Enterprise and Regulatory Reform Bill

ERR 39

PCS briefing 11 July 2012

Enterprise and Regulatory Reform Bill


1. The Public and Commercial Services Union (PCS) represents over 2 7 0,000 members working in government departments, agencies, public bodies and on privatised government contracts. This includes staff at the Equality and Human Rights Commission, Office of Fair Trading, Competition Commission, Ministry of Justice and ACAS.

2. Our members will be directly impacted by this bill as they are responsible for developing and implementing the policies covered in it. As a result, not only will the bill affect their roles, but also cut their jobs. Elements of the bill would also affect our members’ rights in the workplace.


3. We welcome the opportunity to submit written evidence to the Bill Committee and would be happy to supplement this with further written evidence.

4. This submission covers Clauses 7-9: Early conciliation; Clause 10: Procedures for tribunal cases; Clause 12: Unfair dismissal; Clause 13: Financial penalties; Clauses 18-20 and 21-46: Competition reform; Clause 51: Reduction of legislative burden and impact on the EHRC; Clause 58: wide-ranging powers given to the Secretary of State; and what we consider to be an inadequate impact assessment.

Clauses 7 – 9: Early conciliation

5. The Public Bodies Review abolished the Civil Service Appeals Board (CSAB) against advice from PCS and experts in the field. The CSAB provided a less costly, less formal and less administratively burdensome alternative to ETs, particularly in respect of unfair dismissals. At a time of ongoing civil service dismissals and the government wanting to implement efficiency savings, the decision was short-sighted and counter-productive. The CSAB stopped taking new dismissals cases that occurred after 30 November 2010 and the Board ceased to deal with dismissals on 31 December 2011.


6. We understand that in the short term the government’s aim in introducing early conciliation is to reduce backlogs in the system. However, we believe the long term effect will be to reduce access to justice, thereby cutting the number of tribunals and cutting the jobs of our members. PCS therefore has several concerns about these clauses.


7. On a practical level, we question how the proposed system will work with cases where the only need to lodge a claim in the Employment Tribunal (ET) is to protect the position of an employee going through internal grievance. Many of our members’ employers seem incapable of resolving internal grievances within much less than 6 – 9 months. We recognise that complex cases take longer, but we are concerned that there are many cases that are subject to delays for no good reason. At present, employees have to lodge a claim with the ET in order to protect their right to go to ET if the internal process does not resolve the grievance to their satisfaction.


8. Employer involvement in the proposed process is a must. Yet we see employers refusing to deal with grievances appropriately and fairly, refusing to talk about settlement through ACAS, either at all or until the very last minute. We also see threatening letters relating to costs sent to claimants. The approach is designed to try to frighten off or frustrate potential claimants. Very few invitations to participate in judicial mediation are taken up by our members’ employers. Therefore we firmly believe that employers will need to be incentivised to participate.


9. In future, there is likely to be an additional hurdle - a fee or a series of fees that will have to be paid in order to progress an ET application. Additionally, the level of costs that can be awarded by ETs has recently been increased.


10. All this gives employers no reason to engage meaningfully in such a scheme – we believe they would rather frustrate the process and force the employee to step into the uncertain and potentially costly arena of the ET.


11. PCS believes that there needs to be a limit - or even a ban - on costs applications from employers who have failed to engage meaningfully in the pre-proceedings conciliation, if there is to be any worth to it at all.


12. We strongly believe the extension to time limits is insufficient. It can take almost three months for someone to find out their legal rights (most employees do not know these), write the necessary documents and seek assistance and advice. If the process is going to be fair, the overall time limits need to be increased, perhaps to six months.


Clauses 10 -11: Procedure for deciding tribunal cases.


13. Clarity is needed on the input and status of the decision of legal officers in a tribunal case, as well as the process of appeal following a decision made by a legal officer.


14. PCS is more comfortable with an employment judge sitting alone in an EAT hearing but would want to see the full composition of the ET retained to ensure that the worker’s case is comprehensively heard.


Clause 12: New powers to limit or increase compensation awards in unfair dismissal cases


15. The cap on the compensatory award for unfair dismissal is already, to an extent, unfair, as it compensates those with poor terms and conditions better than it does those with moderate terms. We use the term ‘moderate’ carefully – many of our members find that issues such as a loss of pension mean that they end up having compensation restricted by the cap (currently £72, 300).


16. The less an employer has to pay to unfairly dismiss a worker, the more likely they are to do so. When it is cheaper for an employer to get rid of an employee unfairly than pay them what is due in redundancy, there is no protection against unfair dismissal.


Clause 13: Financial penalties


17. PCS agrees with the general idea, but we believe that the worker should get the money (as the party that has suffered), rather than the government, and we would suggest the limit is raised beyond £5,000.


