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Lord Wedderburn of Charlton: My Lords, on the contrary.
Lord McCarthy: On the contrary, as my noble friend says. If there had been an increase in frivolous cases, in vexatious cases, and it was not 0.4 per cent, but 5 per cent, 10 per cent or 15 per cent, we could say, "Ah, they are bringing bad cases, they are litigating more and more and they are getting worked up". There is no change whatever. One could say that more cases were being lost and that thousands of cases are being brought, but they keep losing them because they like their day in court, but the contrary is the case. In so far as there is a trend, they are winning more cases, which may be one of the reasons why the CBI is so exercised.
So there is no evidence of an increased propensity to litigate. It follows that there is no justification for an attempt to turn down the capacity of tribunals by at least a third over an immeasurable period of time.
I turn to the second case against the Bill. There is a considerable volume of respectable research, much of it paid for by the department, and much of it published since the survey and contradicting the survey. The survey was, of course, years and years in the wilderness. People carried out this telephone survey about four years ago. Somehow it never got published. Even now Ministers have not read it.
But Burgess, Propper and Wilson published a survey entitled, Explaining the growth in the number of applications to industrial tribunals 1972-1997. That survey covered a much longer period. It had a trend, of course. I think that my noble friend Lady Turner was referring to some of the evidence in that survey. I do not want to repeat that evidence because the House will know about it now. The weakness of the survey was that it did not really weight the various causes; it simply listed them.
My opinion is that there are two main reasons for the rate of increase over the past 25 years. The first is the increase in jurisdiction. Even when the Conservatives were in office, they could not stop having to implement all kinds of EU directives. Therefore, the jurisdiction and numbers of the tribunals went up. One can put a very close line between the spread of jurisdictions and the waxing and waning of tribunal cases. That is the fundamental relationship. Of course we shall get a lot more in the next few years or so when further directives come in.
The second reason is in some ways far more significant, because we can do something about it. It is the collapse of an alternative means of independently deciding a case. At the moment, outside small parts of the public sector there is no alternative for a worker to the employer's last word other than going to a tribunal. There is nothing else. The overwhelming majority of disputes procedures have no independent element. One has to take what the employer says. Even if one thinks that the employer is not giving one one's
legal rights, one has nowhere to go except to a tribunal. That is the result of the collapse of collective bargaining and the decline in trade union organisation.When I came into the business, large parts of the private sector had systems of arbitration, mediation and independent assessment which gave male manual workers, for the most part, some form of independent assessment which did mean that in the end they did not have to take the employer's last offer. But the only alternative now to the employer's last offer is to go to the tribunal.
While that remains the case, unless one can find a way of giving workers an alternative to the employer's offer without going to a tribunal, the number of cases will continue to increase. Of course one could make the way in which one restricts access to the tribunals absolutely lethal, but I do not suggest that the Bill does that.
So I come to my third argument. That is with regard to the statutory procedure. I should say that I am not against a statutory procedure. I think that it is a knacky little wheeze, but it depends what it says. The statutory procedure that we have, and the way that it is written in this Bill adds to the issues in dispute. We shall go into this matter much more in Committee. Judge Prophet is most persuasive on the issue. But then the TUC, the Law Society and Judge Prophet make the same argument. In writing to the Minister, Judge Prophet said:
- "The Tribunal would be forced into considering whether or not internal strategy procedures have been completed. If not why not? And further forced into a straitjacket of having to find an automatic unfair dismissal when that is not based on a just assessment of the merits of the case. At every hearing where any right is being considered a formula must be applied, so complicated that even the judiciary who have looked at the clause are uncertain what it reads. Pity the ordinary employee and the small business. Even longer and longer hearings are inevitable".
I come to my fourth and final argument. It is the possible consequences of Clause 25. The problem with Clause 25 is that it is a pig in a poke. No one knows what the Government will put into Clause 25. This clause enables them to rewrite dear old ET1. There never was a form so sweet, simple and straightforward as ET1. The only thing that one could get wrong was one's date of birth. It is a form which anyone can fill in, as my noble friend Lady Turner said. Compare it to those terrible income tax forms that we have to struggle with or to the social security forms that people have to fill in. ET1 should be preserved in aspic. But it will not be preserved in aspic; it will be rewritten. We have asked but we are not told what will be put into the new ET1. Anything could go in.
