Clause
5Conciliation
before bringing of
proceedings Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: Clause 5 brings us on to the duties and powers
of ACAS. At present, ACAS has a duty—I stress that word,
“duty”—in certain circumstances to conciliate in
cases where no claim has been presented. The effect of the clause will
be to change that duty to a power.
It may be
helpful to explain the context of this change, which is an important
underpinning element of our package of changes to the dispute
resolution system. As we have heard throughout this morning, ACAS has a
good record of achieving settlement in the period after a claim is made
to an employment tribunal but before the process of the tribunal
hearing. Currently, it also has a duty to offer conciliation in certain
cases that are capable of becoming the subject of an employment
tribunal claim where both parties request it, or where one party makes
a request and the conciliation officer judges that there is a good
prospect of
success. This
duty is not new; it has been on the statute book since the 1970s.
However, during the 1980s in particular ACAS found that some employers
were using this pre-claim conciliation duty simply to obtain an ACAS
settlement, as the basis for a legally-binding agreement to underpin
severance arrangements that had already been agreed without the
involvement of ACAS. Also, the nature of the duty on ACAS to provide
conciliation was such that it could lead to ACAS being asked to assist
with cases that were never likely to become the subject of an
employment tribunal claim, at the taxpayer’s expense. That was
not the intention of the duty.
In response,
the ACAS council decided that conciliators should interpret the duty
strictly in the spirit that was intended, so that the pre-claim
conciliation service would
be focused on cases that were otherwise more or less certain to become
the subject of a tribunal claim. In turn, that had the consequence that
ACAS steered away from actively promoting this service, even though it
could be valuable. The number of pre-claim conciliations carried out
since has been small; it has run at around 1,000 a year in recent
years, making up less than 2 per cent. of the conciliation activity of
ACAS. The
Government see clear benefits in making the conciliation services of
ACAS more widely available in disputes that have not yet reached the
stage of a tribunal claim but are likely to do so; making that change
is an integral part of these reforms. If a dispute can be resolved
before the parties set out their positions in a formal and legal way,
that can save considerable time and costs for all concerned. A total of
85 per cent. of respondents to the consultation following the Gibbons
review supported the proposal that ACAS should be given additional
resources to provide such services.
I
have already referred to the additional resources that the Government
are making available to ACAS in order to achieve that aim. Those
resources are considerable. However, we also think that it is
appropriate to give ACAS the power to target properly pre-claim
conciliation on those cases where it thinks that it can make the most
difference and be the most valuable. That is really the purpose of the
clause.
It will then
be open to the parties in such cases to decide whether to use the
service. Regardless of whether the parties take advantage of this
pre-claim conciliation, if the dispute subsequently turns into a
tribunal claim they will still have access to ACAS conciliation
services in the post-claim period, in the usual
way. In
short, we are trying to ensure that ACAS is able to manage effectively
the new case load that we wish it to take on, without having to
restrict the use of its services unduly and without having to transfer
resources from other parts of its operation into an area where it has a
duty to respond to every request. So we want more pre-claim
conciliation; we have given ACAS more resources to achieve that, and we
also want to give ACAS the power to use its discretion to apply those
resources where they would be best used. That is the purpose of the
clause.
Mr.
Djanogly: The clause deals with encouraging conciliation.
I am happy to say that we agree with the thrust of these proposals. In
the other place, there was significant debate on the relative merits of
conciliation and mediation. Perhaps that was because many mediators
were involved in that debate. I am not a mediator. I have since heard
in a roundabout way that ACAS is generally not keen on mediation as a
form of dispute resolution. There are certainly some circumstances in
which mediation is a better way of moving forward than conciliation.
Does the Minister agree with the claim that I have heard that ACAS
steers clear of mediation when it should sometimes go in that
direction? What is the Government’s attitude to mediation? If he
thinks that there are situations where mediation would be more
appropriate, how does he intend to promote
it?
Mr.
McFadden: Mediation is a perfectly fair and appropriate
part of the armoury. I have not heard under the wire or on the
grapevine that ACAS is somehow
reluctant to engage in mediation or is hostile to it. The question that
has been in ACAS’s mind is the one that I raised in my opening
remarks on the clause. It has a duty to carry out pre-claim
conciliation, but it has no capacity to target that where it can be
most effective. Therefore, that service and duty are not promoted. That
situation ends up where we do not want to be, which is with less
pre-claim conciliation than we would like to
see. The
clause will free up ACAS and, at the same time, give it more resources.