18. We think employers should face this penalty regime for any breach of employment rights, not just those with ‘aggravating factors’ (however this term is defined). Indeed, we ask that the government defines what it means by ‘aggravating factors’ as a matter of urgency.


19. There could also be an issue of compliance with this proposal for some employers. Those within the private sector, particularly smaller organisations, might see financial penalties as an incentive to comply with employment laws. However for large wealthy employers and those, such as the public sector, where the money paid will not impact profit lines, the incentive is less clear.


Clause 18-19: Closure of the Competition Commission and Office of Fair Trading and setting up of the Competition and Markets Authority (CMA)


20. PCS represents members in both the OFT and the CC. We believe that the proposals in the bill represent a damaging cut dressed up as a reform. The cut jeopardises the important work undertaken by both organisations and the significant savings they make for consumers. The CC and OFT between them create an estimated £465 million saving for British consumers and a further £127 million for consumers through merger control.


21. According to a recent National Audit Office report the return on investment for spending on consumer protection is 6:1 and PCS believes even current levels of spending on consumer protection are not adequate when compared to consumer detriment.


Office of Fair Trading (OFT)


22. The OFT has responsibility for consumer issues at a national level. It takes up important cases such as their current investigation into airline price fixing and previous work on bank charges that lead to changes in practice. +This work isn’t done anywhere else, but changes in the bill would result in money being refocused on local trading standards and merging functions in a way that will not leave clear lines of responsibility for work areas.


23. With the economy in its current state there is a risk that consumers seeking better deals will suffer at the hands of unscrupulous traders. As a single consumer body working at a national level, the OFT is best placed to address this issue as well as modern matters such as consumer protection related to internet transactions.


Competition Commission (CC)


24. The CC is a high performing and efficient organisation that often undertakes complex cases requiring sufficient time and resources to reach fair and considered judgments.  The risk with this cost cutting and short sighted merger is that there is no guarantee that this high level of performance will continue with a different management structure. There are also questions about whether sufficient resources will be made available for it to meet the demands put upon it.


25. Recent events with BSykB highlight the importance of having a properly resourced CC that has public confidence as an independent arbiter in a sometimes politically sensitive environment.


Clause 20: Competition and Market Authority and TUPE


26. Both the OFT and CC have clearly defined governance arrangements and we would be keen to ensure that any new body has in its founding principles clearly defined governance arrangements that include regular reporting to parliament.


27. PCS is gravely concerned about closing the OFT and CC and merging them into a new body because as the bill stands, it does not offer enough protection for the workers being transferred into the new body. It is important that if this change is made, the bill must clearly stipulate that Transfer of Understandings Protection of Employment (TUPE) applies to the staff that will be transferred. Importantly, decisions need to be taken in time for unions to be adequately consulted and staff to make decisions – for some functions, the potential transfer date is now less than nine months away. This is unacceptable.


28. TUPE legislation is the protection of rights of staff employed when they move from one organisation to another. This applies in transfers between private sector organisations and from public sector organisations to private and charity organisations, but it is not guaranteed to cover transfers within the public sector unless specified by legislation. For public transfers the Cabinet Office Statement of Protocols recommends that TUPE be on the face of the bill.


29. As it stands the bill refers to ‘TUPE like’ arrangements but does not stipulate full TUPE rights. This must be rectified, otherwise workers for both organisations are at risk of losing rights and entitlements built up over years, in a way those moved into the private sector would not. This is especially true for pension rights, and even more so where work is transferring to non-civil service or public sector bodies.


Clause 51: Equality and Human Rights Commission (EHRC)


30. Cutting the powers and duties of the EHRC by amending sections of the Equality Act 2006, under which it was established, does not reduce any 'legislative burden'. Instead it is a retrograde move that removes the foundation stone of the only independent equality and human rights body in Britain. The clause undermines the effectiveness and independence of the EHRC and its status as a UN 'A' rated national human rights institution is jeopardised.


31. The changes apply to sections of the Equality Act that received cross party support when they were passed in 2006. PCS opposes the government’s proposals to reform the EHRC’s statutory remit, contract out its helpline, stop its grants programme (which funds support services to victims of discrimination), and slash its budget by 62% by 2015.


32. By tabling clause 51, the government is ignoring the results of its own consultation ‘Building a fairer Britain: Reform of the Equality and Human Rights Commission’, which highlighted overwhelming opposition from the public and expert organisations, to the proposed changes.


Repealing section 3 - general equality duty


33. The general duty works as a purposive clause that provides a framework for the EHRC to exercise its powers. Removal of this duty will result in uncertainty and inconsistencies and destabalise general equality principles.


