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Lord McIntosh of Haringey: My Lords, I was not shaking my head as the noble Lord, Lord Wedderburn, believes. I was shaking my head at the suggestion from the Opposition Front Bench that the noble Lord's speech was too long.
Lord Wedderburn of Charlton: My Lords, I am sorry if the Opposition or anyone else believes that my speech is too long to set out the facts. These are not Committee points. I use Second Reading for Second Reading points. Noble Lords will find on page 24 of the report that three sets of questions and answers are combined uniquely in the report, without there being a table giving the individual questions and answers. That is unique.
The re-worked answers are combined to show that no attempt to try to resolve the dispute took place between the parties. What do the researchers say? They do not say that the employees failed to try to resolve the dispute, but that:
- "This is probably the most comprehensive indicator of lack of dialogue available from the data".
That case falls within the statistics. Yet it is on the misinterpretation of these two re-worked statistics that public policy has been reversed. Access to justice will be denied to workers if the Bill goes through. I beg the Government to think seriously about what we shall press for in Committee and on Report—that Parts 2 and 3 of the Bill must be revised and reconstructed. I beg the Government to think again and give us a Bill all parts of which we can support.
7.20 p.m.
Lord Moynihan: My Lords, I have a number of substantive points on the Bill that I should like to make. I should also like to make a few general points about employment legislation. However, I should, first, declare my interests, which are threefold: I am
both an employee/employer with Consort Resources Ltd, and a parent. Therefore, the changes proposed in the Bill will affect me on all three counts.The Government have said that the aim of the legislation is to,
- "deliver a balanced package of support for working parents, at the same time as reducing red tape for employers and making it easier to settle disputes in the workplace".
On this day-to-day level, as we know, the interests of employers and those of employees do not always coincide. When it comes to employment legislation, a fine line must be negotiated between them to achieve best practice results. This line is the difference between what must be enforced by regulation and what is best left to a voluntary approach, though I accept that that is a hard one to tread. Sensible measures to raise standards in the workplace are always welcome. While governments can have a role to play in that respect, it must be remembered when drafting legislation that there is a very strong link between good employment relations and success in the market-place. After all, productivity depends on employers and employees working together in an effective partnership. Regulation is rarely the best way to achieve that partnership.
The Bill before us is no exception. From the effective reversal of the Polkey decision to the right for parents to request flexible working, it is a delicately balanced package. The stakes are high, especially for a Bill whose impact will be felt at the same time as the cold shadow of darkening economic skies. A harsher climate is facing British businesses today. Get it wrong, ignore the gloomier economic forecast, allow the sharp edge of Britain's competitiveness to be blunted and not only employer and employee, but every British citizen, will be the loser. Get it right and we will have equipped our workforce—employer and employee alike—with the tools to ride out economic downturns.
Businesses are increasingly concerned about the growth and complexity of new employment rights and about the rise of what has been termed "the compensation culture". In that context, regulation does carry a health warning with it, and that is particularly so with over-prescriptive regulation. That is why I advocate a light touch approach, working with the grain of existing best practice, regulating where unavoidable and taking particular account of the needs of small firms. All of those measures are necessary.
That is the context in which I have considered Part 1 of the Bill, which concerns statutory leave and pay. I should like to place on record my unreserved support for family-friendly working—a point eloquently summarised by the right reverend Prelate. Family-friendly working practices make sound business sense
when it comes to retaining skilled staff. On that basis, I do not believe that they are an optional extra for the majority of employers. A seismic shift has taken place in our society. The workplace has lagged behind; but, like other areas of our national life, it, too, must adapt to the reality of the modern family.However, in offering that support for the Government for many aspects of Part 1, I hope that I shall not inject too much of a controversial note into today's debate when I raise two reservations that also emerge from this part of the Bill. The first is with regard to ensuring that these measures have the desired effect in improving the position of women in the workplace; and the second is with regard to the effect that they will have on small businesses.
