by the employer, there was an entitlement to a finding of unfair dismissal. If it was only a technical matter, however, the tribunal could decide that, despite the procedural irregularity and the consequent unfair dismissal, the compensation could be set at nothing or very low.

The decision meant that cases that would previously have been rejected on their merits were pursued on procedural grounds. The Conservative Government looked at the issue in the mid-1990s and published a Green Paper in 1994 that considered the options for dealing with disputes. It had two main suggestions. First, it suggested that ACAS should have a conciliation scheme and a system of voluntary referrals to arbitration. Secondly, if employees had not followed the internal grievance procedure, or employers had not followed their internal procedures, they should not have the right to go to a tribunal. In other words, it was vital to both employees’ and employers’ defences to have pursued internal remedies first.

In response it was argued that that approach would cause complexity and delay in many cases. After much thought, the then Minister, Ian Lang, decided not to require the internal procedures to be completed. When the Labour Government came in, they looked at the consultation document and the responses and made the same decision. I cannot remember who the Minister was, but in 1997 the incoming Government decided against that change.

It was therefore a surprise—not to mention a mistake—when the Government, in introducing the 2002 Act, decided to go ahead and insist that internal procedures should be completed to provide grounds for a claim or a defence to a claim. Many warned at the time that that would lead to complexity and delay. Instead of all the evidence being heard in one go by a tribunal, a two-part procedure was necessary. The first part of the process was deciding whether a case was procedurally acceptable because the internal procedures had been completed by the employer or employee. Then another hearing was needed to decide whether the dismissal was unfair or not.

The effect of that was predictable, and so it came to pass. From quite early on—within a year of the change’s implementation—organisations such as the CBI and some unions were saying that it was a good idea in policy terms, but that the way in which it had been implemented was heavy handed, bureaucratic, prescriptive, over-regulatory and did not work. The number of cases that were delayed went up and became a big problem.

I remember that when I was the Front-Bench spokesman for legal issues, the chairmen of tribunals would come to me and say, “Look, you have to do something about these 2004 regulations because they are snarling up the whole system. Although they were a good idea in principle,
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in practice they are turning out to be a nightmare.” I asked a number of parliamentary questions on the issue—in fact, last summer, after the Gibbons report came out, I reached a crescendo with about 20 questions, all asking whether the Government would do something about the situation.

Now that I have given that background, I want to tell the House that I welcome clauses 1 to 3, which get rid of the idea that there must be a first hearing about the procedural aspects before one can get down to the real thing—in other words, that it has to be proved that the procedures have been followed internally before a claim can be mounted. As far as the other side of the coin is concerned, though, the idea of having conciliation and some ability to talk and to try to reach a decision on the claim between employer and employee before the matter gets out of the workplace is a good idea.

I welcome the fact that ACAS is getting extra funds, but does the Minister think that there is room for mediators and others to be involved rather than just ACAS. What is the Government’s position on alternative dispute resolution in that area? Is it that it should just be a matter for ACAS and that the £37 million will do it, or are the Government saying that they would be prepared to have independent mediators and others involved to try to tackle some of the cases at an earlier stage?

My overall position is that I give a warm welcome to the first few clauses of the Bill, which are long overdue. I have no doubt that the mistake was made with the best of intentions but I am pleased that it is being remedied, and I know that everybody in the employment tribunals will heave a sigh of relief.

6.22 pm

Ms Katy Clark (North Ayrshire and Arran) (Lab): I agree with the points made by the hon. Member for North-East Hertfordshire (Mr. Heald) about the role of lay members in tribunal proceedings. One of the strengths of the employment tribunals has been that those who have active experience of industry—on the worker and trade union side and also on the employer side—have had a strong role in the proceedings and the move towards a very legalistic approach would not be welcomed. There is concern from all parties that the role of lay members may be watered down, which would be a huge mistake.

I urge the Minister not to listen to the advice given by the Conservative Front-Bench spokesman, the hon. Member for Huntingdon (Mr. Djanogly). We remember that the Conservatives did not vote for the national minimum wage and argued that its introduction would lead to higher unemployment. That has not proved to be the case.

John McDonnell: Before my hon. Friend moves off the issue of lay members, can we all place on the record the work that Lord Bill Wedderburn has done over the years to protect the role of lay members and the astute advice on tribunals, both legal and political, that he has given to the Government?

Ms Clark: I am grateful to my hon. Friend for that intervention.


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As I was saying, the National Minimum Wage Act 1998 was, of course, a controversial and contested piece of legislation. It is one of the flagship policies introduced by Labour since 1997. I welcome the provisions that will strengthen the enforcement of the regulations.

