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Lord McIntosh of Haringey: My Lords, again I oppose the amendment, but for the opposite reason to the motivation implicit in the arguments of the noble Lord, Lord Wedderburn. I oppose the amendment because I think it is inimical to the interest of applicants, and in particular of unemployed applicants.
The amendment would limit compensation for case preparation to the costs and expenses that a party has actually incurred. Its effect would be that preparation time could compensate a party only for the actual financial loss it had incurred as result of the other party's unreasonable behaviour.
We have used "payment" rather than "costs or expenses" to enable preparation time to cover the situation in which a party has worked on his or her case without incurring financial loss. To return to an example that I used in response to the previous amendment, if the applicant is unemployed, it would not be appropriate to award preparation time for the actual expenditure that the applicant suffered as a result of preparing the case because there may not be any actual expenditure. If the unemployed applicant is doing the work himself, there are no outgoings, if I may use a new word—I do not know whether that is an oyster or a swan. However, it would be appropriate to order the respondent to make a payment to the
applicant in recognition of the time spent by the applicant preparing for the case as a result of the respondent's unreasonable actions.The noble Lord's fourth point seems to come in here. He challenges me that the civil procedures rules do not cover the cases in which no records are kept. I hope that I have understood him correctly. The principle is recognised in the civil procedures rules, which provide that where a litigant in person cannot provide evidence of financial loss, he or she may claim for the time spent working on the case, which in the civil courts is paid at a set hourly rate. Our proposals are comparable but preferable in the tribunal situation to that which is already provided in the civil rules.
On the calculation of the hourly rate, tribunals will have discretion as to whether to award preparation time and what that award should be, but it is helpful to have guidelines, which we shall provide, to ensure consistency across tribunals so that the parties understand the basis on which the award has been made.
The noble Lord referred to the concerns expressed by NACAB—whose views I very much respect, as it is deeply involved in such cases—about the threat of costs to intimidate applicants regardless of whether the case is hopeless. I must come back to the situation in employment tribunals, where costs are very rare. Fewer than 1 per cent of cases involve cost awards. We intend to make it clear through guidance that costs are awarded in only very limited circumstances. That is reinforced by our Amendment No. 17, to which I have already referred.
The noble Lord came back to the use of the term "weak cases" in Routes to Resolution last year and in the response to the consultation. The provisions do not use the word "weak", which was intended as a shorthand description of the terms used there—that is, vexatious, abusive, disruptive or unreasonable. There is no extension intended or provided in the Bill in the terms in which costs might be awarded.
I apologise for going over the same ground to some extent, but I have to refer again to the nature of the concerns expressed in Grand Committee. The concerns were that there would be excessive use of the preparation time provisions to intimidate applicants. Although I respect the motivation behind those concerns, I believe that our Amendments Nos. 16 and 17 go some way to answering them. I believe that this particular amendment, providing for preparation time to be defined as part of costs and expenses, would make matters worse for applicants, particularly unemployed applicants who therefore have no costs in preparing their case. I hope that the amendment will not be pressed.
2 p.m.
Lord Wedderburn of Charlton: My Lords, I am grateful to the Minister for his explanation, which covered roughly the same ground covered in Grand Committee. I do not think that he should apologise for saying what he said in Grand Committee. We certainly
have no intention of apologising for what we said in Grand Committee in view of the guidance in your Lordships' Companion to the Standing Orders which I quoted in speaking to our first amendment.The Government, with great respect, are in a frightful old muddle about this. In Grand Committee, we moved an amendment saying that preparation time awards could be awarded only in cases where there was vexatious, frivolous, misconceived or unreasonable proceedings, but the amendment was rejected. Now we are again being told that regulations will make it clear that costs can be awarded only in very limited circumstances. Although I am grateful for the assurance that "weak cases" was just a generalisation in the preparatory documents, the term was used rather too often without much explanation. Nevertheless, I am very grateful for the explanation that "weak cases" means cases in which the case is vexatious, frivolous, misconceived or conducted unreasonably. Those are the cases in which costs can be awarded. Those are the cases in which we are now being told that preparation time awards are to be awarded.
If that is so, why cannot the Bill say so? This is one of so many cases in which the nub of the issue is to be concealed or explained in regulations, the exact nature of which we do not know. In moving Amendment No. 33, my noble friend Lord McCarthy will raise the issue of our ability to see the drafts of these regulations. Everything in the Bill points to that.
