The
Committee consisted of the following
Members:
Allen,
Mr. Graham
(Nottingham, North)
(Lab)
Beckett,
Margaret
(Derby, South)
(Lab)
Bottomley,
Peter
(Worthing, West)
(Con)
Brown,
Lyn
(West Ham) (Lab)
Burt,
Lorely
(Solihull)
(LD)
Djanogly,
Mr. Jonathan
(Huntingdon)
(Con)
Heald,
Mr. Oliver
(North-East Hertfordshire)
(Con)
Jenkins,
Mr. Brian
(Tamworth)
(Lab)
McFadden,
Mr. Pat
(Minister for Business, Innovation and
Skills)
Moffatt,
Laura
(Crawley)
(Lab)
Mullin,
Mr. Chris
(Sunderland, South)
(Lab)
Thurso,
John
(Caithness, Sutherland and Easter Ross)
(LD)
Walker,
Mr. Charles
(Broxbourne)
(Con)
Wicks,
Malcolm
(Croydon, North)
(Lab)
Wright,
Jeremy
(Rugby and Kenilworth)
(Con)
Wyatt,
Derek
(Sittingbourne and Sheppey)
(Lab)
Mick Hillyard, Committee
Clerk
attended the
Committee
Third
Delegated Legislation
Committee
Monday
8 February
2010
[Jim
Sheridan in the
Chair]
Draft
Employment Relations Act 1999 (Blacklists) Regulations
2010
4.30
pm
The
Minister for Business, Innovation and Skills (Mr. Pat
McFadden): I beg to
move,
That
the Committee has considered the draft Employment Relations Act 1999
(Blacklists) Regulations
2010.
It
is a pleasure to serve under your chairmanship, Mr.
Sheridan.
As
the title of the measure implies, the roots of this issue go back many
years. The Employment Relations Act 1999 conferred on Ministers powers
to introduce regulations banning the blacklisting of trade unionists
and the denial of employment or career advancement by virtue of trade
union
membership.
I
am sure that we all agree that freedom of association is an important
part of any free economy. Workers can choose to join, or not to join, a
trade union, and if they become active within a union, they should not
be denied employment on that basis. The powers in the 1999 Act were
enabling. Regulations were not introduced at that time because it was
not believed that blacklisting was taking place, although it had
occurred in the past. When the Act was reviewed in 2003, draft
regulations were drawn up, but they were not introduced because there
was still no strong evidence that blacklisting was taking place.
Indeed, few, if any, of the respondents to the consultation on the
draft 2003 regulations argued that blacklisting was taking place. The
Government have therefore not rushed to judgment or to legislate on the
issue without basing our decision on
evidence.
The
situation changed last year when an investigation by the Information
Commissioner uncovered evidence that a large-scale and covert vetting
system was operating in the construction sector through an organisation
called The Consulting Association. My hon. Friend the Member for
Barnsley, West and Penistone (Mr. Clapham) secured an
Adjournment debate on 23 March last year in which he highlighted the
serious implications of those revelations. In my contribution to that
debate, I told the House that the Government would act if it was proved
that TCAs vetting system involved the blacklisting of trade
unionists.
The
subsequent investigation proved that TCA was indeed involved in the
blacklisting of trade unionists. It held details of some 3,300
blacklisted persons, and during its lifetime it managed a secret
vetting system for 40 construction companies. The TCAs sharp
practice had prevented union members from finding gainful employment
over many years. The commissioner successfully prosecuted TCA for
breaching data protection law. Its proprietor, Mr. Ian Kerr,
was fined £5,000, and 15 enforcement notices were issued against
TCA and some of its user construction companies to stop the collection
and use of personal data for vetting purposes.
The organisation has since been closed down. That episode showed that
blacklisting was taking place and that it was time for the Government
to act, not only with a view to the past, but to ensure that the
practice was not repeated elsewhere, and that is why we are introducing
these
regulations.
I
will now explain the draft regulations in greater detail. They are
being made under section 3 of the Employment Relations Act 1999, which
provides a power to introduce regulations to prohibit the blacklisting
of trade unionists. In the light of the TCA revelations, we returned to
the initial draft regulations of 2003. Indeed, some voices called for
us simply to implement what had been drawn up at that time. It became
clear to the Government, however, that the 2003 regulations would not
have covered a situation such as the TCA case, where the list had been
operated not by the employer or prospective employer, but by a third
party acting on behalf of a group of employers. We therefore ran a
further consultation last summer to ensure that our approach adequately
dealt with the type of blacklisting undertaken by TCA. As a result, the
draft regulations that we are considering have been significantly
amended.
