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Lord McIntosh of Haringey: My Lords, let me assure the noble Baroness that the letterhead of the Working Men's College and the sign outside say the "Working Men's College for Men and Women". The original title was formed in 1854 and there would have been some disquiet if we had changed it.

Baroness Miller of Hendon: My Lords, I am delighted to hear that. That ties in with how I tried to change the word "chair" to "chairman" in the Greater London Authority Bill because I consider the word "chairman" as all embracing. I am glad that it is all embracing in the Working Men's College.

Notwithstanding what a model employer the noble Lord undoubtedly was, I do not imagine that his employees regarded him as just another member of the

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staff. He was the boss and they did what he told them--at least I should imagine that they did. That is the real test of who or who is not a worker. Are you the teller or the "tellee"? The same applies to the hundreds of thousands of directors of the hundreds of thousands of small family businesses around the country whose directors do not consider themselves workers, and whose employees, without knowing the niceties of the existence of employment contracts, would laugh if you described a director as one of the workers.

I was only too right--as I often am!--to want to treat directors with or without a contract of employment as not being employees for the purposes of the Bill. I stress for the purposes of the Bill alone. In February the Court of Appeal in the case of the Secretary of State for Industry v. Bottrill said that whether an employer and employee relationship existed could be decided only by having regard to all the relevant facts. If an individual had a controlling shareholding, that was a fact that was likely to be significant in all situations and sometimes may be decisive. On the other hand, the industrial tribunal had held that the fact that Mr Bottrill had a contract made him an employee. The Court of Appeal upheld that decision against the Secretary of State on the facts of that case.

Why do I mention a case that seems to contradict my argument on this amendment? We have the Secretary of State vigorously arguing before the Court of Appeal at the expense of thousands of pounds of taxpayers' money while attempting to save a disproportionately few pounds for the redundancy fund, that a director, even with a contract of employment, is not an employee.

Now the Minister argues exactly the opposite. If the Minister is right, we could have a situation in a company with two directors where one is treated as an employee and the other is not. That would be ludicrous. The Court of Appeal said that every case depended upon the relevant circumstances.

Here we want absolute certainty and consistency. We do not want the question of whether there should or should not be a ballot to depend upon the outcome of a piece of litigation between the employer and the union and the view that the court takes on the facts of that director's status. In this case we can have that certainty by saying that, with or without a contract, a director is not to be counted as a worker. I beg to move.

Viscount Thurso: My Lords, perhaps I may ask the noble Baroness whether, if there were a ballot in a small firm with a family worker who is a director--not a worker--and that director was to vote for union recognition, that would be the most comprehensive argument in favour of union recognition in that firm.

Baroness Miller of Hendon: My Lords, I must apologise to the noble Viscount. My Front Bench was talking to me and I did not hear what he said. I am sure that he would not say anything that was incorrect.

Lord McIntosh of Haringey: My Lords, I do not know that I can act as intermediary.

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Perhaps I said something in Committee that could have led to confusion. I said to the noble Lord, Lord Tebbit, that persons who do not have a contract of employment do not count as workers. The relevant definition which I mentioned is the one in Section 296 of the Trade Union and Labour Relations Consolidation Act 1992. The definition of worker in that Act includes those with contracts of employment, but also,

    "an individual who works or normally works or seeks to work ... under any other contract whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his". In other words, some people who do not have contracts of employment count as workers.

I am sorry to see that the noble Baroness has tabled Amendment No. 4 because that means that she was not convinced by my arguments, or perhaps she did not understand my arguments--both of which are my fault--that such an amendment is quite unnecessary. I understand her concern that an inventive union organiser may try to establish that the directors of a company are workers, but the definition of a worker in the 1992 Act is clear: directors of a company are not workers unless they have contracts of employment or other contracts bringing them within the definition that I have read out.

Most directors, and particularly non-executive directors, will not normally be workers. However, where they do have such contracts it would surely be wrong in principle not to include them in the count. Surely that works both ways. From the union's point of view, you want to get up to the 21 workers and in a tiny minority of cases, just to the threshold. But, from the union's point of view, surely you do not want to have--this is the point made by the noble Viscount, Lord Thurso--people who, because they are directors and also workers, will inevitably vote against recognition. The noble Baroness, I think, is arguing against her own case. The point I want to make is that the commonsense definition which the noble Baroness wants is already part of the 1992 Act which was enacted under the government of her party.

Similarly, the question of share ownership is not relevant to who counts as a worker. No one qualifies as a worker of a company simply by virtue of holding shares in it. The noble Baroness's amendment would mean that any employee who did hold shares in the business would not count as a worker for the purposes of the schedule. I cannot see why employees who participate in a share scheme should lose their rights to take part in a ballot on union recognition. Again, the argument seems to be against the noble Baroness's own interest. If you exclude those who take part in an employee share ownership scheme, you are going to exclude people who might be inclined to support the management.

In a small family business, family members helping out may or may not count as workers. That would depend on the basis on which they worked. The noble Baroness, Lady Hogg, is not in her place, but I am responding in part to what she said on the previous amendment. It would depend on whether they were paid or purely voluntary, the frequency and regularity with

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which they worked, and so on. If they are workers, surely they should count towards the threshold. People should not be deprived of their rights simply because they work in a family business. But if they are not workers as defined, they will not count.