I could write such an ET1. I do not suggest that the Minister is going to do so. But no one would apply. It would be elaborate and it would be plausible. One could say, "Well, we are going to have a statutory procedure so of course you have to make sure that this statutory procedure has been complied with". One
would not just say, "Have you complied with a statutory procedure?" One would say, "Describe it. Tell me about it." Then one would say, rather like the Conservatives did about the strike clause, that people should know what the penalties were. They should know that they could be fined. Put that all in, and you could write a new ET1 which would cut applications by 50 per cent or more because no one would understand what it required. I would like to know—the Minister can tell me tonight—whether it is the case that ET1 is to be rewritten. The Law Society is very worried. If there is the intention to rewrite it, how will that be done?The final point I make is that those of us who dislike the meat in the sandwich do not deny that the Government have a problem—the real long-term problem of the perception of rights of work inevitably expanding. All the time people are thinking of new rights at work that they should have. There are all kinds of forces out there in society, not merely in British society but in Europe and elsewhere, which are bringing new worker rights across the agenda.
If we are soon to have protection against discrimination on grounds of sexual orientation, religion, faith, age and so on—all of which I support—there will inevitably also be a demand for a rise in the adequacy of the procedures and arrangements for dealing with those rights. That is why it is ridiculous to talk about cutting tribunals down by 30 per cent. We are in it, and it will get bigger. There is only way that one can stop it or reverse it fairly, decently and properly, apart from suddenly reviving the trade union movement so that it can do everything that it did in the past. Even then, it did not do sex very well. It would not have done race very well, and it might not have done gay rights very well, but it was all right on unfair dismissal.
So some legal form of worker rights has to continue. But people must have real rights within a statutory procedure so that they are induced to move into a voluntary system of independent mediation and arbitration which gives them back what they have lost. If the Government are prepared to do that, then this Bill could be a first-class Bill. In Committee and on Report, we hope to offer a more civilised and more practical way out of the Government's problem.
6.19 p.m.
Lord Haskel: My Lords, I certainly agree with what my noble friend the Minister said about productivity. During a recent stay in the United States, I became more aware than ever of how increased productivity leads to increased prosperity for all. What will the Bill do for productivity in British industry? The answer is that no one really knows. As my noble friend the Minister pointed out, productivity does not depend only on industrial relations—letting people go does not improve productivity unless there is investment and change. Restrictive practices at work and restricted employers' rights to hire and fire do not improve productivity. They probably increase costs and hence reduce wages to cover those costs.
Most people in industry instinctively feel that decent standards at work, a mechanism for resolving disputes, a procedure for airing grievances, protection for employers and employees taking lawful action and family-friendly flexibility at work must make some contribution towards improving productivity. Economists may not be able to measure it but people at work feel it.
That is why the Bill is helpful. It is helpful because it helps industrial relations move with the times. It brings them into line with modern thinking—especially thinking about the balance between work and family life. It reinforces the cultural changes that are taking place—perhaps the new rights of which my noble friend Lord McCarthy spoke. The right reverend Prelate the Bishop of Hereford explained how over the years we have become more aware of the needs of parents when children are born, and the Bill moves with the times in trying to satisfy those needs. Flexibility in hours worked, especially when children are young, is an important aspect of that modern thinking. Chapters 1 and 2 of the Bill acknowledge that.
The Bill also acknowledges that nowadays we understand that it is better to resolve disputes at the workplace than to let them become grievances at an industrial tribunal. The Bill encourages employers to use best practice in resolving disputes and employees not to pursue frivolous cases. Of course, good employers already have much of that good practice in place. A greater problem lies in the insistence by many financial institutions that shareholder value takes priority. Experienced managers balance the interests of staff, shareholders and customers equally. It is inexperienced managers who interpret family-friendly policies as weakness, as diminishing shareholder value, and are thus reluctant to introduce them. The Bill and the guidance in it should help to overcome that.
The Bill introduces union learning representatives. I agree with my noble friend Lady Turner that that must help productivity by addressing the shortage of skills. Surely, no one can object to that as long as it is effective. I welcome the proposed safeguard that the representative must be experienced and knowledgeable about skills, training and continuous professional development.
Of course, there is a lot of detailed provision about the workings of industrial tribunals and discipline and grievance procedures that may well benefit from the knowledge and experience of experts. We can certainly question whether eight weeks is a reasonable time for it to be unlawful to sack workers in the course of a dispute or whether two weeks of paternity leave is reasonable—as the noble Lord, Lord Henley, asked. But such matters are essentially a matter of compromise. No hard and fast rule can be laid down. Of course, there are those who will abuse the system. Industrial relations depend on a modicum of trust, but we cannot legislate for that. What is important is that the Bill recognises that it is wrong and impossible for the Government to impose unreasonable settlements.
That is all very well, but what impact will Bill have on small and medium-sized companies? Does it mean more red tape? After all, as the noble Baroness, Lady Miller, reminded us, small companies have had to absorb the social chapter, the Human Rights Act 1998, all the tax credits introduced by the Chancellor, the Employment Relations Act 1999 and now face the Bill. One can argue that the Bill will act as yet one more disincentive. I do not agree. I see in the Bill not a lot of meaningless regulation but a fair bit of guidance and best practice about what one has to do to be a good employer in a modern business. Most people want to be good employers because that is how they keep their best staff and their business thrives. It probably helps productivity, too.