Mr.
Oliver Heald (North-East Hertfordshire) (Con): Of course
nobody would condone the blacklisting of someone taking part in lawful
trade union activities. However, what would be the position for someone
who was regularly leading wildcat strikes or not acting in accordance
with procedure or the unions views?
Mr.
McFadden: I think that the hon. Gentleman will find that
trade union activity does not include the illegal activity that he
describes.
Regulation 3
gives the definition of a blacklista prohibited
listand sets out the general prohibition against the
compilation, supply, sale and use of a prohibited list. In effect, this
general prohibition provides a right for trade unionists not to be
blacklisted. The wording is based closely on the corresponding
provisions within section 3 of the 1999 Act. The definition of a
blacklist is tight. To qualify, a list must be compiled with a view to
discriminating on grounds of trade union membership and activities. Of
course, many lists, such as those for normal employment and security
vetting, are not compiled for this purpose, and so, quite rightly, will
be unaffected.
We recognise
that there will be occasions when it could be lawful to have exceptions
to the general prohibition found in regulation 3, and these are set out
in regulation 4. There is an exception for organisations
such as the Royal Mail or other postal providers who might unknowingly
deliver prohibited lists because they are simply the carriers of
information that they do not examine. The exceptions also cover the
work of whistleblowers or journalists who, in the public interest, want
to draw attention to blacklistswe should remember that
investigative journalism played a key role in uncovering the work of
TCA. Regulation 4 also includes an exception for lawyers who advise
clients on their compliance with the regulations.
Regulations 5
to 12 go on to provide for rights for blacklisted individuals,
including non-trade unionists on the lists, to complain to the
employment tribunal. That will happen when they have been refused
employment, dismissed or subjected to some other employment detriment
for a reason related to a prohibited list. In addition, the employer
must have either contravened the general prohibition, or relied on
information provided by somebody who had contravened the general
prohibition. In other words, the regulations capture the direct use of
prohibited lists as well as their indirect use through intermediaries.
Intermediaries do not have to be based in this country, so an employer
with employees in the UK cannot simply circumvent the regulations by
accessing blacklists compiled or held by someone from outside the
UK.
The new
jurisdictions for the employment tribunal are based closely on existing
rules regarding discrimination on grounds of trade union membership or
activities. This is intentional. We want to build on arrangements that
are well understood and that operate effectively. However, the draft
regulations do have some distinctive features.
First, the
regulations recognise the special difficulties created by the covert
nature of blacklisting. For example, the existence of a blacklist might
not come to light until years after a detriment was suffered. We have
therefore given greater scope for the tribunal to extend the normal
time limit of three months for making complaints when it is
just and equitable to do so. The secretive nature of
blacklisting also makes it difficult for complainants to prove their
case, so the regulations put the onus on respondents to prove they did
not act unlawfully, if there are facts that show that, in the absence
of any other explanation, they breached the general
prohibition.
Secondly, the
regulations recognise that victims of blacklisting should be entitled
to reasonable compensation. Blacklisting represents discrimination on
grounds of trade union membership. The cost to those subject to the
practice can run into many thousands of pounds because of lack of
employment or lack of career advancement. The draft regulations
therefore establish in each tribunal jurisdiction a minimum
compensation award of £5,000. That minimum would apply in most
cases, but the tribunal has discretion to reduce the minimum when the
previous conduct of complainantsperhaps unrelated to trade
union membership, such as violent conduct in the workplacemakes
it just and equitable to do so.
Thirdly, the
regulations recognise that some, including trade unions and the
self-employed, will be unable to make complaints to the employment
tribunal. Regulation 13 therefore allows these other organisations or
persons to complain to a county court, or to the Court of Session in
Scotland, about a breach of the general prohibition. Under the court
option, they will be able to sue for damages for any loss they suffered
as a consequence of a
blacklist.
Peter
Bottomley (Worthing, West) (Con): Where is the exemption
to allow whatever the Department for Education and Employment is now
called to have a list of trained teachers who cannot be
employed?