The provisions of the Bill will give mothers a choice on how to combine their work and family responsibilities. It will allow them to fulfil their role as parents without compromising their role as employees, and vice versa. Any measure that increases the supply of skilled workers by making it easier for women to return to work should be welcome. However, it is very important that this provision does not backfire and have the negative and unlooked-for effect of discriminating against the very group that it is intended to help. I hope to explore that point further during detailed discussion in Committee.
In particular, small businesses will find it difficult to comply with the Bill's provisions. It will be genuinely difficult for some of them to keep jobs open for up a year and to train temporary staff, with no guarantee that their employees will return. I must emphasise that I am not arguing against these measures in the Bill, but I believe that employment legislation must, above all, be realistic and not idealistic.
I take further the points made during this debate on small businesses. I believe that it is important to acknowledge that the Bill's provisions affecting small businesses are not cost free. That does not mean that those costs are not worth paying; and, indeed, that the long-term gains from them will not benefit society far more than the short-term costs. However, all regulations in the workplace impose costs, both direct and indirect, on employers, other employees and society as a whole. It does not mean that regulation is wrong, but it means that choices and priorities will sometimes have to be made. Businesses are not infinite shock absorbers. They can only absorb so much in the way of cost burdens.
At this point in my remarks it is sensible to say a few words about flexible working, although, as we know, this proposal appears later in the Bill. In principle, I support the moves to implement the recommendations of the Work and Parents Taskforce, so that parents of young children are given the right to ask for serious consideration of flexible working arrangements. Employers will have a duty to find a solution, wherever possible, that suits both the worker and the business.
Clause 47 was originally tabled under a schedule of "minor and consequential amendments" in another place. However, there is nothing minor about it. It is perhaps one of the most significant clauses in the entire Bill. As has been pointed out, the drafting of this new clause has caused concern. Some of the language in it is very odd, and that is a matter that must be addressed in Committee.
I should also like to make a few comments on Parts 2 and 3 of the Bill, especially with regard to employment tribunal reform and dispute resolution. There has been a general welcome for the measure to modernise the employment tribunal system, particularly outside the Chamber and this evening's debate, and to encourage dispute resolution in the workplace through dialogue rather than litigation. I, too, share that welcome. There is no doubt that it is a step forward for employees to use internal grievance procedures to resolve disputes in the workplace without going to tribunals. Any measures that help to deter trivial or vexatious applications are both necessary and desirable.
I have a number of major reservations about Part 4 of the Bill. The clause to place trade union learning representatives on a statutory footing, which the CBI has called a "step in the wrong direction", falls into that category. The idea of increasing the amount of training in the workplace is a good one, but the mandatory requirement imposed by the Bill for employers to recognise and provide time off to an unlimited number of union learning representatives, without having any say in their appointment or selection, is not. Indeed, although the proposal could have benefits, which I certainly recognise, compulsion sends all the wrong signals. The point about compulsion should be at the centre of our debates. Learning representatives will add value only when they work in partnership with employers. Compulsion is only likely to add to costs.
The proposals on fixed-term working are also an area of concern. Here I should like to echo the words of the noble Baronesses, Lady Turner of Camden and Lady Sharp. They will have far-reaching implications for university teachers, given the endemic use of FTCs in higher education. It is clear from this evening's debate that we shall be returning to that point in Committee. I welcome that clear consequence demonstrated by the speeches that focused on the issue.
However, the Bill will also give fixed-term employees equivalent rights, including rights involving pay and pensions, which were not covered by the original EU directive on which this part of the Bill is based. As my noble friend Lady Miller mentioned, there was considerable debate in Committee in another place on this "gold-plating"—to use her words—of the EU directive. Moreover, these regulations can be brought in at a later date. The point about introducing the regulations at a later date by statutory instrument causes me concern. It means that they are unlikely to be subjected to widespread debate or consultation.
In that context, does the Minister accept the CBI's belief that the introduction of pensions under the fixed term regulations will be extremely complex and costly to administer? How will the proposed new rights for employees on fixed term contracts be implemented in a way that imposes minimal burdens on businesses?