The Bill provides guidance about what procedures work in modern industrial relations management. Many small companies welcome such guidance because not every employer has the time, expertise or experience to work it all out for himself. So if six months' maternity leave is being family friendly, fair enough. If a woman's skills are so valuable that a business cannot cope with her absence for six months, small company managers will find a way. They are used to wheeling and dealing. They will come to some sort of arrangement with her to come back part time, to do some work from home, or whatever.
Incidentally, it is a welcome gesture from the Government that Clause 21 says that they will pay maternity benefits in advance to small companies. Perhaps my noble friend the Minister can tell me whether that is a precedent and whether we can look forward to other payments in advance to benefit small companies.
Small companies know that it is good practice to have a procedure for resolving disputes. It saves a lot of pointless argument and discussion. I agree with my noble friend Lord Borrie that having to formalise procedure, as the Bill requires, and giving guidance as to what it should provide should be no real burden. Many companies which have not got round to doing that will welcome it. That should avoid disputes and grievances going to an industrial tribunal because of ignorance or omission. Any sensible employer or employee will prefer discussion to the cost of going to industrial tribunal, the stress and the cost of finding and recruiting new staff or of finding a new job. Of course, there is more to come in secondary legislation, but I hope that the government will frame it in the same helpful manner, encouraging progressive, modern management thinking.
My noble friend the Minister spoke about the work of the Advisory, Conciliation and Arbitration Service. The Bill should not diminish the importance of ACAS. It is a valuable resource for resolving disputes and getting people back to work. The real cost to the economy of disputes is not so much the lost time but the lost opportunities and output. So I hope that the Government will not use the Bill as a reason to cut back ACAS. ACAS does a wonderful job for small and medium-sized companies. I agree with the noble Lord, Lord Razzall, that its code of practice is sensible and balanced and acts as a valuable benchmark in disputes.
As my noble friend said, the Bill is an attempt to balance the rights and responsibilities of employers and employees. It tries to move with the times and put the point of balance where contemporary society thinks that it should be. I think that that judgment is fairly accurate; in fact, I think that it veers toward the more progressive side of the balance and I welcome that. The fact that our economic situation is reasonably sound demonstrates that we are moving in the right direction and at about the right speed with progressive employment policies. That is why I welcome the Bill.
6.28 p.m.
Baroness Sharp of Guildford: My Lords, I asked to speak in this debate because I am interested in two fairly narrow aspects of the Bill. The first concerns Clause 43 and the introduction of statutory learning representatives; the second concerns Clause 45 and the issue of fixed-term contracts. As always when speaking in a Second Reading debate in this House, one learns a great deal and I must say that I found the speech of the noble Lord, Lord McCarthy, extremely forceful and shall in future regard the Bill as, as he said, a manky meat sandwich, with the central part revamping employment tribunals being the suspicious part.
However, my real interest lies in those two more specific aspects: first, Clause 43 and the appointment of statutory learning representatives, which set an interesting precedent for the Government. I pick up the point that the noble Lord, Lord Haskel, made: it is about productivity. In his introduction, the Minister made it clear that that was what he was concerned about with regard to the appointment of the representatives. The whole issue of Britain's underlying productivity, the productivity gap and the need to improve workforce training underlies a great deal of the Government's present programme.
I shall remind the House of the wording used in the Pre-Budget Report. I do not know how many noble Lords read it in detail. There was much consideration of the issue of workforce training. Paragraph 3.98 reads:
- "In Budget 2001, the Government also said: 'the current voluntary approach has secured increased participation in workplace training since 1995, but this is not enough'".
- "Level 2"—
- "is effectively the minimum standard that 19 year-olds are now expected to have acquired. The Government wants those in the adult workforce who, possibly through no fault of their own, have not attained level 2 qualifications to have the opportunity to do so".
- "The Government is already looking at possible fiscal measures to improve UK skills. The PIU set out a range of options to overcome barriers to training, one of which is a statutory right to time off for training and development. The Government is considering this suggestion as one of the possible ways of taking forward the commitment made in Budget 2001 and will carry out a full regulatory impact assessment and wide consultation on the development and implementation of any new policy".
The Pre-Budget Report then proposes four specific suggestions as to how the matter might be taken forward. First, there is,
- "financial support for employers whose staff take time off to train".
- "free learning provision and accreditation for employees without level 2 qualifications".
- "some form of arrangement for individuals to take up training—such as a minimum entitlement for all employees who have not attained basic skills or level 2 qualifications to paid time off each year to train towards the standard".
- "extended information, guidance and support for employers and individuals . . . these could include arrangements along the lines of Union Learning Representatives".
