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Lord Wedderburn of Charlton: With great respect to the noble Baroness, I hope I quoted and read accurately, but in case I did not I shall read again what the Explanatory Notes state. Paragraph 63 states:

"It is not intended that the parties should have to prove how much time they have spent preparing for a case"—

I interpose that I am interested in what will really happen. They continue:

"but that the tribunal should make an assessment based on guidelines to be set out in the Employment Tribunal Rules of Procedure".

If the noble Baroness is confused by the Explanatory Notes, then to some extent so am I because I cannot see any justification in that rule of thumb just to give money to someone on the basis of an a priori set of rules drawn up by the Secretary of State. The noble Baroness really must try and suspend disbelief.

It is not a case of assuming that money should necessarily be demanded from the applicant—there is no presumption that that should be so. This subsection is a new type of penalty. It is not put forward as costs, although Amendment No. 74 would demand that it be limited to costs—and that should be on the face of the Bill if anything should.

It is not demanded as compensation—I have hesitated to raise that but I will mention it. There has been a big argument in Committee in another place about whether there is a possibility of double recovery. It did not seem to me that the arguments advanced were necessarily knocked down, although they had

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some substance. I put aside the point of double recovery, that the party who is claiming for preparation compensation—if it is compensation—could possibly get double recovery in some way as an applicant. I did not think they were very strong.

Although it is headed "Compensation" in the Explanatory Notes, it does not involve real compensation. Although it is said to operate where costs are awarded, it does not involve real costs; it involves the payment for preparation and time. It is a new species of civil penalty. On that basis, I submit that it is wholly unreasonable to introduce a general proposition of the kind that Clause 22(2) advances, in particular because it is not limited in the Bill to cases in which costs can be awarded. Even if it were so limited, it is for the reasons given by the Law Society an unfair and disproportionate provision which would, as they say, take the practice in employment tribunals for calculating costs awarded beyond that of the civil courts. We are not even talking about being parallel in costs with the civil courts; we are talking about going beyond the civil courts, which do not include non-legal costs in their awards.

I tabled a Question on 9th January which I will read to Members of the Committee. I asked Her Majesty's Government,

"whether any awards of costs have been made in the last five years in respect of time spent by a party in preparing his or her case—

(a) where the party was legally represented; or,

(b) where the party was not so represented,

in any of the following—

(i) planning inquiries;

(ii) tribunals; and

(iii) courts;

and, if so, on what principles and authority these awards were made and what was the range of amounts involved in such awards".

I give away no secrets; when I was asked what on earth my Question was about, I advised those who inquired that they were about page 32, lines 30 to 35 of the Employment Bill.

I have not had a reply to my Question. If the Minister has a reply this evening, I shall be interested to hear it. I suspect that the answer is that no such awards are made in courts or tribunals. Among those whom I have consulted are experts on costs. They intimated to me that sometimes in a planning inquiry there could be such an award for preparation time. However, when I asked to see the legal basis for such an award, I did not get further than being told that that was done on normal legal principles. I know of no such principle; I know of no such practice. The Law Society is surely right that this goes far beyond normal legal practice and the best thing to do with Clause 22(2) is to remove it from the Bill. I beg to move.

Baroness Gardner of Parkes: I do not intend to speak at length to this amendment because the Minister heard me speak on it earlier in relation to Amendment No. 65. I oppose the amendment and would like it left in the Bill as it stands.

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I was concerned to see in the Explanatory Notes—this may apply only to the earlier part—a reference to excluding the not-for-profit sector. That does not apply to new subsection 13A(2). However, I draw attention to the fact that according to the Explanatory Notes, the award could be made only in circumstances in which a costs award was to be made. I support the point made by the noble Lord, Lord Wedderburn of Charlton—if that is the case, it would be better if that was clearly stated in the Bill.

I do not agree with Amendment No. 74, which spells out particular categories. It would be good to see how it was related. A power is involved—I refer to the phrase, "it may include"—but if it was limited to cases in which costs were to be awarded, that would be better.

Lord McIntosh of Haringey: First, the Government owe an apology to the noble Lord, Lord Wedderburn, for not having replied to his Question of 9th January. The amount of time that has passed is quite unacceptable and I shall pursue the matter immediately. I suspect that the delay is due to the fact that the information required comes from a number of different sources. That is an excuse but not an adequate reason.

As is so often the case, this matter involves issues on the substance of the amendment—or, in this case, the amendments—and the issue of whether matters should be set out in regulations or on the face of the Bill. I start by acknowledging what is clearly the fear behind the amendment—that is, that the new provision for preparation time will impact harshly, particularly on applicants, and will deter genuine complaints. My noble friend Lord Wedderburn and Members of the Committee have received an assurance that it is not our intention to reduce the number of tribunal cases by deterring applicants in that way. We have sympathy with the thinking behind the amendment.

I turn to what is proposed in new Section 13A and in the regulations for which it provides. First, the noble Baroness, Lady Gardner, is right—it is, indeed, proposed that regulations will provide that compensation for preparation time shall apply only in circumstances when costs can apply. That brings me to the most important point of my response. Costs awarded in tribunals are absolutely minimal. They are neither frequent nor very high.

Lord Wedderburn of Charlton: I am most grateful to my noble friend, but it might be convenient if we tried to deal with precisely that point. When courts are faced with different words in different provisions of a statute, they tend to believe that different meanings are attached. If new Section 13A refers to costs, why does it not say so? Any court faced with the word "payment" will assume—at any rate, to begin with—that it means something different from "costs". I appreciate that the court will have to look at the regulations. The noble Baroness looks astounded, but there is a perfectly normal presumption that if I say

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"costs" in one section and "payments" in another, I mean something different from "costs", otherwise I would have said "costs".

Lord McIntosh of Haringey: Perhaps I may develop my argument.

Lord Wedderburn of Charlton: Perhaps I may just complete my point. If my noble friend wants to make this "costs", why does he not say so?

Lord McIntosh of Haringey: I do not want to make it "costs". If I am allowed to develop my argument, the position will become much clearer. Costs are very rare. There were only 247 awards last year, averaging only £300.

The other point that I wish to make is that costs are not only made against applicants. Last year, two-thirds of the awards were made against applicants, but in other years the proportion has been more even between applicants and respondents. However, a safeguard against unreasonable behaviour is provided for parties in a system which is otherwise very open and accessible, as it should be.

It must be right that, where a party has been taken unnecessarily to a tribunal, or has had to resort to litigation because of an unscrupulous employer, there should be a way of redressing that. Perhaps I may underline that with a real example. An employer was ordered by a tribunal to pay costs to an applicant after the tribunal found that the employer had acted entirely unreasonably. The employer had not even given a reason for the dismissal and, furthermore, the tribunal concluded that the investigation which preceded the dismissal was biased, unreasonable and breached the rules of natural justice. Surely it was right that the employee in that case should be compensated for the losses that he incurred as a result of his employer's unreasonable conduct in defending a series of actions which were indefensible. I know that there is concern among the groups which represent applicants.

7 p.m.

Lord McCarthy: Perhaps I may—

Lord McIntosh of Haringey: It is much better if I develop my argument.

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