Finally, I want to refer briefly to the use of information for or relating to employment and training, which is dealt with in Clause 50 and in Schedule 6. This raises some important issues of confidentiality—even perhaps of human rights—which I should like to flag now as matters to be raised in Committee. I should like to know whether such confidential information will be shared with the private sector contractors who do the work. If it is not, they will have no way of validating the assessment by the Department for Work and Pensions of how much money is owed to them. If that is the case, anyone who has contact with the department will have to accept that their earnings patterns thereafter will become something of an open book. I understand the underlying need for the provision, but I consider it to be a drastic step and one which smacks of a Big Brother state tracking private citizens as a result of engaging with the Department for Work and Pensions or one of its contractors.
The Bill was described earlier as a "curate's egg"— good in parts, and I agree with that assessment. It is a well-intentioned Bill. Although its individual parts may not appear to impose an onerous load, taken as a whole its cumulative effect will be to add to the burden of new regulatory compliance, administrative obligations and organisational flexibility.
Moreover—this is a key point—the Bill depends greatly on enabling secondary legislation for its effect. As has been mentioned, again eloquently, before us we have a skeleton the bare bones of which have yet to be fleshed out. Such leap in the dark legislation only contributes to my concerns.
At the beginning of my remarks, I made it clear that employment legislation must tread a very fine line. The Bill is in danger of crossing that line. I do not believe that it does so yet, but any further concessions risk destabilising the employer-employee relationship, to no one's advantage and at the expense of our economy as a whole.
7.32 p.m.
Lord Gladwin of Clee: My Lords, at this time of night when you are the last man in, you become aware of two things. One is that most of the things that you want to say have been said. The other is that the Chamber is usually peopled by Members who have already made their speeches and are anxious to hear the Minister's reply and get on with the next business. I have been crossing out large chunks of my remarks so I shall detain the House for only a few moments.
I declare an interest. I was formerly an official of the GMB trade union and spent 30 years infiltrating British industry—in most cases, I must say to the noble Baroness, Lady Miller, at the invitation of the
employer. My experience which is more germane to this debate is that I have been a member of two employment tribunals and am currently a member of the Employment Appeals Tribunal—which experience brings me directly to those parts of the Bill that give me and many others cause for concern.I firmly believe that all employers should have in place a fair procedure for resolving disputes in the workplace. Unfortunately, as the Minister in another place remarked, there are 600,000 workplaces where no such procedure exists. That is why I welcome the proposal in the Bill to require employers to adopt such procedures. However, these statutory requirements are skeletal—a word used by a number of speakers.
Frankly, if the Government wanted to increase the number of workers covered by in-house grievance and disciplinary procedures, all they had to do was to make the ACAS code of practice the statutory requirement. The Minister in another place said that the jump from having no grievance and disciplinary procedure to being legally required to observe the provisions of the ACAS code of practice would be too much for many small employers. If that represents some of the pressure being exerted on the department, why not do it in a staged way, according to the number of employees—requiring the large employers to apply the ACAS code immediately, which most follow anyway, but allowing smaller and medium-sized employers to follow suit at a later date?
We have considerable experience of staged legislation being introduced in order that employers can catch up with the requirements. That proposal was suggested in debate in the other place. Perhaps I may be forgiven if I am wrong, but I believe it was supported by the leading spokesman for the Conservative Opposition, Mr Philip Hammond, and also by members of the Labour Party. The suggestion was turned down by my honourable friend Alan Johnson—but not in a very convincing way. Noble Lords have only to read the Committee stage proceedings to see the point I am making.
The problem with the proposals in the Bill are, as I have said, skeletal. For example, there is no requirement for an employer to carry out a proper investigation before proceeding to discipline or dismiss an employee. Such a procedure would in itself be unfair. Another example is the absence of any reference to the right of a worker with a grievance or of a worker facing possible disciplinary action by the employer to be accompanied at the meetings referred to in the statutory procedure. The third example is the use of the word "meeting" in the three-step procedure. The final stage is an appeal and should, therefore, be described as a "hearing". That is a point to which we shall return in Committee. The details of the interpretations of the clauses will, as I understand it, be set out in regulations, but the three examples I have given are important omissions which should be remedied and set out on the face of the Bill.