Why have the Government backed off from including in the Bill possible time off for learning, up to level 2? When it exists for statutory learning representatives, why not carry it that bit further? I can immediately hear the noble Baroness, Lady Miller of Hendon, exploding at the idea. She was already somewhat unhappy at the idea of statutory learning representatives and thought that people might abuse that position.
Clearly, there is a genuine problem for small and medium-sized businesses—and other employers—with the potential avalanche of time off that might be given, but the Bill gives us one or two interesting precedents. First, we are already looking at payment for paternity and maternity leave and government compensation for small firms, in particular. Secondly, there might be a way forward by adopting the approach proposed in the Bill towards flexible working time. Should not employees who wish to take time off to study for a relevant level 2 qualification—I stress that level 2 is not high—have the right to ask their employers for such time off, as with the provisions on flexible working time in Clause 47? Employers should have a duty to consider such requests for time off and the right to refuse them if they can demonstrate that it would cause positive harm to business.
In their manifesto, the Government also suggested, alongside the commitment to introduce statutory learning representatives, that there should be a commitment to introduce statutory training levies where agreement was reached between the social partners. A short while ago, we approved the Construction Industry Training Board and the Construction Engineering Industry Training Board orders. At that time, I asked the Minister—the noble Lord, Lord Davies of Oldham, was answering for the Government—what had happened to that commitment. He did not really give me a satisfactory answer.
I recognise that the issue of skills crosses boundaries between departments. It is partly the responsibility of the Department for Education and Skills, as well as of the Department of Trade and Industry. In these days of joined-up government, we need an answer to that question. I reiterate it: what has happened to the commitment? It was a manifesto commitment on the part of the Government, why do we see nothing of it?
The other issue is fixed-term contracts, which have already been mentioned by the noble Baroness, Lady Turner of Camden. Several times, I have spoken about the use of fixed-term contracts in higher education. There are something like 84,000 workers in higher education on fixed-term contracts. That is 42 per cent of the workforce in higher education and over 50 per cent of those working in what are called the pre-1992 universities—our research universities. I know that the noble Lord, Lord Sainsbury of Turville, knows well the problems posed by fixed-term contracts. In 1999, the Bett report highlighted the considerable abuse of such contracts by some in the university sector and especially the degree to which women were found to be disproportionately numerous among those working on fixed-term contracts and on lower pay than other staff.
The European directive that is incorporated in Clause 45 offers us an opportunity to put such poor labour relations in universities behind us. Regulations have been published but, as the noble Baroness, Lady Turner of Camden, said, there are two fields of particular worry to the Association of University Teachers. First, although the regulations ban the use of fixed-term contracts for more than two consecutive spells of two years—four years in all—prior service on fixed-term contracts is not taken into account. Therefore, when the regulations come into effect in 2002, somebody who has already done something like 10 years on a short-term contract will still have to work out another four years. That is not fair. Secondly, as my noble friend Lord Razzall said, we are concerned that certain classes of employment may be exempted and that employers may seek sector specific exclusions on the grounds of what is called objective justifications. On what grounds would such an objective justification for an exclusion be made? Could it be challenged?
I have had a specific interest in the Bill. There are wider implications, and there is much in the Bill relating particularly to maternity and paternity leave, family-friendly policies, flexible working time and fixed-term contracts that I welcome. Having listened to the noble Lord, Lord McCarthy, I now have great doubts about the middle part of the Bill.
6.38 p.m.
Lord Lea of Crondall: My Lords, if any more noble Lords start their speeches by citing John Monks's agreement that the Bill has many positive features, I shall start to feel uneasy about the parallel with Mark Antony's funeral oration: they are "all honourable men".
I begin by accentuating the positive. There are many European influences, including the provisions on paternity leave and pay, adoption leave, improvements in maternity provision and, most recently, the provisions in Part 4 outlawing consecutive fixed-term contracts.
All of those, interestingly, are the consequences of and show the great benefits of social partner agreement. I am glad that those words have escaped the mouth of the noble Baroness, Lady Miller of Hendon. I hope that there will be other occasions when she will make that reference. They reflect a great deal of hard work on such issues as the gender pay gap and flexible working. In my judgment, union training representatives will mark an extremely welcome innovation, even though the noble Baroness, Lady Miller, may think that they could reflect a contradiction in terms.
Rights for fixed term contract workers mark a major reform, combined as they are with parallel rights for part-time workers. These kinds of workers form an increasing proportion of the workforce. If it is the case that the next reform for agency workers has been remarked on by some employers to be a bridge too far, then let me point out that that is what they always say about any reform. However, as a result, in the future, some employers may well wish to employ people on a regular basis, not on a fixed-term contract, a short-term or part-time basis or on an agency basis. They may wish to employ people on a proper, regular basis, which is all to the good. Indeed, a short visit to a pub these days is all that is needed to overhear someone saying, "I think that, for the first time, I am going to get a regular job in the construction industry. I am to have four weeks' paid holiday". Millions of workers have never had such rights. The reforms mark one of the incoming tides of history to which my noble friend Lord McCarthy eloquently referred.