In clauses 1 to 7 we are attempting to create a system that provides
the maximum chance for disputes to be resolved before they get to the
door of the
tribunal.
John
Hemming: Accepting what the Minister says, there is the
facility to encourage people to follow the code of practice and adhere
to proposals from conciliation. People must try to reach an agreement
and will find themselves in a procedural anomaly if they fail to adhere
to that agreement. Therefore, there will be the 25 per cent.
penalty. Is that the Government’s
intention?
Mr.
McFadden: The Government’s intention is to
encourage people to settle disputes outside the workplace. The code
offers certain help in doing that by setting out procedures to be
followed. As the introduction to the code says, dealing with these
things informally can often help. That is a direction that we want to
go in. Of course, we always have to balance that with the right of
access to a tribunal. That touches on some of the amendments that we
will discuss
later.
John
Hemming: I made a blunder in my question to the Minister.
Would the Government consider saying in the code of conduct that if the
conciliator suggests a figure and the employer or employee does not
adhere to it, but does not get substantially more or less, there will
be a procedural penalty? That is often the case with other judicial
proceedings, although there are obviously no cost issues here. However,
if the conciliator says that something is worth £10,000 and the
employment tribunal then says that it is worth only £9,000,
could there be a procedural penalty for the employer or
employee?
Mr.
McFadden: I am not sure whether that would constitute a
procedural penalty. I do not want to place myself in the shoes of the
tribunal chair. I have no doubt that tribunal chairs will look at such
matters, take into account efforts or proposals that have been made at
the conciliation phase and consider everything in the round. With this
clause, we want to maximise ACAS’s effectiveness by giving it
the discretionary power to target its resources on the conciliation
cases where it can have most effect with the increased budget that has
been provided by the
Government. Question
put and agreed
to. Clause
5 ordered to stand part of the
Bill.
Clause
6Conciliation
after bringing of
proceedings 12
noon Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: Clause 6 is important because it refers to time
limits. The laudable intention of the procedures set out in 2004 was
that, in order to focus minds on settling early, there would be time
limits on ACAS’s ability to offer its services. In practice,
minds are often not concentrated until much closer to the tribunal
hearing, by which time ACAS cannot offer its services because it is
beyond the time limits. Therefore, the clause will remove the time
limits on ACAS’s duty to offer conciliation in cases once they
have been presented to the employment tribunal. That will mean that
ACAS’s services will be available for both sides right up until
the moment the tribunal hearing takes place. We feel that that can be
of benefit to both employees and employers.
I never
forget that the context for all of this is the significant estimated
reduction of up to £170 million in costs for business because of
the Bill’s measures that will reform dispute resolution. Part of
that is because the Government, rather than having businesses spend all
of that money in tribunals, have increased the resources for ACAS and
removed the time limits so that it can offer its services in a much
greater part of the
process. Since
2004 the duty to conciliate has been subject to time limits of either
seven or 13 weeks, depending on the jurisdiction concerned. ACAS
retains the discretionary power to provide conciliation after those
prescribed periods have expired, but under the clause, those time
limits will be removed and ACAS will be able to offer its services in
that much-expanded way. Gibbons found that the time limits had not
achieved their desired intention and that parties were still realising
close to the hearing day that they wished to settle but found that an
ACAS conciliation was no longer available. Over 70 per cent. of
respondents to the consultation agreed that those restrictions on the
availability of ACAS conciliations should be removed. The Government
agree, so the clause will repeal the relevant provisions and, like
clause 5, is part of our effort to make ACAS even more effective in the
future than it has been in the
past.
Michael
Jabez Foster: I certainly would like to support the
clause, because the time limits have been an impediment to settlement.
The nature of employment tribunal cases is that people do not
concentrate their minds until the last moment, even when orders for
directions are made. That is how people work, and perhaps we work like
that sometimes. It is certainly the case between employers and
employees and their representatives. Frequently the strength of the
case is not known until statements have been interchanged as a result
of an order for directions or something of that nature. If all the
facts are on the table quite late in the proceedings, perhaps ACAS can
play its greatest role at that point.