Mr.
McFadden: I am not sure what the hon. Gentleman is
referring
to.
Peter
Bottomley: The education Department used to have a
listtitle X or
something
Margaret
Beckett (Derby, South) (Lab): List
99.
Peter
Bottomley: I am grateful to the right hon. Lady. That was
a list of people who could not be employed. Is there not an exemption
in the order for that kind of
thing?
Mr.
McFadden: I think that the hon. Gentleman might be
referring to legitimate lists that are held for the purpose of vetting,
security and so on. They would be unaffected by the regulations,
because regulation 3 makes it clear that the lists covered are based on
trade union membership, not wider security or vetting
purposes.
Although
blacklisting is, by its nature, covert, and it is therefore difficult
to say with absolute accuracy how extensive it is, we believe that it
is rare and that the vast majority of employers do not engage in the
activity and would not support its use by others. As has just been
mentioned, employers often seek to vet future employees on the basis of
fair criteria that are openly applied. The regulations do not interfere
with such fair practices and there is nothing that employers need fear
from the draft
regulations.
We
should unite in condemning the kind of blacklisting that the
regulations prohibit and in standing up for the principle of free
choice for employees about whether they wish to join a union. We should
also go further and defend the principle that exercising that choice
should not result in the denial of employment or someones
career being held back.
I hope that
we shall not hear the hon. Member for Huntingdon making his familiar
condemnations that any legislation that benefits people at work
represents Labour legislating to appease trade union paymasters. The
regulations are intended to uphold the principle of free choice at
work, and that is something we should all
support.
The
draft regulations have now been through two rounds of consultation.
They are balanced, reasonable and robust, and they complement existing
protections in this area that are found in trade union and data
protection law. As our impact assessment shows, the compliance costs
for businesses, trade unions and others are very low. If the
regulations are approved by Parliament, they will send out a strong
signal that we want to banish blacklisting from our labour market and
operate modern industrial relations that consign such activity to the
past.
4.43
pm
Mr.
Jonathan Djanogly (Huntingdon) (Con): The right hon.
Gentleman tried to pre-empt my comments. Perhaps that is a sign of our
having sparred for many
years.
Peter
Bottomley: My hon. Friend and the Minister will be
changing places
soon.
I want to
make it plain from the outset that the Conservative party is absolutely
opposed to discrimination against individuals on account of their
membership of a trade union. That includes, but is not limited to,
blacklisting. We support the existing law that makes it
illegal.
The actions of
The Consulting Association, which precipitated the latest review, and
brought us here today, were clearly unacceptable. Conversely, trade
union membership is not some kind of secret society that people should
want to hide. Assuming that details of relevant individuals are
properly registered by organisations under the Data Protection Act
1998, and that any questions relating to information held are duly and
properly answered, we do not see why companies and other organisations
should not be permitted to produce and maintain such details for valid
uses.
Once we go
beyond the principle and take a closer look at the regulations, it
becomes apparent that they do not quite do what it says on the box. For
one thing, despite looking over the issue since the primary
legislationthe Employment Relations Act 1999was passed
some 11 years ago, the Government have come up with just one example of
blacklisting in their explanatory memorandum and impact assessment, to
justify the order. Even that example, we believe, does not bear much
scrutiny.
Looking at
the facts, the Information Commissioner found that by keeping around
3,300 personnel files and running a vetting service for construction
companies on covert lines, TCA had clearly breached its DPA obligations
and was accordingly prosecuted. Will the Minister please explain why
the DPA was considered not to have worked in that situation, given that
the findings of the Information Commissioner were against TCA, which
was ultimately closed down? That being the case, why is the appropriate
remedy not to strengthen the DPA, if that is necessary, rather than
pursuing this order?
The truth is
that blacklists, as the Minister implied, are not a widespread problem
in industry. The Government are seeking to justify this legislation on
the basis of a single, isolated case. Indeed, under section 137 of the
Trade Union and Labour Relations (Consolidation) Act 1992, it was a
Conservative Government who made it unlawful for employers to
discriminate against individuals due to trade union membership. As I
have mentioned, the provisions of the DPA serve as an effective
safeguard against covert lists of unionists.