I turn to a more general point about employment rights. Either Jung or Freud—I do not know which—said that work is central to people's lives, both men and women. That is true of the membership of this House. Over the past 40 years, the tribunal system has considerably enhanced the quality of working life. It has de facto enhanced the quality of contracts of employment, a point to which my noble friend Lady Turner of Camden has attested.
We have to calibrate these points, as it were, but it is true to say that some of the recent increase in tribunal activity has been due to a reduction in the base of collective bargaining, a point made by my noble friend Lord McCarthy. It would be a logical desire on the part of Her Majesty's Government to reverse that process. I hope that it will be a moral that my noble friend on the Front Bench will underline.
The introduction of pro rata rights for so-called atypical workers—who have started to become rather less atypical and more typical—has marked a major reform under the Social Chapter which was and remains a very popular part of Labour's 1997 election manifesto. I recall vividly that it was also popular in
the preceding campaign for the European elections. "Vote for the Social Chapter" proved to be a popular slogan.Perhaps I may turn to the aspect of the Bill which has generated the most discussion; namely, the default procedure for dispute and grievance resolution. Those noble Lords with a background in the trade union movement—we should declare our interests; I do so all the time—believe that the extension of rights to which I have referred will create a larger workload for employment tribunals. Many of these new rights are to be accorded to workers who have not previously enjoyed them. As a result, and as a consequence of European legislation under the Single European Act signed by the noble Baroness, Lady Thatcher, and under the Social Chapter, we shall see an increase in the workload. I mention this because I hope that my noble friend on the Front Bench will comment on it. Whatever the percentage, such cases will not be of the kind often characterised as the modern "rush to litigation" or the rush to statutory procedures on the ground that individuals have suddenly become more litigious. Perhaps my noble friend will confirm that that is a point which may properly be made.
My noble friend Lady Turner also drew attention to a point to which I attach the greatest importance and believe is the main strategic question. Those of us with experience of industrial relations would, I believe, all agree on one thing: that if procedures could be satisfactorily agreed within a company or place of employment, settled there and the procedure taken forward and then finished on a basis agreed by both sides as the finishing point, that would require joint ownership of the procedures and thus fewer cases would be taken to tribunals. That is logical and correct. But that does not arise and is quite different from the scenario where an additional hurdle has been placed in front of issues going there, because it is quite different in terms of confidence in and the credibility of the procedure. I was very pleased to hear my noble friend Lord McCarthy make that crucial and fundamental distinction.
It is in this respect that some of us feel that the Bill has not got it quite right. I want to put forward a suggestion as to how to improve the sense of engagement of the workforce with the default procedure in the Bill as and when it is translated into action in the workplace. I suggest that if the criterion is that the procedure has to win the confidence of all those concerned, that will mean that, through the voice of their representatives—and they will have to invent some if they do not have them; how otherwise can they respond?—the workers will agree that they can settle matters through the internal procedure. The question I wish to put to my noble friend on the Front Bench is this: is that what the Government want? I think that they do want that, but I should like to hear it confirmed. Do they wish to see a procedure which will be capable of settling many matters in the workplace?
If the answer is in the affirmative, what will be conducive to achieving that? After all, we already have it in firms which recognise trade unions. Indeed, it is
almost a definition of trade union recognition that there is a procedure agreement covering individual grievances, properly negotiated, just as is the case with regard to substantive terms such as pay, holidays, hours and pension arrangements. So the Bill sets out a benchmark procedure which in all cases will apply as a floor. Leaving aside whether trade union agreements are in place, what about the other 50 per cent or so of cases where the default procedure will be free-standing? Exactly how will it be introduced?The role of ACAS has been cited, and rightly so, in a number of contributions made both here and in the other place. What will be the relationship between the ACAS code and the default procedure set out in the Bill? I think that the Government intend to ask ACAS to revise the code in due course in order to ensure that it recognises the new statutory procedures. But there is a danger of best practice being driven out by the minimum terms. I do not say that; it is a point which has been forcefully made in today's briefing from the Industrial Society. I shall quote one paragraph:
- "The Bill's dispute resolution provisions will undermine ACAS. The ACAS Code of Practice on Discipline and Grievance is widely adhered to and respected, but we fear that the lesser procedures in the Bill will instead become the norm amongst employers. The Minister's statement at Commons Committee stage, that ACAS will be asked to produce a new, in effect, lower level code, is shocking. Admitting it will be necessary as a result of the Bill is an admission that the procedure requirements are being down-graded".