I have two further concerns on which I should welcome comments from my noble friend. The first relates to cases of alleged gross misconduct where the employer can use the modified procedure set out in Schedule 2 to the Bill. But again there is no requirement for an investigation before dismissal. In these circumstances the sacked worker is appealing from outside the workplace. In my experience that rarely, if ever, leads to reinstatement if the appeal is successful. My worry is that some rogue employers will see the modified procedure as a way of sacking people and thinking afterwards; and that we shall see an increase in unfair dismissal claims coming before tribunals.
At this point I must declare a further interest. I am a member of the council of Public Concern at Work. My final concern is the impact of the Bill, particularly Clause 30, on the Public Interest Disclosure Act 1998. The noble Lord, Lord Borrie, referred to the issue, and I shall not repeat his remarks. However, I ask the Minister for an assurance that there will be no conflict between the statutory procedures for dispute resolution set out in the Bill and the safeguards for whistle-blowers in the Public Interest Disclosure Act.
7.39 p.m.
Lord Sharman: My Lords, in the spirit of the noble Lord, Lord Gladwin, I shall endeavour not to detain your Lordships too long in winding up. It is difficult to disagree with the stated objectives behind the Bill. Patricia Hewitt, Secretary of State for Trade and Industry, said that the Government's priority was,
- "to deliver a high-skill, high-productivity economy".
- "Productivity is not about working people into the ground; it is about skilled people in high-performance workplaces, where employers and employees work together in an effective partnership".—[Official Report, Commons, 27/11/01; col. 864.]
I welcome in particular the family-friendly provisions in Part 1. It is generally accepted that the modern British economy faces some potential long-term problems of increasing the supply of skilled and unskilled workers. Much of that supply will have to come from older workers who have retired prematurely or from women, who traditionally have taken long and often involuntary absences from employment. Any provisions, such as maternity or paternity rights, that make it more comfortable for women to return to work should be welcomed and encouraged, as long as they are properly balanced. The provisions in Part 1 go a long way towards achieving that objective.
However, as the Law Society's commentary on the Bill says,
- "the Bill is a wasted opportunity to clarify the existing problems of definitions in maternity provisions, such as the right to accrue holiday entitlements under the Working Time Regulations during periods of statutory leave, or the haphazard and unfair treatment of bonus payments".
As the noble Baroness, Lady Turner, rightly said, that brings us to the end of what could have been a nice separate Bill, which I am sure that my party would have worked diligently to help the Government pass through this House at record speed. However, we then come to what the noble Lord, Lord McCarthy, referred to as the "manky meat"—Part 2 on tribunal reform. Why the provisions have been introduced in this Bill at this time is puzzling at best and incomprehensible at worst, when the Leggatt report is sitting on the table. I am not a lawyer, but I understand that the report applies to all tribunals, with the stated aim of simplifying their processes. Why could we not wait until some of that was implemented?
Secondly, as my noble friend Lord Razzall remarked, we have an Employment Tribunal System Taskforce which is also studying the problem. Why not wait until it has reported? I shall not go on about the problem of tribunal reform. Many people who are much better equipped to comment on those provisions have done so. However, it seems to me that the provisions will not achieve what is stated in the priorities. They will not make things better between employers and employees. I entirely endorse the contention that any procedure that requires the filling in of a form—even a simple form—immediately puts people in the hands of lawyers and the legal process. I have grave reservations about that.
Part 3 deals with dispute resolution. The noble Lords, Lord Lea and Lord Razzall, have referred to the grave concern expressed by the Industrial Society that the process of ACAS will be undermined by the procedures. My party has some significant reservations about Schedule 2. The absence of any requirement for employers to investigate before decisions are taken is incomprehensible. Good management would always want to find out the facts. An overall requirement that any hearing should be conducted fairly would be an added benefit.