It is worth
noting that the individuals who suffered as a result of TCAs
activities are able, under the DPA, to seek compensation for damage and
distress. The wide publicity the case received is likely to have acted
as a considerable disincentive to any employer considering similar
action. We believe that the Government are once more too quick to dive
down the legislative route, rather than finding a practical solution.
The CBI has said that we need evidence-based, proportionate employment
regulation, not knee-jerk reactions to one-off events, and that this
would be better dealt with through clear guidance.
Even with 15
pages of regulations, the provisions are so complicated that their
implementation will still require guidance. Will the Minister confirm
that that is now going to be issued? However, it appears that the
Government insist on pressing on with the regulations regardless. On
that basis, we have a number of key concerns about their content.
First, the Government need to justify their compensation figures in
regulation 8. In instances of a breach under any of the regulations,
there is now a minimum award of £5,000 and a maximum of
£65,300.
I should be grateful if the Minister would explain how these amounts
have been calculated and to what extent they differ from DPA penalties.
It seems that an employer might be in breach of these regulations, even
if the employees union details have been validly and openly
registered under the DPA. It would appear that union membership
involves extra rights that other workers do not enjoy. If non-unionised
workers are discriminated against for, say, being Communist or even,
dare I say, Conservative, presumably they had better be a unionist;
otherwise they will not be helped.
The
surprisingly large minimum award is of particular concern regarding the
concept of detriment in regulation 9. The term
detriment is a grey area, as it is not defined by the
regulations. That could be unfair to employers who would be unable to
determine whether they have breached their obligations under regulation
9. We have been presented with 15 pages of regulations that could be
interpreted in a variety of waysgood for lawyers, perhaps, but
not for reducing red tape. Indeed, it will often be beneficial for
employees if their employers have lists of trade union members. For
example, in the manufacturing industry the employer would generally
negotiate changes to contractual terms and pay increases with
representatives from the relevant trade union. However, not all workers
in a factory would be part of that trade union. It is therefore useful
for the employer to know which employees it will need to negotiate with
individually and which will fall under the union.
Will the
Minister please advise how these regulations tie in with the need to
verify union membership in the event of strike ballots? More generally,
will he please explain why these regulations apply to an
employers own employees at all? A problem could come up when an
employer keeps a list, perfectly lawfully, and an employee who is a
trade union member becomes disgruntled at having been passed over for
promotion or a pay rise. The employee may well have been overlooked for
completely valid reasons. However, under these regulations, it could be
difficult for the employer to prove that its records, citing the
employee as a trade union member, had not affected its decision. At
what point do the records become an illegal list? That is not clear.
Therefore, in order to reassure employers on this issue, greater
clarity is vital about the types of lists that may be maintained and,
importantly, in what circumstances those lists can be referred to.
Guidance will be
needed.
As
they stand, the regulations are disproportionately burdensome on
business. This is particularly the case with regulation 12 concerning
unfair dismissal. The automatic transformation of a dismissal to an
unfair dismissal under the regulations will doubtless create a raft of
new employment claims to tribunals, possibly loading employers with yet
more red tape and bureaucracy. This is an ill-thought-out piece of
legislation prompted, no doubt, more by Labours imminent need
for campaign funds than by any proven need or common sense. We will not
oppose it today, but we will review it once we are in
government.
4.51
pm
Lorely
Burt (Solihull) (LD): The Liberal Democrats would clearly
support any legislation that sought to prevent discrimination on
grounds of trade union membership or activities. It is obviously unfair
and, if legislation is required, we would be extremely pleased to
back it. My understanding is that the regulations enable individuals to
go to a tribunal when they have been dismissed, when they have been
refused employment or when they have been subject to a detriment. That
would normally constitute something like prevention of career
advancement. Will7 the Minister elaborate on that a little? Would an
employee need to resign and claim constructive dismissal or could he or
she go straight to a
tribunal?
The
notes say that this will mostly affect businesses of 250 and more
employees. The implication is that it will not constitute a burden for
small businessesI welcome thatbut could the Minister
explain why small businesses will not be affected in any proportionate
way by this legislation? The costs of implementation will hardly be a
large cost to business. It is just over £40 per business and
£6 per employment agency, if you do the math, as they say. I am
concerned about the justification for introducing this measure at this
time.
4.53
pm
Sitting
suspended for a Division in the
House.
5.7
pm
On
resuming