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Lord McIntosh of Haringey: I am grateful to both noble Lords who have introduced their amendments, and I welcome the opportunity to deal with both amendments together. As the noble Lord, Lord Wedderburn, said, Amendment No. 198 is similar to Amendment No. 192A but it differs in that it would not remove the penalty regime which is in Clause 38.
Amendment No. 192A would insert a new provision into the Bill relating to the enforcement of existing requirements in the Employment Rights Act 1996 that employees should receive a complete and accurate written statement of employment particulars. The effect of the amendment would be to enable employees whose employers have not fulfilled those requirements not only to take a case to the tribunal to rectify the position, as they can now, but to go beyond that and obtain a fixed level of compensation if they win their case.
At the same time, the amendment deletes the provisions in the present clause, having the effect that the awards made as a result of complaints to tribunals about other issues are to be increased by a percentage if no, or an inadequate, statement of written particulars has been given.
I have mixed feelings about the amendment. I have to resist one of the effects that it would have but I shall agree with the other and take action accordingly.
It is clear that we all agree that the effective resolution of disputes in the workplace and clarity in employment relationship more generally requires that employees should be given the written statement of employment particulars to which they are entitled. We all share the aim of encouraging compliance with that requirement.
The Bill directs tribunals, when a successful claim is made under the majority of the main types of tribunal claim—that is, what are called "jurisdictions", which are set out in Schedule 5—to make an increased award where the written statement was not issued or was incomplete or inaccurate.
Before I go further, perhaps I may say a word about Schedule 5. That schedule is intended to be fairly comprehensive. It is intended to cover pretty well everything that comes before an employment tribunal. If it is found not to be comprehensive, and if there are changes in matters which can and should go before an employment tribunal, it can be altered by regulation. It does not require primary legislation for that purpose.
I want to correct one point made by the noble Lord, Lord Razzall, concerning his statement that the schedule does not apply to the national minimum
wage. The national minimum wage is enforced under Section 23 of the Employment Rights Act 1996, which is a provision specified in Schedule 5. I do not believe that the issue of what is included in Schedule 5 is absolutely essential to the argument that we are making today, the point being that the amendment would create a stand-alone penalty for non-compliance and would remove the linkage with the other types of tribunal claim and replace it with a free-standing right to compensation.I believe that the current approach in the Bill creates the right balance in encouraging compliance and by putting employers on notice that they neglect their obligations under the written statement provisions at their peril, without in effect creating a new stand-alone right to compensation. It focuses on an area of particular abuse—that is, those situations where the employment relationship has been damaged and that is the employer's fault.
Of course, we could go further. We could, as the amendment suggests, enable tribunals to make awards where the only issue is the absence or inaccuracy of a written statement. However, we take the view that this would be a step too far. At the moment, where a complaint is made of the absence or inadequacy of a written statement, the tribunal will determine what should have been included in the statement and the employer will be deemed to have given the employee a statement containing that information. That seems to me an acceptable and appropriate remedy for the abuse suffered. Providing a stand-alone financial penalty where the only problem is the absence of a statement might encourage speculative claims where no real damage has been suffered.
I turn now to the other issue, which is the simplified fixed penalty approach which is proposed in the amendment. The amendment would take out subsections (1) to (7) of the clause, which the noble Lord, Lord Razzall, has quoted so effectively. It would remove the penalty provisions as currently drafted. These provisions enable an award made for one of the types of claims listed in Schedule 5 to be uplifted by a variable percentage of between 5 per cent and 25 per cent, with a minimum floor of one or two weeks' pay. The noble Lord, Lord Razzall, said that that was impossibly complicated; I agree. I have read the clause and the Explanatory Notes very carefully, but at the end of that—not being a lawyer, and certainly not an employment lawyer—I was none the wiser.
Although we do not wish to create a stand-alone penalty and we want to preserve some link between a penalty for a breach of this requirement and a penalty for breach under some other type of claim, we should adopt the simplest and most readily understandable formula for calculating the penalty that we do impose.
I am persuaded that a fixed-rate penalty—I suggest two or four weeks' pay—would be as effective as the current percentage-uplift system in discouraging employers from ignoring their obligations. It would be a good deal simpler to operate. The Government will therefore bring forward an appropriate amendment on Report.
11.15 a.m.
Lord Wedderburn of Charlton: I am grateful that the Government will reconsider Clause 38. When they consider whether to impose a two or four week basic award, will they do further research, which they say that they have not done, on the effect of sanctions on employers fulfilling their obligations?
Government policy is not to allow for any stand-alone penalty for the failure by an employer to give proper written particulars to the employee of his conditions of employment, because they only want a remedy where the employment relationship is damaged. Do not the Government regard it as an automatic damage to the employment relationship if the employer does not give to the employee a written statement, which he is legally obliged to give, of the main terms and condition of employment?
Lord McIntosh of Haringey: My noble friend rightly describes the Government's position. We do not think that there is automatically a damage to the employment relationship—it only matters if anything goes wrong as a result. In a very large number of employment relationships, particularly continuing employment relationships before this Bill comes into effect, nobody has ever queried the need for a written statement. Unless something goes wrong, nobody will query it—neither the employee nor the employer. If something goes wrong, it must be clear—we are making this clear in the Bill—that there will be a penalty if it is missing. That is as far as we can reasonably go without introducing a whole new category of matters going before the tribunal simply because there is not a written statement, or an adequate one.
On the first question posed by my noble friend Lord Wedderburn about research, we consulted on Clause 38 and consultees were broadly happy. However, I rather think that they were happy before they saw the way in which Clause 38 had to be drafted in order to achieve what we were seeking to achieve. I cannot imagine that there will be any difficulty with a simplified approach.
Lord Gladwin of Clee: I am most disturbed by the language that my noble friend has just used. The concept that no damage has been done if no contract of employment is ever issued is one that I hope does not receive too much publicity. This is monstrous. You cannot pretend in this regard—not issuing a contract of employment to someone you have employed just does not stand up to examination. I cannot go along with the idea that unions that have been consulted are happy with this concept.
Lord McCarthy: I want to be clear about what the Minister is saying. It seems to me that he is not prepared to make a single concession. He said that, if necessary, he wants the regulations in Schedule 5 to be more comprehensive, because he wants them to cover everything. If we find that they do not cover something, you use regulations to state that they do. That is not a concession. He also said that he wants to retain the indirect approach. You have to go to a
tribunal and win before anything happens. That is not a concession. In so far as he explained why he wants such provisions, he said that we must not have speculative claims. Most claims to tribunals are speculation; no one knows exactly who will win, and if the worker does not win, he will receive no money. If we said in advance that if there was a chance that he would receive no money, he should not take a case, that would simply—this may be getting close to the reason why the Minister is making more concessions this morning—get the Government nearer to the necessary 40,000 cases. He is quite happy in this regard. This is another non-concession, with a fixed rate, even if it turns out—if the Low Pay Unit works on the matter again—that it is just as anomalous and just as unfair as the complicated system in the Bill.
The main concession that the Government will not make is about doing anything that enables the applicant to believe that he or she might get justice. There is no justice in this. A fixed rate is not justice and the refusal to move on an indirect approach—and all the other issues—are not justice. This all goes back to the need to cut 40,000 cases; that is the only justification. The Minister, of all men, said that consultation of interested parties is the same as research, or is a substitute for research. He should make some concession somewhere or we shall have to come back on Report.
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