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Lord Cavendish of Furness: Before the Minister sits down, my noble friend said that she tabled the

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amendment to provide protection for an employer against unions jumping the gun. The noble Lord does not think that the amendment is necessary. Can he say that is because the employer does have protection? I would like clarification.

Lord McIntosh of Haringey: There are two separate sections of the law. One is the law on industrial action. The amendment is about industrial action, which is why the Public Bill Office advised the noble Baroness to table it within Section 1. The other area is statutory recognition. We shall deal with industrial action as a separate issue in the Bill. We have a whole section on that subject, including Schedule 5. It is better not to introduce, as the amendment appears to do, a restriction on industrial action as part of the process of recognition and collective bargaining.

Baroness Miller of Hendon: I shall seek to withdraw the amendment but I will think about it again. My noble friend Lord Cavendish repeated my comment about jumping the gun. The Minister referred to two separate sections of the law. While the CAC is considering the whole matter, is it appropriate for a strike to take place during that period of consultation?

Lord McIntosh of Haringey: There could be reasons for taking industrial action which have nothing to do with the recognition procedures. It could not be the case that while extensive negotiation about collective bargaining and recognition is taking place the workforce should be debarred from taking industrial action. There is a whole series of reasons why industrial action might be necessary as a last resort.

Baroness Miller of Hendon: As I said, I shall withdraw the amendment, but I am left with enormous anxiety. If an unwilling employer running a small business is in the middle of the process that has been triggered and suddenly a strike is called, that will not make for a good partnership, conciliation or willingness to work together. It is a most unfortunate situation. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Schedule 2 [Union Membership: Detriment]:

Lord Wedderburn of Charlton moved Amendment No. 232:

Page 58, leave out lines 32 to 45 and insert--
("(4) Subsections (3), (4) and (5) shall cease to have effect.")

The noble Lord said: As previously, we aim to help the Government. I was delighted to hear the Minister's firm statement that we aim here and elsewhere to maintain our observance of International Labour Organisation conventions. Although it is late at night, and since we are all citing our favourite films, I remind the Committee of Bette Davis saying, "Hold on to your seat belts, it's going to be a bumpy ride!". There is a lot left to deal with, not least the amendment we are now moving.

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The nub of the issue is that we want to do what we believe the Minister wants to do--although at the moment I am not sure what he wants to do--which is to get rid of what have sometimes been called the Ullswater amendments. I refer to the subsections in Section 148 of the 1992 Act which were inserted in 1993.

The Ullswater amendments, in social fact, were the beginnings of a most violent and abusive introduction of derecognition in the ports and the newspaper industry. It is an important area of social life to which the Bill addresses itself. In our view, it is most important to get rid of the Ullswater amendments fully and completely as they were introduced in 1993. Let me explain why.

In the two cases--Wilson in respect of the newspapers and Palmer in the case of the docks--the employers instituted a system of favours for those who did not want to obtain benefit from collective bargaining. Lord Justice Dillon always spoke of these advantaged as douceurs. He did not go to Latin, but he got half way. Curiously enough, we have a good word for what was happening; namely, "sweeteners". There were sweeteners for those who stuck by the employer who wanted to get rid of collective bargaining.

The immediate problem was that Section 146 of the Act makes it a wrong for the employer to penalise or in any way deter membership or the activities of an independent trade union on the part of employees. Those are not the full words, but it is the nub of the matter. The Court of Appeal took the view that it was bang in the centre of the section; that it was a system introduced by employers who were discriminating against those who were sticking by the union. Some Members of the Committee will remember that the noble Baroness, Lady Dean, said that the tactic was to let the union and collective bargaining wither on the vine. It was a good description of what was being done.

The Court of Appeal having said that, and before the judgments of the Court of Appeal were in print, on behalf of the Government the noble Viscount, Lord Ullswater, introduced, within five days, three new subsections. Subsections (4) and (5) are simply supports for subsection (3) and I take it that the Government will agree with that. Subsection (3) of Section 148, as it became, said that, where the evidence in the case showed that the employer was discriminating against the worker, and where there was evidence also that the employer intended to further a change in his relationship with his workers or any part of them, the first evidence should be cast aside and the second evidence should be taken, whatever the balance in the court room, as dominant to the case.

The assessment of the real evidence, if I may put it that way, was struck down and many authors wrote about how difficult it would be to show that the Ullswater balance between the employer giving evidence that he was changing the relationship with his workers on the one hand and that he was discriminating against the employee on union grounds on the other hand, must always come out on behalf of the employer.

So far, I think that the Government are with the amendment, although I submit that, having got this far, it is beginning to look as though subsections (3), (4) and

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(5) of Section 148 of the 1992 Act should simply be dispensed with. I suspect that the Government did not do that in paragraph 4(4) of Schedule 2 because they wanted to keep in something about reasonable employers. The Ullswater doctrine gave the new formula a minor dent by saying that, if there was no possibility of an employer being reasonable in what he was doing, it would not apply. The Government have done something similar, which they have set out on page 58 of the Bill. The Government have added a proviso that occurs when the employer has, as stated in paragraph 4(4)(b):

    "acted or failed to act, unless it considers that no reasonable employer would act or fail to act in the way concerned". I should have said that another aspect of the legal doctrines involved is fully dealt with by the Government's amendment. That is to say, the House of Lords went on to find, in Judicial Committee, that what the employers had done with their douceurs, as it were, was simply an omission in not paying them to the discriminated workers. The Government have got rid of that by speaking of acting or deliberately failing to act. I congratulate them on that brief way round the point. That deals with the point and repeals the point.

