The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I beg to move,

It is a pleasure to serve under your chairmanship, Mr. Wilshire.

The order will enable employment tribunal proceedings on payments relating to leave entitlement under certain working time regulations to be heard by an employment judge sitting alone. Employment tribunals are usually heard by a full panel, which consists of a legally qualified employment judge and two lay members representing the employee and employer sectors. However, since the mid-1990s, there have been some changes, and in specific instances, as set out under the Employment Tribunals Act 1996, an employment judge can sit alone to decide a case.

In August 1996, the implementation of section 4 the Act, which the order amends, enabled judges to sit alone to hear cases on, for example, breach of contract and unauthorised deductions from wages. Claims for redundancy payments were added to the list from 1 August 1998 and certain national minimum wage claims were also covered from 1 April 1999. So, at the moment, there are four main categories involving simple monetary matters on which an employment judge can sit alone: national minimum wage, unlawful deductions from wages, breach of contract and redundancy pay.

Today’s order adds a fifth category to that list—it is most easily described as holiday pay. Like the other categories, the new category covers simple monetary matters and relates to leave entitlements under the working time regulations. When we consulted on the change, ACAS said:

and the council of employment judges said that

In making the change, I must emphasise that the Government value the immensely important contribution that lay members make to the tribunal system. They bring an understanding of the realities of the workplace from employer and employee perspectives that can be extremely valuable to the process. During the passage of the Employment Act 2008, there was widespread support in all parties for the role of lay members. Today’s order is not designed to undermine the valuable function of lay members in any way, but we want them to be used in cases that are best suited to their expertise, and not in cases that might not need their expertise.

There are several other reasons for the change. First, Michael Gibbons, in his independent review of employment dispute resolution, which gave rise to much of the 1998 Act, asked us to review the circumstances in which an employment judge sits alone. Straightforward monetary claims usually involve clear issues of law and require no real legal deliberation, so this was one type of case in which a lay member’s practical experience of the workplace was found to be less relevant than in other types of case. A follow-up consultation that the Government ran last year agreed that lay members’ time could be more productively spent—I mentioned two of the responses to the consultation.

Secondly, the order is part of a package of measures to simplify the dispute resolution framework. In addition to today’s measure, we are expanding the ACAS confidential and impartial helpline. That will be available from April to answer specific employment questions and to provide advice for resolving workplace disputes. For disputes that employees and employers are unable to resolve by other means, ACAS will also offer a free pre-claim conciliation service, which can also be accessed through its helpline.

Thirdly, although some might ask about the safeguards and whether it is appropriate for a judge to hear a case alone, the existing safeguards that apply to the categories of case on which a judge can sit alone will also apply in the new category. In other words, an employment judge must consider the individual circumstances of the cases they hear and the views of all parties when deciding whether a case should be heard by a judge sitting alone or by a full tribunal. A judge can also decide at any stage that a case should be heard by a full tribunal, for example, if the facts of the case are likely to be disputed. Safeguards are built in to the measure to ensure that we do not channel inappropriate cases under the order.

I believe that the reform will make a sensible addition to the subjects that can be heard by a judge sitting alone, and that it will ensure that the valuable expertise that lay members bring to the tribunal process is used in cases where their expertise can be made best use of rather than where it cannot. On that basis, I commend the order to the Committee.

Mr. Jonathan Djanogly (Huntingdon) (Con): The order will streamline employment tribunal proceedings. Section 4(3) of the Employment Tribunals Act 1996 is amended by the insertion of new subsections (ce), (cf), (cg) and (ch), which increases the number of tribunal proceedings that can be heard by an employment judge alone. As a result, four new proceedings can be heard by a single judge. They relate to payments to leave entitlement—holiday pay—under working time regulations.

As the Minister said, the order comes in the wake of the Gibbons review on dispute resolution, published in March 2007, which proposed a simplified dispute resolution process. It represents a shift towards a less rigid and, hopefully, more efficient adjudication of such disputes. Although the majority of disputes are settled before reaching a tribunal, those that reach the tribunal are often lengthy and costly. As such, the order could help to ensure that lengthy procedures and their related costs will be cut. The Gibbons review estimated that the dispute resolution process costs the Government some £120 million a year.

Under the order, a single judge will replace a full panel of three tribunal members, which includes lay members. It represents part of the shift towards the more flexible system that we supported during the passage of the Employment Act 1998. It is also hoped that the removal of two extra panel members will help to introduce some consistency into proceedings, particularly in the cases that are heard by professional employment judges sitting alone. Indeed, typically, holiday pay disputes are fairly straightforward, and a full panel would normally add little to the outcome.

However, I have looked at a few of the replies to the consultation, and I would like the Government to provide clarification on a couple of matters. First, some holiday pay cases are complex. For instance, they could include the determination of an employee or worker’s status. In such cases, would it be beneficial to have the option for a hearing to be in front of a panel? I think the Minister said that that would be possible. If so, how would such a decision be taken?

The second concern is that the valuable input of lay members may be lost in certain cases. Does the order risk divorcing the process from everyday practice? In other words, could having one judge sitting alone make the process more rather than less technical, as could happen with lay members?

Lorely Burt (Solihull) (LD): I will not delay colleagues unduly this afternoon. I find very little to argue with in the order, which seems to be a straightforward and reasonable piece of secondary legislation.

Like the hon. Member for Huntingdon, I was concerned whether it would always be appropriate for a single judge to hear a claim on pay. However, I have checked, and my understanding is that before a tribunal sits, a decision will be made on whether it is appropriate for a full tribunal or single judge to hear the case.

My questions concern who makes the initial decision. Does the judge make the decision? Does a separate tribunal judge assess the complexity of the case and make a decision on whether it is appropriate for a single judge or a judge with two lay members to hear it? What happens if a case turns out to have a greater degree of complexity than was originally thought when it commenced? Would it be possible for lay members to be convened on another occasion to ensure that the case was given proper and due consideration?

I certainly do not wish unnecessarily to tie up the valuable time of lay members when a single judge could make a straightforward decision. If the Minister answers those questions, I will be happy to support the measure.

Kate Hoey (Vauxhall) (Lab): I should like the Minister to clarify a couple of things. The explanatory memorandum on the measure is confusing. Paragraph 5 states:

but paragraph 9.1 states that

Will the Minister clarify whether the measure covers Northern Ireland?

Mr. McFadden: The hon. Members for Huntingdon and for Solihull essentially asked about the safeguards. Let me clarify—perhaps I was not clear in my opening remarks—how the measure will work.

If a case is complex—it might involve holiday pay and other jurisdictions—the judge can decide to hear it in front of the full tribunal, with lay members. There is also a safeguard built in because the judge must take account of the views of the parties. They also have a say whether a full tribunal is necessary. I do not believe that the order will mean that cases or the process will be divorced from reality. We are essentially discussing matters of fact and not matters of legal interpretation.

The hon. Lady asked what happens if a case is more complex than it first appeared. In such cases, as I said, it would be open to the judge to decide that the case should be heard by a full tribunal and not by him sitting alone.

On the question asked by my hon. Friend the Member for Vauxhall, the order does not cover Northern Ireland, but we are working closely with Northern Ireland officials on such matters. On that basis, I commend the order to the Committee.

Kate Hoey: Does that mean that the guidance in paragraph 9.1 is wrong?

Mr. McFadden: If one takes the view that officials in Northern Ireland might wish to follow practice, it might not be wrong, because the order could have an influence throughout the United Kingdom. However, the strict legal coverage of the order is Great Britain, not the United Kingdom.

The Chairman: On the basis that the purpose of the order is to make things briefer, the Committee has obviously taken the issue to heart.