I can think of some genuine reasons why employers might have to dismiss employees without a hearing. In such circumstances, they should not be penalised. However, the provisions as drafted might well encourage employers to dismiss employees for gross misconduct even if it is not appropriate. We shall need to look at that carefully in Committee.
Clauses 33 and 34, which deal with the failure of applicants and employers to follow procedures, need fundamental re-examination. In both cases they may well achieve the opposite of what is intended.
We then come to Part 4, on which my noble friend Lord Razzall has already expressed our concern that the flexible arrangements envisaged in Clause 45 should apply to all workers, including agency workers and others. We shall need to look at that in some depth.
Finally, I repeat my party's opposition to Clause 49. Dr Vincent Cable, the Liberal Democrat spokesman on trade and industry in another place, said on Second Reading:
- "the provisions are not only inappropriate, but extremely reactionary...
- The clause will mean that, in future, the partners of disabled people in receipt of a variety of disability benefits will be required to submit to the work test. If they fail that test, as currently defined, benefit sanctions will ensue.
- That worries us deeply, because there is no evidence that the process will encourage disabled people's partners to work. However, there is a lot of evidence to suggest that many such partners, although they are not being paid, are working, in the sense that they are carers. Driving those people into work would be inhuman in some cases, and enormously costly to the state, which would have to fulfil the caring responsibilities".—[Official Report, Commons, 27/11/01; cols. 886-87.]
I am not sure whether the Bill is a curate's egg or a manky meat sandwich, but I am sure that we have enough to get our teeth into in Committee.
7.49 p.m.
Lord Rotherwick: My Lords, I declare an interest in that I run a small business and also own and manage office accommodation that is home to a number of small firms. Oxfordshire is one of the most successful counties for small businesses in Great Britain. I also declare that my wife and I have a 15 month-old baby. I am not sure that I would like to be thought of as a new father with nappy-changing abilities, as the right reverend Prelate the Bishop of Hereford said, but over the past 15 months I have become only too aware of the importance of paternity leave and the challenges that parenthood imposes on a husband and wife.
I therefore consider the Bill with a balanced mind, both as husband to a mother who is a key worker in an IT industry and requires maternity leave to nurture a newly born child and as an employer concerned about the Bill's impact. I should also say that I hope that a few noble Lords will agree with me that it is disappointing to see that the Bill does not deal with the paternity leave of Whips in your Lordships' House.
As the noble Lord, Lord Razzall, said, this is a mish-mash of a Bill that has a number of aims, some of which we can accept, some of which we have reservations about and some of which we cannot accept. My honourable friend in another place, Mr Hammond, said:
- "It is largely an empty box—a skeleton of primary legislation—the full impact and effect of which we shall not be able to judge until we see the regulations that should accompany it".—[Official Report, Commons, 27/11/01; col. 921.]
It should also be said, on a brighter note, that the accompanying Explanatory Notes are exemplary in their clarity. Sadly, they will have no impact on interpretation of the Bill once it becomes law.
We hope that when the Bill becomes law, our businesses, especially small businesses, do not lose too much of their competitiveness in relation to their world competitors. Undoubtedly some groups, including the trade unions, would wish the Bill to go
further. Employers may be anxious to give less away. Trade unions have done much good, but businesses must be competitive to continue to employ and expand. We must not go back to the old days of the state continually being required to bail out failing businesses that have become uncompetitive due to bad work practices.As my noble friend Lady Miller said, the Government state that the Bill's aim is to,
- "deliver a balanced package of support for working parents, at the same time as reducing red tape for employers and making it easier to settle disputes in the work place".
It may be of interest to the noble Lord, Lord McCarthy, to hear that there has been a torrent of legislation in this area. Indeed, there have been more than 3,856 new directives this year alone—the highest number ever. It must come as no surprise to the Government that—although the move was popular, as the noble Lord, Lord Lea, said—since they signed up to the social chapter, Britain has fallen from ninth to 19th in the world competitiveness league. More worryingly, our productivity growth has gone from being above the G7 average to below it.