One issue of practical application is the sense in which a grievance has been properly investigated—rungs one and two of the individual's right to a voice. There will be much greater acceptance of the procedure's validity if that feedback is taken into account from the start. If, for example, feedback included the request for every issue to be investigated at a certain level, that would lead to a more acceptable result. That also ties in with the right of a worker to be accompanied in a grievance by a legally qualified person, lay union representative or something in between. That also links to the need to retain the word "hearing" from the 1999 Act in place of "meeting", to avoid ambiguity in tribunals on the right to be accompanied. On that point, will my noble friend make a statement that would be seen in the courts as definitive?
On the Polkey principle, and despite the slight adjustment made in the other place, I will quote not the TUC but today's briefing from the Industrial Society, which advocates removing Clause 34(2)(2):
- "This Clause provides that a dismissal will not be unfair for the reason only that a procedure has not been followed. It is inconsistent with strengthening the adherence to procedures and reverses the House of Lords decision in Polkey v. AE Dayton Services 1988. HR managers have told us that it will be even more difficult to persuade managers to follow a procedure if they think they can get away with it by arguing that the employee would have been dismissed anyway. Nor is it clear when Polkey will not apply nor the weight of the burden of proof. If this is to be left to the tribunals, then it can only result in more claims to clarify the uncertainty.
- "Clause 34(2)(2) should be removed altogether. Failing that, it should be altered so as to limit its effect to the 100 per cent contribution cases—where the employee gets no compensation:
- "Delete: 'if he shows that he would have decided to dismiss the employee if he had followed the procedure'.
- "Insert: 'if he shows that the fairness of the dismissal was not affected by his failure to follow the procedure.'".
I will mention some of the other questions that I shall be raising so that my noble friend the Minister can consider where some of us are coming from before the Committee stage.
One area of concern is the new power to award costs in relation to the time and resources committed by the parties in preparing a case. We must avoid the problem of double recovery. If we are to achieve a level playing field, we should not include a whole army of employer representatives ticking up costs, which would scare off the applicant if only on the issue of costs. Employers' costs are much easier to quantify, as they are likely to have human resources directors and other senior staff whose time and salary can be taken into account. I draw attention also to the opposition of the Law Society to Clause 28, which gives tribunals powers to strike out cases at preliminary hearings, before any evidence is heard.
Irreversible trends in society create a demand for the exercise of rights. Unlike King Canute, we ought to recognise those trends.
6.54 p.m.
Lord Wedderburn of Charlton: My Lords, I congratulate my right honourable friends and my noble friends on bringing forward proposals in the Bill on family-friendly leave, equal pay questionnaires, which is a most important issue, and the implementation, albeit the rather inadequate implementation, of the directive on fixed-term work. I say that not because the fixed-term work directive is European. I never understand why just legislation cannot be passed by this Parliament, leaving aside the problems of the European Parliament, to which my noble friend referred.
I congratulate my right honourable friends and my noble friends also on the important provisions for union learning representatives. The Conservative Opposition in another place, in a rare Division in Committee, voted against statutory rights for learning representatives in Part 4. They see that as some sort of
promotion of the emergence or infiltration, as the noble Baroness, Lady Miller, said, of a gang of Jacobins coming through the tunnel, with whom an employer might one day be forced to discuss training and further education for workers.Those are all prudent and admirable provisions but I have a large number of doubts about others. I add my voice in support of the noble Lord, Lord Davies of Coity. The provisions for low-paid workers to which he referred are quite inadequate and must be looked at again. I share the doubts of some noble friends, the Law Society, the Industrial Society, the TUC and a number of trade unions, in respect of Parts 2 and 3 and the crucial Schedule 2, which has been widely sensed as the price of acceptance by employer organisations of the Bill's welcome features.
Some of us will want to test Parts 2 and 3 in Committee, which unhappily will not take place in this Chamber, not least because those parts were not tested in another place. The Government's objective, as stated in their response to consultation, is,
- "an estimated reduction of between 30,000 or 40,000 applications compared with current levels".
The Government's overall objective is to settle industrial problems and grievances at the level of the workplace, without litigation. No one with any sense of adequate industrial relations could oppose that objective but the key issue is how that should be done fairly and sensibly. Small employers should be compelled to have grievance procedures but that reform should have been enacted years ago. Should that aim be pursued by attempting, as the Bill does, to ban workers even from applying to tribunals and penalising those who dare to apply contrary to new and unfair conditions? The Bill's method of restricting access to justice must be unjustified, unless it can be shown that workers are abusing access to enforce their rights and that the conditions imposed are fair. The case has not been proved on either limb.