The truth, however, is that other than the drip, drip of employment legislation that we have heard about, Britain has the most restrictive labour and employment laws in Europe. Trade unions in Britain have the fewest rights of those in any country in Europe. As has been said, our right to be members of trade unions and to take part in trade union activity dates from less than 100 years ago, when the Labour party was created. One of the first steps that the initial 29 Labour MPs took was to drive through a private Member’s Bill to overturn the House of Lords decision on Taff Vale. We have already heard references to Lord Wedderburn and other leading employment experts, who have regularly articulated that our rights in labour law now are worse than they were 100 years ago. We should not be proud of that.

Of course, new laws are not the only way of dealing with exploitation in the workplace. If we look at history and at the situation now, we see that one of the most effective ways of fighting a cause in the workplace is to join a trade union. We know that trade union members earn significantly more than non-trade union members. They have better pay, better pensions and better health and safety in the workplace.

It is appropriate that those of us in this place should make it very clear that, as a public policy matter, we believe that trade unions are a force for good in society. One reason for that is that we have to recognise the huge imbalance of power in society. In particular, we must recognise the huge imbalance of power in the workplace between the employer and employee. I welcome the work that has led more than 100 MPs to sign early-day motion 1604, which calls for the Bill to be amended to include aspects of the Trade Union Rights and Freedoms Bill. We have heard already from my hon. Friend the Member for Hayes and Harlington (John McDonnell) about that Bill.

I welcome the clause that lifts restrictions on trade unions and the amendment of the rules on the exclusion or expulsion of individuals on the grounds of membership of a political party. The clause is in the Bill because of active attempts by fascists in Britain to infiltrate trade unions, when, of course, fascist ideology runs counter to the beliefs of trade unions. If we consider the activities of fascists who have gained power throughout the world, we see that trade unionists are one of the first groups that they target, victimise, exploit, jail and kill. Trade unions are saying that they do not feel that it is reasonable that they should be forced to take people who are members of fascist parties into their membership, because they know that the only reason those organisations target them is to undermine their core values and beliefs.

We need to look more broadly at trade unions and their rule books. Britain has the most restrictive labour laws in Europe, which means that we have the most rules that govern how trade unions behave. The Conservatives, who were in power for 18 years, introduced most the legislation that led to the regulation of trade unions. It is interesting to hear Conservative Members talk about burdens on business, because they put excessive burdens on trade unions. Trade unionists tell us that the rules under which they are required to operate are not
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just excessively bureaucratic and expensive, but make it practically impossible for them to carry out their activities lawfully—the activities their members ask them to carry out. The Trade Union Rights and Freedoms Bill proposed simplification of the law on trade unions, because it is not appropriate that the state should lay down in such detail the requirements to be followed every time a trade union takes a ballot on industrial action.

Current provisions make it impossible, in effect, for legal industrial action to take place. However, most cases are not examined in detail; evidence is not examined in detail by a body such as a court or tribunal. Those who have had to take part in such processes would not dispute the fact that existing legislation is excessively prohibitive.

Rob Marris: I make this intervention as someone whose constituency Labour party receives moneys from the trade union solicitors, Thompsons, for whom I used to work and with whom I am proud to be still associated. Instead of a panoply of laws on how trade unions are—if they jump through certain hoops—exempt from creating the tort of inducing breach of contract, for example, by industrial action, would it not be simpler to abolish the tort altogether? We could thus get rid of the panoply of regulation.

Ms Clark: I agree. My central point is that trade unions should be able to regulate their own rule books. Members should be allowed democratically to decide the rules under which they operate. I welcome the Bill’s provisions, but I ask the Government to look again at the issues I have raised and consider simplifying the operation of trade unions.

The Minister for Energy will be aware of the negative impact of recent European Court of Justice decisions on trade union freedom and collective bargaining, which will no doubt be debated on other occasions. We need to look at those issues again; the principle should be that the nation state determines rules on the operation of trade unions and the right to strike, which is not a legal right in the UK.

Much of the Bill relates to the national minimum wage, on which a number of proposals have been put to the Government. I suspect they will be the basis of amendments to the measure. The first relates to exemptions for young workers, which have already been raised by my hon. Friend the Member for Hayes and Harlington. The Government have asked the Low Pay Commission to look into the issue again, but we need to say strongly in this place that we view an annual wage of £6,630 for a 37 and a half hour week as a poverty pay rate. We want a rate for the job.

Furthermore, people should not be discriminated against on the basis of age. A person doing the same job as an older person is entitled to the same wage. In my constituency, I have heard of a number of cases of young workers supervising older workers—for example, in the hospitality industry—yet the supervisor is on a lower wage, because at present that is justifiable legally.

Mr. David Anderson (Blaydon) (Lab): I agree entirely with my hon. Friend. A person could start an apprenticeship at 16 and become a fully trained craftsperson by the age of 20, yet they would still be paid less than the minimum wage, which is nonsense.


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Ms Clark: I agree with my hon. Friend. There is a strong case that there should be no discrimination on the basis of age alone.