We should always remember that small businesses comprise 99 per cent of all businesses in this country, employ 44 per cent of the private sector workforce and generate 37 per cent of the output. They also create almost all new jobs in the economy. If British industry is to live successfully in an ever-changing economic environment, there must be a cessation of the indirect costs on business that the Government have created in successive waves of regulation. Those regulations impose both direct and indirect costs on business. We may not have gone as far as some of the countries in the European Union in creating disincentives to job creation, but it is important that we strike a fine balance between employees' rights and a loss of competitiveness in Britain's firms.
As a Fellow of the Industry and Parliamentary Trust, I have spent a number of days with BAE Systems. In those days I have become more aware than ever before of the importance to a firm of being able to recruit, train and retain skilled workers. Employees tend to be dedicated to the firm they work for not only because they enjoy the working environment and the challenges of the workplace, but because the firm recognises the employee's requirements to have a fulfilling family life as well. Families that have time to nurture their children give their children a good start in life and offer them the best chance of growing up to be contributors to society.
It is clear that the proposed extension of rights to paid and unpaid leave for maternity, paternity and adoption will increase the opportunity for families to create a caring and secure environment for children. The higher rates of statutory pay and longer periods of entitlement will help employees who are fortunate enough to benefit. Time will tell, however, whether the
legislation has over-egged the pudding and whether in times of economic downturn firms will find these rights to be the straw that breaks the camel's back.Professor George Bain—who is much quoted by Labour Members in another place, and also by the noble Lord, Lord Sainsbury—said that,
- "very often it is a case of employee versus employee because one person's flexible working is quite often someone else's inflexible working".
Last November, we saw a high-profile tribunal case in which WPC Michelle Chew of Avon and Somerset Police was refused permission to work the same days each week so that she could take her children to nursery school. Avon and Somerset Police said that all officers had to work varied shifts, while critics believe that special treatment would lead to a backlash against working mothers by men and childless couples. The tribunal ruled that the force had breached the Sex Discrimination Act 1975. One should obviously consider the effects of giving benefits to one section of society that might have negative implications for another section of society. Why should one section of society shoulder the burdens created by the flexibility requirements of another section of society?
We are glad to be able to welcome the Bill's other main strand—proposals to improve disputes, resolutions and tribunal procedures. It must be right to have as much clarity as possible in this sphere, thus one hopes improving the number of disputes resolved in the workplace. Can the Minister tell us whether ACAS will receive further resources to ensure that it can provide a more comprehensive and more effective service?
As my noble friends Lady Miller and Lord Moynihan outlined in their speeches, in Part 4 the Government propose to impose on employers a requirement to recognise and provide time off to unlimited numbers of union learning representatives without giving them any say in their selection or appointment. Like my noble friends, I am concerned about this part of the Bill. One wonders whether it is simply a pay-off to the Government's union paymasters. Although we believe that union learning representatives can play a valuable role in the workplace, it is respect for them by their employers that will make their roles worth while.
We accept the Bill's broad objectives, which are most well intentioned. Taken individually, the objectives may not seem to constitute an unacceptable burden. However, given all the other new burdens of regulatory compliance, administrative obligation and organisational inflexibility that the Government have imposed, we must take the utmost care in placing further burdens on our businesses. We should also put the debate in context. The Government's proposals are being presented after three successive quarters of manufacturing recession, and businesses across all sectors are reeling under the seemingly unstoppable flow of new regulation. At a time when the global economy is heading towards a sharp downturn and jobs are being lost at an accelerating rate across the
UK, we must ask whether this is the time to impose new burdens which will make Britain's economy less competitive.8 p.m.
Lord McIntosh of Haringey: My Lords, perhaps I may take the analogy of my noble friend Lord Lea of Crondall and say that I do not believe I have heard so many Mark Anthonys in the course of an afternoon and evening in any debate in this House before. I rather liked the formulation of my noble friend Lord McCarthy, which he did not quite finish. He is not in his place! I have pages of reply I am not supposed to give.
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