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Workers' Representatives : Designation Machinery

7.15 p.m.

Lord McCarthy rose to ask Her Majesty's Government whether they will take steps to devise satisfactory machinery for the designation of workers' representatives with whom employers are required to consult in the event of collective redundancies and transfers of undertakings.

The noble Lord said: My Lords, the Question arises out of the Government's silence for the past nine months since the decision of the European Court of Justice in June 1994. The ECJ decided that the Government were in breach of two directives: the directive on collective redundancy and the directive on transfer of undertakings.

In fact, the ECJ decided that we were in breach of those two directives in a whole range of ways. The Government accepted that that was the case and took steps, such as they were, to conform with those two directives 12 months or so before the ECJ decided that they were in breach of them. Therefore for the most part we had those matters put into the 1993 Act. But there was one decision of the ECJ which the Government failed to accept. Nine months have gone by and we have not heard from the Government whether they accept the decision that employers cannot evade the effect of those directives merely by failing to recognise, or derecognising, trade unions.

That is what the ECJ said. It said that the effect of the present regulations was that employers could avoid having any worker representatives to carry out consultation and representation in cases of redundancy and transfer of undertakings merely by not recognising trade unions.

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I asked the noble Lord, Lord Inglewood, on 9th February, after many months had gone by, whether the Government had any thoughts on this matter. The noble Lord said:

    "The Government are presently considering what action needs to be taken".—[Official Report, 9/2/95; col. 301.]

Naturally enough he was asked subsequently to elaborate. He said:

    "The important point about the decisions in the two judgments is that it is for the employees to determine who their representatives will be".

That was a most interesting response, because it suggested to me at the time that the Government had, in effect, accepted the judgment, because the judgment says that it is for the employees to determine who their representatives will be. The employer cannot decide. Then, unfortunately, the noble Lord seemed a bit less sure, because in answer to further questions he went on to say:

    "As the noble Lord will know, the judgments and the law in this area are far from straightforward. We are anxious to make sure that we consider the matter properly. Subsequently we shall discuss our ideas before bringing proposals forward."

At that point the noble Earl, Lord Russell, said:

    "My Lords, does the Minister agree that the judgments have the force of law because in the European Communities Act 1972 Parliament, in the exercise of its sovereignty, so decided? Will he further agree that the only question can be about how and not whether we implement them?"

I thought the noble Lord, Lord Inglewood, was helpful. He said:

    "My Lords, the noble Earl, Lord Russell, is absolutely correct in his analysis of the constitutional position. I can confirm that he is correct that it is not a matter of whether but how these matters are dealt with."—[col. 302.]

So we asked the noble Lord how he had taken nine months as it was a matter only of how and not whether. We are still asking him. Therefore, I ask this Question. Before this Question could appear upon the Order Paper, I was contacted by the noble Earl who asked me whether I would like to withdraw the Question tonight because the Government were just about to give birth, as I understood it—they were going to issue a statement about this matter on Red Nose Day. I had to think carefully. My difficulty was that I knew that the Government rarely issued statements that had not been leaked to the Guardian. This statement had not been leaked to the Guardian and I thought that perhaps it would not be published. I thought that, at any rate, if the statement were published it would be interesting for us to debate it tonight because it might not be as we would have wished it. I kept the Question on the Order Paper, and on Red Nose Day the Minister wrote to me informing me that the Government were not yet in a position to issue their legislative proposal. Therefore, I understand that the Government have a legislative proposal and I hope that the Minister will confirm that. I understand that, after nine months, they will not say, "Talk among yourselves and in another nine months we might tell you what we think", but that they are going to issue a legislative proposal.

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Therefore, I wish to ask the Minister several questions. First, when can we have the legislative proposal? Secondly, will it contain a proposal and not state merely, "Talk among yourselves. Get on with it. We shall come back in 1996."? The Minister will not tell me the contents of the proposal and I do not expect him to do that. However, surely he can tell me whether it is based on the need to produce a designation beyond voluntary recognition. The ECJ stated that we cannot get away with the situation in which we do not designate the way in which the representatives are to be elected, appointed or whatever unless they are there because they are from recognised trade unions, which is voluntary recognition. Are we to face the fact that we cannot hide behind the argument that the laws and practices of this country forbid that kind of designation? I have tried hard to understand the arguments that the Government put to the ECJ. I believe that they have sought to argue three objections to accepting that logic. First, that once upon a time we all agreed to accept a single channel principle. In other analogous cases, such as health and safety legislation, that the Labour Government accepted the voluntary principle, or the single channel principle, or the principle that the only rights were trade union rights. My answer to that argument is that that was long ago and far away. Such cases arose at a time when a whole range of legislation encouraged the recognition of trade unions and when the regulations were not being used by employers as a mechanism for derecognition, which is now the case. Secondly, that is not what the ECJ now states. My third point is the EU has a range of ways of compelling us to accept the decisions of the European Court. In the period post-Maastricht, of which the Government were in favour, there are many ways in which that can be made extremely expensive for the Government. I raise in passing the dreadful example, from the point of view of the Government, of the Frankovitch case. That should make the Government think not a second time but a third and a fourth time if they believe that they can evade the consequences of an ECJ decision. I shall repeat the questions that I want the Government to answer. First, the Government must accept (must they not?) that in the near future it will be necessary to produce an acceptable policy which embodies the principles in the ECJ decision. I do not ask how they intend to do that; it is a matter for them. However, the policy must contain designation of the representatives beyond the area of recognised trade unions. Secondly, they must tell us when they are publishing the policy. Finally, why have the Government been so remiss in accepting this particular decision? Will the Minister tell the House what is the Government's real objection to representative provision of this kind? They cannot say that they are against trade unions, although they are, because it does not have to be trade unions; it has to be representation. What is it that the Government, or their employer friends, are afraid of in the directive? All that is involved is that the employees will be allowed freely and independently to choose their representatives. The employer must then inform them of his plans in respect