I acknowledge
that some costs might be involved in reaching that stage that could
have been dealt with earlier if ACAS had had an earlier intervention,
so I hope that it will not abandon the possibility of early resolution
because it has a longer period in which to do it. ACAS, too, might be
subject to the ability to leave things until the last minute, which
would be a detriment. If it can go in early and be there late, that
would have a great
effect.
Mr.
Djanogly: We welcome the removal of the time limits and
the resulting expanded and more adaptable service that ACAS can
deliver.
Question
put and agreed
to. Clause
6 ordered to stand part of the
Bill.
Clause
7Compensation
for financial
loss Question
proposed, That the clause stand part of the
Bill.
Mr.
McFadden: I want to say a brief word about this final
clause dealing with dispute resolution. It inserts a new provision into
the Employment Rights Act 1996 to empower employment tribunals to order
employers to compensate workers for the full financial loss they have
sustained as a result of unlawful deductions from wages, including
failure to pay the national minimum wage, and non-payment of redundancy
awards. For
the moment we should put ourselves in the shoes of a worker entitled to
the national minimum wage who does not receive it. We all have
constituents who may be in that position and we have some understanding
of just how difficult it is for someone in that position to make ends
meet. The denial, contrary to the law, of perhaps a couple of hundred
pounds, is something that we could probably all deal with. It would not
make us become overdrawn, but to those on the minimum wage it can make
the difference between just getting by or ending up in real trouble.
That is what this clause is
about. If
someone incurs bank charges for going into overdraft as a result of
such an unlawful non-payment, the clause would be available to the
tribunal to help compensate for that. I stress that it is as a direct
result of the non-payment and it is drawn tightly, but it is
recognition that financial loss can result from things like unlawful
deductions from wages or non-payment of redundancy
awards.
Mr.
Swire: This all looks very well on paper as we debate it
here, but what is the application of this in reality, particularly for
casual workers from eastern Europe who are subject to gangmasters? How
can this be enforced in that
respect?
Mr.
McFadden: It is enforced by the tribunal. We will discuss
migrant workers and the gangmasters, agencies and so on in the
following clauses, but if I continue I may be able to enlighten the
hon.
Gentleman. Employment
tribunals already have powers to extend awards to full financial loss
arising out of claims for holiday pay and breach of contract. The
clause will allow workers to bring a combined tribunal claim covering
both breaches of the law in all these areas, and claims for
compensation for financial loss arising from such breaches. At the
moment, workers can obtain the compensation in the claims covered by
the clause only via a separate claim to the civil courts. The clause
will remove the need for claimants to make a separate claim. It is also
designed to encourage employers to make the correct payments in the
first place.
The payments
that an employment tribunal may currently order the employer to pay or
repay under these circumstances are limited to the amount arising from
the employer’s direct liability. This means that financial
losses incurred by a claimant, which are over and above
the amount owed but which can be attributed to the non-payment, can be
pursued only through the civil courts. Such losses might include, for
example, charges incurred if a direct debit has failed or punitive
interest on bank accounts that go into the
red. I
will refer later to the work of the Government’s vulnerable
worker enforcement forum, which I have chaired over the past year. One
of the issues raised time and time again in that forum is just how
marginal the existence of some workers is. Such workers are dependent
on timely and correct payments, so it is absolutely right that
financial loss, which occurs as a result of them not receiving those
payments can be taken into account by the
tribunal.
Lorely
Burt (Solihull) (LD): May I welcome you to the chair,
Mr. Bercow? May I also congratulate the hon. Gentleman on
his well deserved elevation? We welcome the clause, but we have
expressed concerns about how financial compensation should be
calculated, particularly interest on the total outstanding amount. It
is welcome to hear the Minister talk about bank charges incurred as a
result of not paying moneys in a timely way, but how feasible will it
be for a tribunal to calculate the award? He rightly points out that
many of those affected will not have been paid even the national
minimum wage. Using bank charges to give fair restitution to employees
might not help a considerable number of those affected. My hon. Friend
the Member for Brent, East (Sarah Teather) has previously raised the
issue of using interest charges. Where it is not possible to get an
idea of bank charges—perhaps if the relevant person does not
even have a basic bank account—could a similar interest charge
payment be used to ensure that there is fair
restitution?
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