Since the publication of the surveys that I shall mention later, the case has become more tenuous. I have never believed that employment tribunals and litigation should be or can be a substitute for proper negotiation in the workplace and a strong trade union movement to represent work people. But the provision of a backstop legal process in the form of tribunals for individual grievances had become, one thought, a bipartisan policy since 1970. It is now central to the culture of our working life. It was not possible for another place to debate the proposed restrictions on workers' access to justice, even though some probing amendments were eventually tabled. The information was not available, so Members of another place had not read it—like the Opposition. I understand that the noble Baroness has not seen the SETA survey which is in the Library. She will correct me if I am wrong. Secondly, the Government's guillotine fell upon the few amendments that were put down on Report. In the light of those two features, the responsibility of this House is to look again at Parts 2 and 3 of the Bill.
Since September 2001, my noble friend Lord McCarthy and I have asked for discovery and publication of two full reports—first, the Survey of Employment Tribunals, or SETA, and, secondly, the Awareness of Employment Tribunal Rights survey carried out slightly before it. Both were available to the department early in 2001. Last Monday, in the depths of the Recess—and it gives me no pleasure to say this, but it is not a day when facts should be obscured—the SETA report was deposited in the Library of the House. The "awareness report", as I shall call it, was, I understand, deposited at five o'clock on Friday. That is not the way in which policy should be made.
Little snippets from these reports were quoted again and again in another place, but no one could refer to them to see whether the quotes were correct. I add my voice to that of my noble friend Lord McCarthy in saying that not even what has now been published shows that the Government's figures are right or even sustainable. Indeed, a social scientist in higher education who used the statistics as they have been given would really have to reconsider his position.
I turn now to my objections to Parts 2 and 3 of the Bill. I appreciate that the Opposition are making some play of this, but I am not sure that they have much standing to do so in view of their record. My first objection is to the wide regulation power in the Bill. There is far more than is needed to meet the stated objectives and assurances given by my honourable friend the Minister in another place.
My second objection is to the unfair and uncertain set of conditions which will operate as implied terms and will be imposed on all workers employed under the 25 million contracts of employment in the land, banning them from applying to tribunals or penalising them for doing so under new admissibility criteria—even when they have been treated illegally by an employer—unless certain unreasonable conditions are completed. The unreasonable conditions are contained, of course, in Schedule 2, to which so many people have now objected.
I pause to say that anyone familiar with tribunal work knows very well that disputes about whether these conditions have been fulfilled may well increase by thousands in pre-hearing reviews, if people get the opportunity. The president of the Employment Tribunals Service, who, contrary to the letter distributed to Members of the House from the Minister in another place, has maintained full consultation with the Secretary of State and Ministers on this matter, said that these conditions are,
- "frankly absurd and will be a nightmare to administer".
These unfair provisions respond to years of pressure by the CBI, the chambers of commerce, the Federation of Small Businesses and the Institute of Directors. There is no supportable reason for this change of policy—it is a radical change of policy—on the Government's part.
As to the first objection—the width of the regulation-making power for secondary legislation—I must admit that I rather expected my noble friend the Minister to introduce these parts of the Bill with a
spirited rendering of "I'm Henery the Eighth I am" because so many clauses give the Secretary of State power to interpret them. In the new Clause 33, which was inserted at the last moment in another place, there is a provision that it will not be the courts which will decide whether there has been compliance with the new unreasonable conditions but the Secretary of State. He will say whether there has been compliance with the provisions set out in the Bill.I leave it there because that leads on to Committee points and I want to restrict myself today to Second Reading points. But they are points that must be put on the record at this stage. We shall certainly press the Government to be rather more exact and to give the Bill—which is at the moment, in many ways, a skeleton—a rather more respectable physiognomy and add some flesh to the bones.
I repeat, the Bill's method of promoting workplace settlement by means of restricting access to justice can be justified only if it can be shown that workers are abusing access to justice in the tribunals. That is the key issue. That is why the Minister in another place constantly referred to these figures.
In 1968, the Donovan report—which is a better starting point than Franks—made quite clear the principles which were to be observed, not only in this country but in many European countries. Tribunals must be easy to access, cheap, not subject to the usual regime of costs and sensibly run—that is, informal. Unhappily, the Bill threatens a host of those principles.
It threatens a new cost regime—we do not quite know what—even though the Leggatt report said that nothing should be changed until more research was done. It proposes new awards for management's estimated "preparation" time—a proposal obscure in its terms which we shall have to amend. This is an opening which will clearly be used to intimidate workers with a good case who want to take action against illegal management acts, making them fearful of approaching the tribunal. Imagine if your case had crossed the desk of the noble Lord, Lord Simpson, at Marconi, and you were told that you had to pay for his preparation time. That would cost you a pretty penny. This provision must be looked at.
The provision in the Bill to abolish the principle adopted by the courts—the Polkey rule—that employers must observe all relevant contractual procedures before the dismissal of a worker could be fair must be jettisoned.