34. The ratio of respondents to the government consultation that were against the repeal of section 3 was nearly 6:1.


35. PCS agrees with the recent report from the European Commission on national equality bodies when it states that: ‘In order to fully realise their potential in promoting equal treatment for all, equality bodies should develop a vision of their role within the administrative culture and society.’ [1]


36. At a Justice conference in June, Sir Bob Hepple QC challenged the government assertion in their consultation response that Section 3 ‘has no specific legal function’ and ‘creates unrealistic expectations’ about what the EHRC can achieve’ and the Secretary of State in saying that to repeal it is simply ‘legislative tidying up’ and removal of ‘gold-plating’ (Hansard 11 June 2012,cols 75,76). ‘This overlooks the functions of section 3 in providing a link between the aims of promoting equality and human rights and good relations between groups. Its repeal will deprive those applying the law of interpretative principles and will leave equality law rudderless’.


Repealing duties in sections 10 and 19 to promote good relations between groups


37. The EHRC is Britain’s specialist equality and diversity institution and it is to this body that third parties look for examples. The good relations duty is a very important function, particularly for organisations concerned with race, religion and belief, as well as hate crimes and violence against women.


38. The ratio of respondents to the government consultation that opposed this proposal was 7:1.


39. To understand the importance of the good relations duty, it is necessary to look at the work that the former Commission for Racial Equality (CRE) undertook when exercising it. The CRE was the only commission in Britain that had this duty.


40. The CRE used the duty to help set standards for public authorities, for example, to tackle extremism. This included practical guidance for local councils on elections when the far right started to achieve success at the ballot box in the 2000s. It was used again after the civil unrest in 2001 in the northern regions to try to break down the parallel societies and lives experienced by Asian and white communities who lived side by side but rarely integrated at any level.


41. The duty is relevant to a variety of situations. For example, addressing harassment and violence outside the workplace, tackling disability hate crime (into which the EHRC recently had an inquiry), improving civic participation and combating social exclusion and deprivation.


42. It is assumed that organisations such as the Runnymede Trust or Fawcett Society will take over the good relations duty, however they are dependent on grants. With the EHRC’s grant giving function ended, it is questionable how the organisations will have the capacity for such work.


Repealing section 12 monitoring frequency


43. At a time of increasing inequality, reducing the frequency with which the EHRC monitors progress against identified equality and human rights indicators from every three years to every five years, makes no sense. The point was effectively made by conservative MPs, particularly Henry Bellingham MP (then conservative Whip), during debate on the then Equality Bill when he pointed out that reporting every three years was effectively just once in the life time of a parliament. [1]


44. The ratio of respondents to the government consultation that opposed this proposal was 5:1


45. PCS opposes the move to repeal section 12 as monitoring at least every three years is needed to keep track of changes so that any necessary action can be taken in a timely fashion. The current triennial review also makes it easier to identify relationships between progress on equality and economic trends and legislative changes.


Repealing section 27 powers to provide conciliation services to resolve disputes involving alleged discrimination in the provision of goods and services.


46. Conciliation is a less expensive way of resolving disputes than going through the court system. The EHRC has experience and expertise in discrimination rights, for example, reasonable adjustments and disability access. At a time of stretched resources and increasing problems of 'advice deserts', no other organisation is so well placed to provide this service.


47. The ratio of respondents to the government consultation that were against the repeal of this section was more than 3:1.


48. The withdrawal of a conciliation service from the EHRC would have a disproportionate impact on disabled people. This is because the conciliation service is primarily used in relation to the provision of goods & services, education cases and air regulations, all of which are areas where disabled people are more likely to face discrimination.


49. Outcomes that can be achieved through conciliation are wider than those achieved through the courts and it can provide a means of bringing about systematic change for minimum cost.


50. The EHRC has not publicised its helpline and as a result there has been a drop in referrals to the conciliation service. However the Disability Rights Commission (DRC) utilised the conciliation service to a greater extent because they widely advertised their helpline. The EHRC’s conciliation service is valuable and while other organisations carry out the function, they do not collect the evidence with a view to developing and informing national policy. The EHRC does and must continue to do this for the future.


Clause 58: Powers to the Secretary of State


51. The government tried to introduce a 'Henry VIII' clause to the Public Bodies Act 2011 and has again tabled a clause in the ERR Bill that would give ministers, particularly the Secretary of State, wide-ranging powers to amend or repeal primary legislation without further parliamentary scrutiny. The constitutionality of such sweeping powers rightly caused consternation in both Houses and was condemned by the Lord Chief Justice in 2010.


52. PCS believes that there has been an inadequate impact assessment of this bill given the clause that would repeal fundamental parts of equality legislation. We question the statement made in the impact assessment of the bill that there would be ‘no major impact’ on our country’s diverse communities.


For more information please contact Natasha Burgess, PCS Campaigns Officer on 020 7801 2820 or natasha@pcs.org.uk

[1] Study on Equality Bodies set up under Directives 2000/43/EC, 2004/113/EC and 2006/54/EC published October 2007

[1] http://www.publications.parliament.uk/pa/cm200506/cmhansrd/vo051121/debtext/51121-20.htm


Prepared 18th July 2012