Finally, members of a partnership do not normally count as workers, since they do not have contracts of or for employment. They are the owners of the business. Some partnerships do have a category of "partners" who receive a salary. The John Lewis Partnership is usually given as an example, although those shares in the business are held in a trust and the so-called "partners" do not own the business but are employees. The "partners" who receive a salary are generally accepted to have a different status from "real" partners. Again, the existing definition is good enough.

I hope that in the light of this further explanation, the noble Baroness will accept that the definition of "worker" in the Bill, which comes from previous legislation over a period of time, is perfectly adequate for the purpose and that she will withdraw her Amendment No. 4.

Baroness Miller of Hendon: My Lords, the noble Lord the Minister had no need to take the blame or to think that I had not understood his response properly because he had not explained it properly the first time. I am quite sure that he explained it very well the first time and he has explained it very well the second time. I do not really want to accept it, but I certainly will. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Lord McIntosh of Haringey moved Amendment No. 5:

Page 22, line 23, at end insert--

("Notice to cease consideration of application

15A.--(1) This paragraph applies if the CAC has received an application under paragraph 10 or 11 and--
(a) it has not decided whether the application is admissible, or
(b) it has decided that the application is admissible.
(2) No further steps are to be taken under this Part of this Schedule if, before the final event occurs, the parties give notice to the CAC that they want no further steps to be taken.
(3) The final event occurs when the first of the following occurs--
(a) the CAC issues a declaration under paragraph 20(2) in consequence of the application;
(b) the last day of the notification period ends;
and the notification period is that defined by paragraph 22(5) and arising from the application.")

The noble Lord said: My Lords, I should like to move Amendment No. 5 and speak also to Amendments Nos. 7, 24, 25, 28, 29, 53 and 54. I apologise for the delay in tabling these amendments. The idea behind them is relatively straightforward, but we have to do some very careful checking to make sure that there are no unintended or unhelpful consequences.

Let me start by repeating what I said in Committee. The Government intends to exclude from the scope of Part II any purely voluntary agreement, including all

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agreements made before Schedule 1 comes into force. Part II, which refers to voluntary agreements, will apply only to those agreements made in consequence of an application for recognition under paragraph 3 of Part I. These are referred to as "agreements for recognition" in our amendments. In essence, these agreements will be binding on the employer for three years. After three years, the employer will be able to derecognise the union without having to apply to the CAC, just as if the union had been recognised voluntarily.

We believe this change is necessary and desirable for several reasons. It closes a loophole by which an employer could agree recognition, perhaps after a union's application had been accepted by the CAC and a bargaining unit determined, and then derecognise the union. In this way an employer could avoid recognition even if all his workers were union members. So these amendments would make "semi-voluntary" recognition binding for three years, just as statutory recognition is binding for at least three years.

By providing a union with some security in a recognition agreement, and by providing the employer with more flexibility to derecognise than does statutory recognition, this change will promote voluntary--or perhaps I should say semi-voluntary--agreements. If the parties can reach agreement without a ballot, perhaps with the help of ACAS or the CAC, or after the bargaining unit has been determined, they do not need to go through the entire statutory recognition process--involving balloting and so on--in Part I.

We have also provided a procedure whereby an employer or union can complain to the CAC that a bargaining method agreed after recognition has not been followed. If the CAC finds that this is indeed the case, it will be able to impose a bargaining method. This will apply whether the original recognition was via the statutory process in Part I or was an agreement for semi-voluntary recognition under Part II. Wholly voluntary agreements will not be affected.

Turning to the text of the amendments, Amendment No. 5 requires the CAC to cease work on an application for recognition if the parties request it to do so. This is a prerequisite for semi-voluntary recognition, but it is also a commonsense clarification. Amendment No. 7 allows an employer or a union to apply for a bargaining method to be determined if the union was recognised under Part I; an equivalent for semi-voluntarily recognised unions is inserted by Amendment No. 25. Amendment No. 24 first sets out, in the new paragraph 40, the detail of what constitutes semi-voluntary recognition, and secondly provides, in the new paragraphs 41 and 41A, for the necessary interpretative provisions. It thirdly provides, in paragraph 41B, a procedure for resolving disputes about whether recognition is semi-voluntary, and finally sets out in paragraph 41C, the consequences of semi-voluntary recognition. Paragraph 41D ensures that bargaining arrangements are ended if recognition is ended.

Amendment No. 25 provides a period in which a semi-voluntarily recognised union and an employer may seek to agree a bargaining method without the involvement of the CAC, as well as a procedure for the

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imposition of a method by the CAC if either party fails to carry out the agreed method. Amendment No. 28 ensures that the procedure may be used only by independent unions, and Amendment No. 29 prohibits the unilateral withdrawal of an application for an agreed method if the CAC is required to determine a method.

Finally, Amendments Nos. 53 and 54 make a change to Part IV, the derecognition provisions, which is consequential to the changes to Part II. Because derecognition of a semi-voluntarily recognised union is not allowed for three years, but can be done at any time thereafter, it is necessary to remove semi-voluntary recognition from the scope of Part II. That is what Amendments Nos. 53 and 54 seek to do.

These amendments make important changes, which I flagged up when we considered Part II of Schedule 1, to the way in which the schedule deals with voluntary recognition. Genuine voluntary agreements will fall outside the scope of Part II, but voluntary agreements made as a result of applications under Part I will be more attractive to employers and unions. These are changes which we have considered at length and we believe they are of benefit to all parties. I beg to move.

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