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Baroness Northover: I thank the Minister for that reassuring reply. I shall read it in the cooler light of day. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25, as amended, agreed to.
Clause 26 [Complaints about regulatory bodies]:
[Amendments Nos. 180 to 188 not moved.]
[Amendments Nos. 188A and 188B not moved.]
Clause 36 [Regulations and orders]:
Lord Hunt of Kings Heath moved Amendment No. 189:
- Page 43, line 28, at end insert "or, in the case of an order made by the Department of Health, Social Services and Public Safety in Northern Ireland under section 25, by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12))"
On Question, amendment agreed to.
Lord Hunt of Kings Heath moved Amendments Nos. 190 to 194:
- Page 43, line 31, after "section" insert "25,"
- Page 43, line 34, after "34" insert ", or an order of the Secretary of State under section 25,"
- Page 43, line 35, at end insert—
The noble Lord said: With the leave of the Committee I shall move Amendments Nos. 190 to 194 en bloc. I beg to move.
On Question, amendments agreed to.
Clause 36, as amended, agreed to.
House resumed: Bill reported with amendments.
Clause 38 [Failure to give statement of employment particulars, etc.]:
Lord Razzall moved Amendment No. 192A:
The noble Lord said: I trust that we are all suitably refreshed and have done our homework over the Easter holidays. The purpose of this amendment—and I am indebted to the work that the Low Pay Unit has done here—is to attempt to deal with one of the difficult issues, the complexity of Clause 38. I think everybody will agree with the comments of Judge Prophet that the existing Clause 38 is mind-numbingly complex. As Judge Prophet says,
I am sure we are all agreed that the widespread failure to provide written statements, as identified by the DTI, causes damage to the employment relationship. That certainly conforms to the experience of people who are familiar with this field. Therefore, there is no dispute from these Benches as to the rationale for a sanction on employers to encourage compliance. We would, however, agree with the comments of the Low Pay Unit and others that the question must remain as to whether Clause 38 is the best public policy response to this problem.
Perhaps I may share with the Committee some of the problems that can arise. First, we submit that the measure is badly targeted. The sanction under Clause 38 will apply only where an employee has brought one of the claims listed under Schedule 5. It will not apply to claims brought for other purposes, even though the failure to provide a written statement may be just as fundamental to that claim. For example a claim for under payment of the national minimum wage is not in Schedule 5, whereas a claim for detriment in relation to the national minimum wage is. In both those cases, it would seem equally important for the tribunal to
The compensation mechanism is also complex and, we would suggest, flawed. In summary, Clause 38 provides for the following—and it is complicated. As Judge Prophet says, it is mind-blowingly complex. First, to trigger extra compensation, the applicant must have made a claim under one of the jurisdictions under Schedule 5. In determining that claim, the tribunal must then find that the employer has not complied at all, or only complied partially with the requirement to provide a written statement.
If the tribunal then decides the claim in favour of the employee but decides not to make an award in respect of that claim, the tribunal must still make an award for the failure of the employer to provide a written statement. This must be two weeks' pay where no written statement has been provided and one week's pay if the statement is incomplete or out of date.
If the tribunal decides the claim in favour of the employee and does make an award in respect of the claim, then the award should be increased. The increase should be the greater of 5 per cent of the award or one or two weeks' pay, depending on whether the failure to comply with the requirement was complete or partial. If this increase in the award is less than 25 per cent of the original award, the tribunal can then increase it up to 25 per cent of the original award, if it would be just and equitable in the circumstances. The tribunal may, however, have increased the award already through the operation of Clause 31. This would apply in circumstances where the employer is at fault for failure to complete internal procedures and could result in an increase in the award of up to 50 per cent. If such an increase has already been made, the total of the increase under Clause 31 and the clause should not exceed 50 per cent of the original award.
