John
Hemming: We are perhaps more sympathetic to the Government
on the 25 per cent. figure, but that obviously depends on the
Minister’s answer to the question at hand. Compliance with the
codes is perhaps a procedural issue, rather than a substantive one.
Inasmuch as the Bill is orientated towards the substance of the issue,
we do not feel that it necessarily would be good—for employers
or employees—to revert to a greater focus on procedural matters
and change the 25 per cent. figure to 50 per cent. Hence, we are
generally with the Government on
this.
Michael
Jabez Foster: I certainly want to resist the amendment. I
am surprised that it comes from the quarters that it does, because
powers have previously been used against employers, usually small
employers who have simply not understood the procedural
requirements.
Mr.
Djanogly: My point was that we do not have the figures
about how powers have been applied. I would be grateful if the hon.
Gentleman put us right on those
figures.
Michael
Jabez Foster: My evidence is empirical. I agree that the
substantive figures would be helpful. However, anyone who deals with
small employers—not just as a lawyer but in their constituency
surgery—knows that it is they who almost inevitably fall foul of
the procedural rules. The hon. Gentleman seems to be penalising small
employers because of some failure on their part, as we discussed
earlier, to have the resources to access knowledge across the board.
They do not even have the ability to go to Citizens Advice for support,
as employees may. This amendment is therefore targeted against small
employers, which is wholly
unfortunate.
Mr.
McFadden: Let me first deal with the point about figures.
I do not believe that the tribunal service issues a breakdown of the
cases in which the current variance of 10 to 50 per cent. is used, but
it has told officials in my Department that the top end of that
variance is rarely
reached. The
more substantive issue before us is what the degree of adjustment on
procedural grounds should be. I started my remarks today by saying that
the Bill has a thread running through it, which is the balance between
procedure and merit in tribunal cases. The hon. Member for Birmingham,
Yardley got it right when he cautioned us against running against the
Bill’s general direction by elevating procedure to too great a
level above merit. My hon. Friend the Member for Hastings and Rye is
also right when he says that the effect of the amendment, if accepted,
could be that a small employer, having perhaps been substantially
correct in the case presented to the tribunal, is hit with a 50 per
cent. increase in the award against them because of the procedural
weakness of not appealing to the ACAS code. The reason why we
are removing the 2004 procedures, as set out in clause 1, is that,
having reviewed their operation for a few years, we concluded that
process was being elevated above merit. I fear that the amendments
would lead us to fall back into that
trap. Mr.
Swire: In reviewing that matter in the legislation, has
the Minister or any of his officials discussed the implications with
the Federation of Small
Businesses?
Mr.
McFadden: Yes. We discuss all our employment matters with
the main business organisations regularly, including the Federation of
Small Businesses, the CBI and others.
Another issue
to remember is that, whereas the 2004 procedures required tribunals to
elevate procedure above content, under the changes that we are bringing
in, that judgment will be for the tribunal to make. The hon. Member for
Huntingdon asked why the figure was 25 per cent. instead of
another one. These matters are not an exact science; where we set the
figure is a matter of judgment. Our policy aim is to not elevate
process above content, and to not allow procedure to be simply
disregarded. We want to get that balance right by allowing tribunals,
at their discretion, to vary an award if there has been an unreasonable
failure to adhere to procedures.
Clause 3
creates an incentive mechanism by proposing that tribunals be
allowed—not required—to adjust awards by up to 25 per
cent. if either party has acted unreasonably in failing to comply with
the relevant code of practice. An adjustment of 50 per cent. would take
us back to the system that the Bill is trying to reform and would
perhaps repeat the unforeseen consequences of the 2004 procedures that
we are trying to move away from.
Mr.
Djanogly: The first point to make is that the Minister has
admitted that the figures do not exist, even though in 2002 it was
claimed that they would. We are all operating in the dark; we do not
know what the situation is. The Minister said that it is not an exact
science; I say that he is sticking his finger into the wind. We are
hindered by a lack of information but I am starting to see the problem,
which the hon. Member for Hastings and Rye elaborated on and the
Minister confirmed.
The hon.
Gentleman and the Minister seem to be saying that they understand the
concerns of companies and small businesses, and that they are unsure of
the tribunals’ ability to get to grips with the problems of
putting companies and employees on an even procedural footing and of
dealing with vexatious claims. In other words, if the figure were 50
per cent., it could be used disproportionately against companies,
rather than employees. In that context, I can see why the figure is
capped at 25 per cent. rather than 50 per cent, but that does not make
it right. Equally importantly, it shows that the Bill will not have the
impact that the Minister has
claimed. Barry
Gardiner (Brent, North) (Lab): On a previous amendment the
hon. Gentleman asked for increased clarity. Does he not accept that
reducing the scope by which any penalty may vary from 50 to 25 per
cent. gives the clarity and certainty that small businesses would
welcome?