Of all things, the Bill aims to cut down the duties of conciliation officers from ACAS. Why? As my noble friend said, conciliation has increased faster than applications. The Bill will impose new rules whereby a worker with a good prima facie case will never even get to a tribunal or could be penalised for doing so. Most of the new rules are based on the statutory grievance and discipline procedures in Schedule 2 and are implied in every contract in the land. They are unfair and not, as the TUC wanted and made clear, based on the more fair procedures of the ACAS code, which is not perfect but is obviously more fair. Indeed, the
ACAS code will not survive. It was made clear by the Minister in another place that it will have to be rewritten after this Bill.It is admirable that the Bill will compel small employers to adopt grievance and disciplinary procedures, but the new rules are not even handed. They give the employer the last word in every dispute; they do not even require investigation before a dismissal; and they tell a worker who is thrown out of the works, told to clear his desk and go, that he must come back and use the procedure. It is a fantasy land. I agree with my noble friend—I doubt whether the Bill will save 40,000 cases. But the Government are determined on this matter; otherwise they would not include it in the Bill.
How did this sorry story come about? It is necessary to say a word about how this has happened because it is so unlikely, especially for my Government. How did it come about? We know that the CBI and employers' organisations have been grumbling since 1980 about the cost to business of workers enforcing their individual rights at work. They complain of the cost of tribunals enforcing workers' rights. They spent years demanding more law in industrial relations and now they have it they do not like it being enforced. A right which is not enforceable is an exercise in frustrated rhetoric. It is not surprising that the claim about costs does not take account of the justification of the claims.
Let us be clear. British employers are not alone. The French employers' organisation, MEDEF, has now launched a campaign to cut down the jurisdiction of the Conseils de Prud'hommes in France and the Italian employers have convinced the Berlusconi government to accept demands to slash employment protection rights. It is a fairly general phenomenon. Yet research shows that of the applications made in this country, those that succeed at a hearing have remained at a fairly steady rate since 1988. I thank the Minister who not only sent me by post a copy of the SETA survey, which saved me half a day, but also for sending me in the middle of this debate a reply to a Parliamentary Question which shows that since 1986 the proportion of successful applications has scarcely varied. Indeed, it increased again last year.
So where are the indefensible demands by applications to tribunals launched in a frenzy of litigious fever? As my noble friend has said, they do not exist. Employees' applications for remedies in the employment tribunals have been steadily increasing for two decades. Of course, one can gain a percentage increase according to where one starts. The Government are right that between 1990 and 2000 the number has tripled, but if one starts in 1990 and goes to 1996, the figure is multiplied by 2.5. If one considers the years from 1996 to 2001, the increase is by a factor of 1.3. There has been no marked recent increase.
Here I depart slightly from my noble friend Lord McCarthy. The research by Dr Earnshaw and her colleagues in 1998 and by Dr Burgess and his colleagues published shortly thereafter, have given us five factors which are the reason for the steady increase
in applications to tribunals and which the Government actually recognise in one of their documents. The five factors are these. First, discrimination cases increasing related to increasing female participation in the workforce. Secondly, unfair dismissal cases increasing because of growing employment in small enterprises, where there are inadequate or no procedures. Thirdly, redundancy cases related to the decline in manufacturing employment. Fourthly, cases related to the decline in trade union membership. Fifthly, the steady extension in the jurisdictions of the tribunals over the years. That is important.But in 2001, the leading scholars in the subject, Professors Deakin and Morris, concluded:
- "The perception that the system is being abused by unmeritorious applicants is based on anecdote rather than research".
- "Sixty four per cent of applications to the employment tribunals come from employees who have not attempted to solve the problem with their employer directly in the first instance".
- "When combined, these findings suggest that, in 62 per cent of cases, the applicant did not meet with the employers to try to resolve the dispute. These findings have to be interpreted with some care".
But the Minister in Committee in the other place—this is crucial to the issue—returned again and again, like a dog with a bone, to the evils of the 62 per cent and 64 per cent of applicants who had done nothing to try to solve the dispute. Noble Lords may wish to refer the reports of 11th December and 18th December and to many other parts of the proceedings. But suddenly, after the Bill had been published and long after the new policy on access to justice had been formulated, the Minister suddenly produced another figure. He said,
- "In 37 per cent of applications there was no attempt to resolve the problem before the application was made".
- "Around 7 per cent of people who have experienced problems (with employers) did not seek advice or make contact with their employer to resolve the problem ... The remaining 93 per cent of employees who had experienced a problem said that they had tried to resolve the problem".
There appears to be something very odd about the ministerial arithmetic: 37 per cent had not tried to resolve the problem, but 93 per cent had. That was enough to make one search the published evidence, when it was made available, and to look very carefully at what was said at page 24, where three sets of questions and answers are combined. My noble friend on the Front Bench shakes his head, but if he looks at that page he will find—
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