I believe that in the past two minutes that I have demonstrated the mind-blowingly complex nature of the clause as drafted. Not only is the formula unnecessarily complex, we would submit that it is also flawed and that one gets inconsistent and unfair awards for compensation. I will not list all the examples that the Low Pay Unit has demonstrated, but I will take two. One example is that of an employee who earns £200 a week, wins her claim, but receives no compensation. She is then awarded compensation as she has had no written statement. This is two weeks' pay or £400. Therefore, the compensation for the written statement in that case is £400.
A second example is of an employee earning the same amount—£200 a week—who wins her claim and receives £10,000 compensation. She is then awarded compensation as she had no written statement. Under the first part of the calculation, that would be the greater of 5 per cent or two weeks' pay, so there would be £500 compensation for failure to provide the written statement. The tribunal then decides it will be just and equitable in the circumstance to increase the compensation up to the 25 per cent maximum, so she receives £2,500 for failure to provide a written
The amendment is clearly designed to get an answer from the Government as to whether they propose to make this complex and flawed formula simple. I beg to move.
The Deputy Chairman of Committee (Lord Brabazon of Tara): I should point out that if this amendment is agreed to, I cannot call Amendments Nos. 193 to 197.
Lord Wedderburn of Charlton: It has been agreed that I should speak to Amendment No. 198, which might be more efficiently grouped with this particular clause and it is wholly my fault that the groupings do not include it. It would be a saving of time if I did so and my noble friend the Minister and the noble Lord, Lord Razzall, have kindly agreed that I should do so.
The effect of Amendment No. 198 would be very similar to that of Amendment No. 192A. It was drafted after the excellent argument of Judge Prophet on Clause 38, to which I wholly subscribe, and before I saw the excellent briefing from the Low Pay Unit to which the noble Lord, Lord Razzall, has referred. If I may return a comment conversely from what the noble Lord, Lord Razzall, said on a previous occasion, I think that his amendment may be rather better than ours.
This gives me the opportunity of saying that Amendment No. 198 would apply in the case where, as it puts it,
This is a longstanding ground of criticism of what is now the Employment Rights Act 1996 and began as the Contracts of Employment Act 1963. For many, many years the tribunal has been allowed to make a declaration as to the inadequacy of the written statement of employment particulars but to go no further. It seems to me that by the very fact of including the complex Clause 38, the Government accept that in the normal case there must be a sanction on an employer who does not give proper written particulars.
It is in that sense that both the amendment moved by the noble Lord, Lord Razzall, and our Amendment No. 198 are important from a long-term point of view. They seek to provide a long-term improvement to the employment protection rights legislation by ensuring
"( ) No order shall be made by the Department of Health, Social Services and Public Safety in Northern Ireland under section 25 unless a draft of the order has been laid before, and approved by resolution of, the Northern Ireland Assembly."
Page 44, line 15, at end insert—
"(6A) Subsections (4) to (6) do not apply to orders under section 25."
Page 44, line 16, at beginning insert "Subject to subsection (6A),"
11 Apr 2002 : Column 671House adjourned at twelve minutes past midnight.
[The Deputy Chairman of Committees (Lord Brabazon of Tara) in the Chair.]:
Page 41, line 45, leave out subsections (1) to (7) and insert—
"(1) Where an employment tribunal makes any determination under section 12(1) or (2) of the Employment Rights Act 1996 (c. 18) (determination of references) the employment tribunal shall make an award that the employer pay to the employee a sum equal to the amount of two weeks' pay."
"It is so complicated that even the judiciary who have looked at the clause are uncertain what it means. Pity then the ordinary employee and the small business".
The object of the amendment is to provide a free-standing remedy for failure of an employer to provide a registered statement which is both proportionate to the mischief it addresses and provides a sufficient incentive to employers to comply with this requirement.
"an employer has failed to give to an employee a statement as required by the sections 1, 4 or 8"
of the Employment Rights Act 1996. Under Section 12, which at the moment allows only for a declaration by the tribunal, there would be added an automatic right to compensation. In case the Government were going to insist on their extraordinarily complex, not to say tortuous, Clause 38, we linked it to Clause 38. If, of course, the Government have had second thoughts on Clause 38, we would merely wish to give the tribunal a discretion as to the amount which it must award.
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