However, there is the proviso. There is a problem about giving an exit for the reasonable employer in practice compared with what the formula appears to say on the face of the Bill, or indeed in the judgment. It arises in the cases of unfair dismissal where the employer is trying to show that he acted reasonably and very often he succeeds. However, in cases like Iceland Frozen Food v. Jones, 1983, the courts said:

    "there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, and another might reasonably take another". That formula has, especially in the writings of commentators, been shown very clearly to get rid of any substantive notion of reasonableness in the operation of such parts of the law. Professor Collins, in his book Justice in Dismissal, spent some time showing conclusively that it is an undesirable formula as it stands.

In my submission, it would also be part of the Government's proviso as set out on line 36 of page 58. It is inevitable that, where the employer is asked to balance the change of relations with the workers on the one side, and his action discriminating against an employee for trade union reasons on the other, he may well say--if I were briefed for him I would expect to win--that the context is a set of changes in the workforce (the Minister talked about the new situation at workforce level) in relation to himself in the course of which he happened to discriminate against an employee on trade union grounds.

Amendment No. 232 does not include that proviso because we do not believe it to be right that the only way in which an employer can discriminate on trade union grounds and get away with it is by saying he is changing his relationship with the workforce. If he were to show that there was some economic or social reason, or reasonable consultation for the change, that might be a different matter; though I would resist it. However, to

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give the proviso in sub-paragraph 4(b) on page 58 is to give the employer a way round the defence against discrimination of the workforce, and discrimination on trade union grounds in respect of the employee, all without the "do serve" which Mr. Justice Dillon found in previous practice.

In other words, the Government should look at paragraph 4(4)(b) on page 58 with a view to satisfying themselves that the proviso would take away a great deal of the repeal of the Ullswater amendments. If we are going to repeal the Ullswater amendments, let us do so. That is what our amendment seeks to do. Let us not play around with the notion of reasonable employers. I mentioned the book of Professor Collins not merely to increase his royalties, but also to suggest that if one wants to find a place where this line of case law is set up, there it is. It must be answered in terms of what has happened in tribunals and appellate courts. Therefore we hope that the Government will consider the straightforward wholesale cut of the Ullswater amendments, which were bad enough in themselves. I beg to move.

11.15 p.m.

Lord McIntosh of Haringey: The right to belong to a trade union is separate from any rights to collective bargaining. They are related but they are distinct. The existing law makes that distinction and we wish to preserve it.

Clause 2 and Schedule 2 relate to an individual's right to belong or not to belong to a trade union and the right to participate in union activities; they do not relate to any entitlement for an individual to have his or her terms and conditions determined by a collective agreement negotiated by a union. Those rights are covered elsewhere in this Bill, most notably in Clause 1 and Schedule 1, and in Clause 15 to which we will come later.

My noble friend's amendment is aimed at paragraph 4 of Schedule 2 which amends the wording of Section 148 of the Trade Union and Labour Relations Consolidation Act 1992. As he makes clear, the amendment is aimed at what are now subsections (3) to (5) of Section 148; in other words, the Ullswater amendment. Those subsections specify that where an employer seeks to change his bargaining arrangements, his purpose shall be taken to be to effect such a change, and not to deter union membership unless his action is such that no reasonable employer would have taken it for that purpose. In other words, any reasonable act by an employer to change his bargaining arrangements is not discriminatory against trade union members.

The Ullswater amendment was introduced under controversial circumstances at a late stage in the passage of the Trade Union Reform and Employment Rights Act 1993. It was intended to reverse an aspect of the Court of Appeal's judgment in the Wilson and Palmer cases. In the event, the Judicial Committee of this House subsequently overturned the judgment of the Court of Appeal. Nevertheless, the amendment clarified the law. To accept this amendment and thereby repeal the latter would reintroduce uncertainty.

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I acknowledge that, when in opposition, the Labour Party objected both to the content of the Ullswater amendment and to the manner in which the previous government introduced it. In the climate of those times it was seen as yet another anti-union measure, rushed through in the light of a Court of Appeal judgment which was subsequently overturned. But the context has now changed. First, the House of Lords judgment has confirmed that there is a real distinction between trade union membership and collective bargaining. Indeed, we have spent the whole of today debating collective bargaining.

Secondly, Section 148(3) needs to be seen in the context of government proposals on recognition and our objectives to avoid the fragmentation of bargaining. Thirdly, under Clause 15 we propose to give employees protection against pressure to give up the terms of collective agreements.

I can assure my noble friend that the Government have looked very carefully at Section 148(3) and have concluded that it serves a useful purpose in this new context and ought to be retained. It helps to make clear the important distinction between rights for trade union membership on the one hand, and, on the other, our proposed rights to collective bargaining, which the Committee has now agreed.

Repeal would raise doubts as to the intended purpose and effect of changing the law. We wish to avoid any such confusion. There will continue to be circumstances in which employers seek, quite legitimately, to change their bargaining arrangements; for example, following voluntary or statutory derecognition or where the bargaining unit has changed. The law must allow them to do so.

As has been made clear on the record both here and in another place, the Government have recognised that some employers might put pressure on employees to accept individual contracts. The inclusion in the Bill (in Clause 15) of protection for employees from being forced to sign contracts with terms that differ from applicable collective agreements will deal with this situation.

We have entered a new era of industrial relations. In the light of these explanations and the new context created by the Bill, I hope that my noble friend will not press his amendment.

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