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Baroness Hogg: I support the amendment moved by my noble friend. The Bill as drafted is peculiarly insensitive to the needs of small businesses, in particular small service businesses. I am concerned that the Bill does not seem to make a sufficient distinction between part-time and full-time employees. Small catering businesses, for example, may well at times employ over 20 part-timers but in real terms are small businesses with low turnover.

I refer to Amendment No. 2. The Bill appears to make it necessary for the number to exceed 20 on one day only because the line in the Bill ends with the word "or" rather than "and" before moving to the averaging proposal over 13 weeks. That seems to border on the ridiculous. I should be grateful for reassurance from the Minister.

Lord Cavendish of Furness: My Lords, I have declared an interest in this subject; I refer noble Lords to the Second Reading debate. I have businesses that would be affected by the Bill.

I support the amendment moved by my noble friend Lady Miller of Hendon. She makes a compelling case, to which I do not have much to add. I have been involved in businesses that employed only a few people and in some that employed 200 or more. I do not believe that either figure is correct. If there is to be compulsion--I do not like that anywhere--my instinct is that somewhere in the region of 80-plus might be a suitable figure for union recognition.

It must be acknowledged that much that emanates from the European Community attracts distrust, and even hatred, among the fraternity of small businesses. However one aspect of the EC that small businesses admire, and would like to see developed further, is the single market. My noble friend made a particularly important point when she said that recommendations from the EC about the definition that support and enhance the workings of the single market should be encouraged. I support the amendment.

Lord Wade of Chorlton: My Lords, I hope that the Government will look sympathetically at this amendment. As the Government have said on many occasions, it is important that we do not do anything to hinder either the start-up or the growth of small businesses. They are the key and the major employers in the country. Small businesses are delicate flowers, and it takes little to disrupt the investment for growth and development that is the necessary to our future economic success. This is an important amendment and I hope that the Government will support it.

Lord McCarthy: My Lords, this may be a point of order, although I am not sure whether we have such things in this place. Is this not a waste of time? These

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amendments are virtually the same as those about which we had a long and protracted debate in Committee. Is it right that we should go over the same ground twice?

4.45 p.m.

Lord McIntosh of Haringey: My Lords, we are at Report stage. There are strict rules governing what happens at Third Reading, but, unfortunately, there are much less clear rules about what follows between the Committee and Report stages. It was interesting to hear again the arguments advanced by the noble Baroness, Lady Miller. I had heard them before and I had read them. However, she was able to remind noble Lords who did not pay the attention that I did to her speech in Committee about her concerns.

Before I move on to the substance of her amendments, I must correct a misapprehension that the noble Baroness has about the operation of the 21-worker limit. She laboured under that misapprehension in Committee and she continues to do so today. On 7th June, she said:

    "The employer must recognise the union if a mere nine employees--40 per cent of the workforce--requires it and the majority vote in support. In other words, if only three bother to vote, it would take just two votes to approve.".--[Official Report, 17/6/99; col. 1161.] That is not correct. It must be my fault because I have not explained properly the workings of a recognition ballot.

In order for a union to win a recognition ballot, a minimum of 40 per cent of all workers must vote in favour of recognition--I repeat, they must not just vote, but vote in favour. Therefore, if there are 21 workers, at least nine of them must vote in favour of recognition. If only three people bother to vote, the union will not be recognised. The union must also gain the majority of the votes. Therefore, if 10 workers are in favour and 11 are against, the ballot will be lost and recognition will not be granted.

I return to the issue of a threshold for small businesses. A fundamental reason for having a statutory scheme for union recognition is to provide a means for workers to be represented collectively by a trade union when they wish it. I know that the noble Lord, Lord Cavendish of Furness, does not like that; he has said it before and he said it again today. I appreciate his point of view, but that is what the Bill is about. There is a strong argument that the right to be collectively represented should not be subject to any threshold. Some of my noble friends agree with that argument: they take the view that the situation should be the same as that which pertains to health and safety legislation. It does not have any threshold for small businesses--for rather obvious reasons.

There is a further argument that employment relations in the smallest businesses are different--more personal and less formal--and that statutory collective bargaining is inappropriate in such cases. We listened to both sides and we were persuaded that the smallest firms are, on the whole, different. That is not to say that there is anything wrong with collective bargaining in these firms: some small firms already recognise unions. I told your Lordships in Committee and again today of my

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experience in this area. There is nothing to stop such businesses continuing to recognise unions if they so wish.

We accept that to apply the statutory provisions to firms with 20 or fewer workers could be onerous and inappropriate. That is why we propose the threshold at that level. I disagree with the noble Baroness, Lady Miller, now as much as I did in Committee when she suggested that there must be a single threshold for all purposes. I have already given the example of health and safety legislation, where I think everyone would agree that there should be no threshold. There are much higher thresholds for works councils under European legislation. There is no reason why there should not be thresholds of 20, 50 or 80--as the noble Lord, Lord Cavendish of Furness, advocates on this occasion--for different purposes. There is nothing magical about any of those figures.

The noble Baroness asked whether we had consulted about the matter and she pointed out that the Federation of Small Businesses and the Institute of Directors, in particular, oppose the threshold of 20. I note that she did not mention the Confederation of British Industry. In any case, the fact that she was able to support her argument by referring to those organisations proves that we consulted fully.

Of course, this figure--any figure--is arbitrary to some extent. The noble Baroness suggested 50 employees, but a firm with 50 employees is a much more substantial undertaking. In many branches of activity, a firm with 50 employees would be considered to be a medium or even a large business--I think particularly of agriculture or retailing. A restaurant or a hotel with 50 employees--I return to the remarks of the noble Lord, Lord Cavendish of Furness--is not a minnow in the hospitality industry. A business of that size must, of necessity, have a more developed personnel function.

We have proposed a realistic, fair and workable solution. However, if that proves not to be the case, as a last resort the Bill confers the power to vary the figure upwards or downwards if that is shown to be necessary. The noble Baroness said that the Bill now contains that power and that that is some sort of admission on our part. However, the Bill has contained that power from the beginning and it was envisaged initially in the White Paper. We are talking about excluding 8.1 million people--or about 31 per cent of the total workforce--from the statutory recognition provisions in this Bill. I think that we have demonstrated, both in Committee and on this occasion, that that is reasonable.

The noble Baroness, Lady Hogg, asked about the calculation of 21 workers. If the numbers fluctuate, workers may find it difficult to know whether a firm employs 21 people on a given day. The Bill proposes two tests: either the employer has 21 workers on the day that the application is received; or the firm had an average of 21 workers over the preceding 13 weeks. The situation is more complicated than the noble Baroness seems to believe. That test is outlined in paragraph 6 of Schedule 1 to the Bill. It aims to ensure that an employer

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who gets word that an application is about to be submitted cannot avoid recognition by sacking enough workers to get below the threshold for a few days. I do not think the noble Baroness would wish to encourage such a practice.

Baroness Hogg: My Lords, surely what is sauce for the goose is sauce for the gander. The fact that the word "or" appears means that they would have only to choose a day on which employment was over that number for the full panoply of the Bill to apply.

Lord McIntosh of Haringey: My Lords, unfortunately, employers have the power to decide how many people work for a business; employees do not. Therefore, it cannot be sauce for the goose in the same way as sauce for the gander. No, we have given full consideration to the matter and reached the right conclusion. I hope that the noble Baroness will feel able to withdraw her amendment.

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