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of redundancy, transfers and takeovers. The representatives will discuss them, consider them and perhaps raise objections. The employer may have to find agreed ways of meeting their points of view. It is not compulsory arbitration nor the infringement of management rights and it will not cost money. We are not discussing minimum wage legislation; we are discussing consulting, talking, considering and trying to reach agreement. For a long time, most good employers have found that they can learn through such a process and that their employees can tell them how to act. What are the Government and employers afraid of? Why cannot the Minister tell me tonight that the Government accept the principle?

7.25 p.m.

Lord Wedderburn of Charlton: My Lords, my noble friend's timely Question prompts me to declare—although I am not sure that it is strictly necessary—that last year I was professionally instructed to advise on the judgments of the Court of Justice of 8th June 1994, from which this Question arises. Those instructions are now spent. Those judgments require the United Kingdom Government to observe their obligations under the directives of 1975 and 1977, as interpreted by the court, to guarantee consultation with workers' representatives in the event of transfers of undertakings and collective dismissals. The Government must take account of the fact that they appear to have been in breach for a long time and therefore risk a considerable number of actions under the Frankovitch doctrine, as the court has developed it. The court rejected the Government's argument, not surprisingly, that in Britain employers were not bound by the directives' obligations to consult where they refused to recognise a trade union for collective bargaining. In 1980 the same colour of government repealed the key procedure for obligatory recognition of appropriate trade unions which was introduced by the Labour Government of 1975. Of course, that factor means that there is no analogy for the position of governments before 1980 and afterwards. It should be put on record that the two directives are not, as some believe, an extravagant code of worker protection. It is no esoteric privilege that, before one loses one's job and family income, an employer should talk with one's representative about how that has occurred and whether anything should be done about it. In view of tonight's time constraints I shall not elaborate, but I say firmly that some of us believe that the protections in the directives are much too weak, in particular in terms of the sanction. No right is stronger than its sanction. Secondly, it is worth noting that the court made it clear that worker protection is only one part—some writers have it only a minor part—of the directives. The court stated that the directives are:

    "intended both to ensure comparable protection for workers' rights in the different Member States and to harmonize the costs which those protective rules entail for Community undertakings".

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Harmonisation of employers' costs in the integrated market is a central purpose of these directives. The task in Britain, as the court declared, is to take all appropriate measures to ensure that workers' representatives are designated for consultation and no longer allow an employer "to frustrate" the protection provided for workers. The Government's obligations in this matter have been manifest since 8th June 1994. I do not complain that they have not found the perfect scheme since that time, but to say nothing is really quite extraordinary. In this state of legislative dysphasia, they still cannot rescue from the dark recesses of their labour law unconscious even the dreams of the four-page letter which the Minister told us that we might receive, and never did receive, in the past week. If the Government are not ready this evening to let the whole cat out of the bag, perhaps I may put four questions to the Minister, of which I have given him notice, in relation to specific guarantees, because it is right that we should look to the future rather than re-analyse all the nice points from the past, albeit that they are many. The first matter is existing relationships. Surely it should be common ground that the new machinery for consultation must not damage existing good relationships between employers and their recognised trade unions or discourage further employers and unions to make such arrangements. Consultation with a union which is already a partner for relationships in that place of work should surely be a primary aim for strengthening and, in a way, achieving that part at least of the judgment which would cause management the fewest complexities. The second aspect is independence. Workers' representatives must be properly independent both of state control and of control by the employer. That is not a matter where house unions or staff associations which are not independent will do. In order to represent freely the interests of their constituency, there must be guaranteed independence. Certainly, if one looks at the debate in other member states where there has been perhaps rather stronger discussion of those points, if we are to have, as the judgment put it, something which is comparable to other member states, that is a not unimportant heading. Thirdly, whatever the selection procedures are to be, where workers are to select their representatives on ground where there had been none before perhaps, surely the procedures must be open to appropriate independent organisations of workers. If there are to be elections, for example, then an appropriate independent organisation of workers must have some right to participate—to nominate candidates perhaps, to communicate with the workforce—and not meet with a closed door from the employer. I appreciate that that may be difficult to draft and to get right, but this evening I am asking for agreement as to aspirations. Fourthly, there is the question of the continuity and resources of the workers' representatives. I do not say this to make any particular ideological point, but it is a matter of fact that where a trade union is carrying out that process, continuity and resources are not so difficult

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to find. But it may be that there are representatives who have a less secure place at a particular workplace. I submit that we must ensure that the arrangements provide sufficient continuity and resources. The directives envisage workers' representatives assimilating a great deal of information and making counter-proposals in the face of the employer's obligation:

    "to consult with a view to agreement".

The directives do not lay down bargaining but they lay down the need for a high level of consultation—to consult with a view to agreement. That is rather a new concept for our law and it has been discussed already in the High Court. In that process, the worker representatives must be given the opportunity, when there are redundancies, to comment on management's plans after it has sent its proposals to the competent public authority, as it is obliged to do. It would be quite inadequate to allow merely for workers to choose representatives only after redundancies have loomed up over the horizon, still less when they are actually declared. It would be at the choice of management. I do not criticise the management, but redundancies come over the horizon at the initiative of management. The representatives must have more resources and better continuity.

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