On previous occasions, I have had a number of discussions with Ministers about exemptions for seafarers to national minimum wage legislation. The Minister for Energy will be aware that the current legal position is that foreign national seafarers are entitled to the national minimum wage on UK registered ships when they are in port or in internal waters. The result is that foreign workers on British ferries are being paid wages equivalent to £1, £1.50 and £2 an hour. Examples have been provided to the Government on a number of occasions. All workers on a UK registered vessel in UK internal waters—for example, a Caledonian MacBrayne ship sailing to the Western Isles—would be entitled to the minimum wage, but that would not be the case if they were on a non-UK registered vessel making the same trip.

Rob Marris: I have every sympathy with my hon. Friend’s proposition, but it is incredibly difficult to legislate for such things. For example, a similar situation might involve a trucking company based in Poland, but owned by a UK company, which could be sending HGVs to the UK driven by Polish nationals resident in Poland who were earning less than the UK minimum wage. These things are difficult.

Ms Clark: I do not accept what my hon. Friend says. Such situations are clearly difficult to regulate, but the role of Government is to grapple with them and come up with solutions. We are talking about ferry routes that serve communities, whether the Scottish islands, Hull or Rotterdam. They are not operated by fly-by-night employers or industries; they provide services daily.

John McDonnell: Another irony is that even though such ships are not UK flagged, a number of them still receive the benefits of tonnage tax, which is provided specifically to promote the employment of UK seafarers and fair employment generally.

Ms Clark: Indeed. My hon. Friend highlights the fact that state subsidies are, in effect, underwriting exploitation. From the point of view of British resident workers, it is not acceptable that such mechanisms are being used to undercut their wages and conditions.

Mr. MacNeil: As a resident of the Western Isles, where the Caledonian MacBrayne ferries operate, I can tell the House that many other aspects of legislation, such as the licensing laws and health and safety provisions, are implemented on the ferries, so why should that not also be true of employment legislation? I fully support what the hon. Lady is saying.

Ms Clark: I appreciate the point made by the hon. Gentleman. As we have discussed on previous occasions, it is not just ferry workers who are affected by the exemptions, but those working in the fishing industry and those who supply the offshore oil industry. I ask the Government to look at the issue again. It was a commitment in our 1997 manifesto, so as a matter of principle we should look at the exemptions to the national minimum wage and do everything we can to close them. The reality is that the national minimum wage has been one
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of the most effective measures in fighting poverty and inequality in this country, and the Bill provides a real opportunity to close the loopholes that remain.

Mr. Clifton-Brown: The hon. Lady will know from the constituency that she represents that the UK used to have one of the largest merchant fleets in the world. With the best of intentions, British Governments introduced employment and tax regulations that encouraged—indeed, forced, in many cases—British shipping firms to go offshore and to use flags of convenience. Does she not think that some of the proposals that she is outlining will have exactly the same effect on the very small British fleet that is left?

Ms Clark: The hon. Gentleman will be aware that that is why the tonnage tax was introduced. I am sure that the Minister will comment on the fact that British shipping has been a great success story for the Government. Such issues are often raised as red herrings, and that is why I focused on the examples that I used in raising the issue with the Government. I have specifically focused on ferries, because those that run between Scotland and some of the islands are good examples. If a ferry leaves Ardrossan and goes to Arran, all the workers will be covered by the national minimum wage, but if that ferry leaves Ardrossan and goes to Belfast, they will not be covered. We should address that anomaly, and I hope that the Government will look again at that issue. They are holding detailed discussions with the trade unions that represent some of the work force in those sectors, and I hope that the Government propose a practical solution during the consideration of the Bill.

Rob Marris: I sense that my hon. Friend might be moving on. Does she see anything in the Bill that relates to the minimum wage that addresses the scandal of tips—I do not—and the fact that some employers can effectively steal tips from their staff? To me and many other trade unionists, that seems completely unacceptable and certainly against the moral spirit of the legislation on the national minimum wage, if not against the letter of the law. Does she, like me, want much stronger legislation to deal with that scandal?

Ms Clark: Yes, indeed. My hon. Friend highlights yet another loophole, and I do not believe that that was the intention of those who campaigned so hard for national minimum wage legislation over so many generations. Of course, hospitality industry staff are some of the most exploited and least organised, because traditionally trade unions have not been powerful in the sector. We should look again at that issue, because it highlights the need for one of the British trade union movement’s other calls in asking the Government to consider class actions in relation not just to equal pay cases, which we will discuss in the equality Bill, but to employment matters such as the national minimum wage. The reality is that the most vulnerable workers in our society find it very difficult to stand up for themselves, and they fear victimisation. There is therefore a strong case for looking at how organisations such as trade unions can take collective class actions when the law is breached. My hon. Friend gives a good example in relation to those who work in the hospitality industry.


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