Mr.
Djanogly: No, I totally disagree with the hon. Gentleman.
If companies and employees were to be treated on a fair and equal basis
and the figure was 50 per cent., that figure could well act
as a disincentive against vexatious claims. The point that the hon.
Member for Hastings and Rye and the Minister made is that companies and
employees may not be treated in the same way, and that companies may
therefore lose out. I tend to agree. We do not know whether we can
agree because we do not have the figures. So, as I said before, we are
thrashing around in the dark
here. 11.15
am
Mr.
McFadden: Let me cast some light. The hon. Gentleman
referred to vexatious claims. Surely he accepts that vexatious claims
can be dealt with at a pre-hearing review and that the tribunal will
recognise them as vexatious and will not find in favour of the person
who brought them. To elevate this procedural device of saying that not
adhering to the code should be matched with an ability to vary awards
up or down by 50 per cent. will not deal with an issue of vexatious
claims. They can either be dealt with in the current process, or the
target would be
missed.
Mr.
Djanogly: The Minister pre-empts my final point; I am
going to agree with him. When we get on to vexatious claims we do have
some figures. We will come on to that because I have great concerns
about those figures, but to my mind it is impossible to separate the
debate between the procedural and the vexatious; certainly, the average
small company would not do so. For them, it is all part of the same
problem. As the Minister says, the Bill separates the procedural from
the vexatious and is rather toothless as a
result. Moreover,
the Bill ignores the question of vexatiousness, so we have tabled
amendments to remedy that. I am sad to see that those amendments are
not being considered under this clause. I feel that they should be, but
that is a decision taken by others and I respect it. We will come to
that issue at a later stage, but the Minister will take the point that
vexatious claims are not dealt with in the Bill, and that is what will
most concern small businesses. On the basis of what we have heard, we
will wish to reconsider our position on these clauses, and I seek leave
to withdraw the
amendment.
The
Chairman: Order. I make it clear to members of the
Committee that ordinarily when someone seeks leave to withdraw their
amendment, I will immediately put that question to the vote. Similarly,
if an hon. Member seeks to push their amendment to the vote, I will
immediately put it to the vote. In this case I have received a slightly
belated indication from the hon. Member for Birmingham, Yardley that he
wishes to speak on the matter and on this occasion I will happily allow
him to do so. Hon. Members will quickly discover that I am a
facilitator. I want them to contribute but unfortunately I am not
psychic, so an hon. Member who wishes to catch my eye cannot rely
simply on raising their eyebrow. They need to rise and indicate their
wish to speak.
John
Hemming: Thank you, Mr. Bercow. On a procedural
matter, although my declarations of interest are a matter of public
record, I should like to add to that record.
I am a member of the Federation of Small Businesses, which
has not been mentioned so far. I am an employer as well as having been
on various sides of employment tribunals. The issue of substance is
whether vexatious matters have any substance. Vexatious cases do not
have any substance. Therefore they would not be found on a substantial
basis, so this is totally irrelevant to the question of whether any
application to a tribunal is vexatious. The question is whether it
satisfies the procedural process. The Government’s direction of
travel is right. Perhaps we would prefer 22.596 rather than 25 per
cent., but that is not really an issue of
substance.
Mr.
Djanogly: I understand that the procedural formalities
here mean that I must again seek the Committee’s leave to
withdraw the amendment, so I beg to ask leave to withdraw the
amendment. Amendment,
by leave, withdrawn.
Mr.
McFadden: I beg to move amendment No. 1, in
clause 3, page 4, line 3, after
‘Society)’,
insert— ‘Regulation 17 of
the Cross-border Railway Services (Working Time) Regulations 2008 (SI
2008/1660) (breach of
regulations)’. I
refer the Committee to proposed new schedule A2 on page 3 of the Bill,
which sets out a list of jurisdictions to which the rest of the clause
applies. In other words, those are the enactments under which someone
could pursue a claim under the
clause. Government
amendment No. 1 will add an enactment to that list. It is periodically
updated as employment law evolves. As we have discussed, tribunals can
apply an adjustment to proceedings under the jurisdictions, as set out
in new schedule A2. That schedule replicates the jurisdictions listed
in schedule 3 to the Employment Act 2002 and covers the vast majority
of the jurisdictions of claims accepted by employment
tribunals. In
a sense, the amendment can be put down to timing. Following Third
Reading of the Bill in the other place, the Cross-border Railway
Services (Working Time) Regulations 2008 came into force on 27 July. I
am sure that all hon. Members noticed that at the time. Those
regulations transpose a European directive on working conditions for
railway workers on cross-border railway services. For example, they
allow a worker to complain to an employment tribunal if his employer
has refused to permit him to exercise rights relating to rest, break
periods and so on. Regulation 17 was inserted into schedule 3 to the
Employment Act 2002. This is a consequential amendment that will add
regulation 17 to new schedule A2 as a jurisdiction to which the new
adjustment provisions will also
apply.
Mr.
Djanogly: In principle, we see no reason to oppose the
amendment. Perhaps the Minister could clarify who constitutes a
cross-border worker for the sake of the remedies provision. Does he
have figures for the number of times such remedy claims have been
successful, and in how many of those cases would a tribunal have varied
the award on the basis of a failure to comply with the code? Finally,
does the Minister believe that the amendment will have any cost
implications?
Mr.
McFadden: An example of the type of worker involved is
somebody working on a railway service through the channel tunnel, which
is a cross-border railway service. This provision will apply to their
breaks, rest periods and so on. The hon. Gentleman asked how many times
the tribunal will be able to take cases. That is a matter for the
future, not the past. The cost implications for employers operating
services through the channel tunnel will depend on the extent to which
they adhere to the working time regulations. If the regulations are
contravened, there will of course be a cost implication. As in all of
these matters, there is a very easy way to avoid cost implications: to
adhere to the law in the first
place. Amendment
agreed
to. Question
proposed, That the clause, as amended, stand part of the
Bill.
Mr.
Djanogly: I would like to continue probing this part of
the Bill. I note with interest the comments of Lord Henley in the other
place on the circulation of the draft ACAS code. He was concerned that
the other place was furnished with a copy of the draft code only on the
morning that it was to be
debated. Given
the importance of the new code and the fact that it forms much of the
core of the Bill, I would be grateful if the Minister enlightened the
Committee on the consultation process that was undertaken. I am aware
that the consultation was initiated and subsequently undertaken by
ACAS. I would be grateful if the Minister answered the following
questions on the consultation process. What format did the process take
and which organisations were contacted? What responses were received
and will the House have the opportunity to see
them? A
shorter, more concise code is to be welcomed. I know that most
employers will welcome the emphasis on informal dispute resolution, but
will the lack of guidance given by the principle-based approach
increase the workload of the employment tribunals? I hope not, but will
the Minster give his view? I thank him for sending through a finalised
version of the code—I think that it arrived last Friday. He will
appreciate that we have had a short time to review it, and we will need
to seek people’s views and possibly come back to him at a later
stage.
Having looked
through the code, I would like the following points, on the
code’s paragraphs, to be addressed. The advice at point 5 of the
original draft code issued by ACAS
stated: “Employers
and employees should do all that they can to resolve disciplinary and
grievance issues in the workplace. Recourse to an employment tribunal
should only be a last
resort.” Why
has that express and clear statement been removed? Point 8
states: “In
cases where a period of suspension with pay is considered
necessary”. Some
employment lawyers have been saying that there is a need to clarify
that, given the number of possible reasons for those cases. Is there a
need to specify the situations where it is needed? In point 13, the
phrase “workers” is used in the body of the section, yet
the title states “employees”. We need consistency,
especially as the words may convey different ideas and roles. In point
20, should “further misconduct” not become “any
misconduct”, thus removing any impression that the
subsequent misconduct needs to be associated with the former? It would
also ensure that minor misconduct does not slip through the net. After
point 33, should powers to investigate the reported grievance and then
to discuss it with the employee not be included? The manager should be
able to undertake an informal fact-finding procedure before formal
proceedings are
initiated. What
prevents employment tribunals and courts from seeing the code as
statutory again, and how will the Government avoid that? Does ACAS see
it as an organic code that will be reviewed and changed as needs be? If
so, how frequently is it intending to review the code? How much
discretion will employment tribunals have with regard to those who
follow the spirit rather than the letter of the code, especially small
businesses that may lack the human resources capability of others? How
do the Government propose to make small businesses aware of the new
code? That action is very important in
itself.
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