The most important point is that no one has expressed worries about the application of this general concept of preparation time in relation to applicants who—as Ministers so often say, and as has been said in another place—are "sitting at their breakfast room table". The idea that regulations could not provide for compensation for loss of time by such people is bizarre. Of course regulations could say that people should be compensated for loss of time. The worry has been the sums that respondent employers will claim from applicant workers. There was not a word about that in the reply of my noble friend the Minister. If there was any mention of it, I shall read it with interest. I did not hear a word about that.
It is true that costs are rare. However, preparation time awards will not be threatened rarely; they will be threatened often, as the Law Society made absolutely clear in both of its briefs. In resisting all efforts for the Bill to tie down to a narrow ambit these new sorts of animals in the zoo of money to be paid by applicants to respondents, my noble friend the Minister is doing a disservice to the practice of employment tribunals in this country, and it will be seen as a most serious departure by the Government. The move has been supported only by employers' organisations. It has been resisted by the Law Society, by citizens advice bureaux and by various unions, and yet the Government persist in it. I hope that some further thought can be given to it by Third Reading; but in view of the amendments we are coming to I rather doubt it.
This is definitely a wicket down for no runs at all. It is a most sorry moment in the history of employment tribunals. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey moved Amendment No. 16:
- Page 33, line 1, leave out from "of" to end of line 2 and insert "time spent in preparing that other party's case."
The noble Lord said: My Lords, in moving this amendment I shall also speak to Amendment No. 17.
Going back to basics, I do not think that anyone disagrees that there should be provision for compensating parties who have been on the receiving end of unfounded or vexatious cases. Of course there should be minimal checks in the system to ensure that the tribunal service is used responsibly by those who need it, and that parties and their representatives conduct cases in a way which does not disadvantage the other party or disrupt the proceedings.
The new provision for preparation time payments will address the gap in current legislation that there is no recompense for self-represented parties who have suffered unreasonable behaviour, despite the fact that self-representation is commonplace in employment tribunals. I have listened very carefully to what my noble friend Lord Wedderburn said in his closing speech on the previous amendment, and I believe that his comments were profoundly misconceived. I believe that the provision for preparation time, being addressed as it is to self-represented parties who have suffered unreasonable behaviour, is particularly helpful to applicants going to employment tribunals.
We do not believe that, in practice, the provision for preparation time would lead to a big rise in the level of costs awards. Evidence shows that tribunals are very moderate in awarding costs, both in the number of awards made and in the level of the awards. However, we have heard from a number of highly respected organisations which work with applicants that the threat of costs is being used to intimidate applicants into withdrawing their complaints—a point legitimately made by my noble friends Lord Wedderburn and Lady Turner—regardless of whether the case is without merit or whether the applicant's behaviour has been unreasonable. My noble friends are concerned that awards could potentially be higher as a result of the new provision for preparation time, and that this would add to the arsenal of heavy-handed tactics which are being used to warn off applicants genuinely seeking redress for an infringement of their rights.
We want costs and preparation time to be a deterrent against those few cases or defences which have no reasonable prospect of success, and we want to deter unreasonable behaviour. We want to ensure that where parties have to endure such behaviour they should not lose out just because they choose not to, or cannot afford to engage a legal representative. But access to justice must be preserved, and at the same time we do not want fear of excessive costs awards to deter vulnerable parties from seeking to enforce their rights.
This is why we are bringing forward an amendment which provides that when the regulations on costs and preparation time are drawn up they must include provision that a tribunal cannot award both costs and preparation time.
Before I turn to the detail of the substantial amendment—I believe that in talking about an earlier amendment I allowed myself to talk about Amendment No. 16, whereas the substantial amendment is Amendment No. 17. I apologise for that—let me first address a couple of other minor changes.
Noble Lords will observe that on the next printing of the Bill the title of the subsection on preparation time is changed from "compensation for preparation time" and will instead refer to,
- "payments in respect of preparation time".
The title "compensation for preparation time" is not an entirely accurate reflection of the subsection because "compensation" implies that the payments relate to actual loss. A preparation time payment is for the time the party has spent preparing for the case and is not necessarily limited to actual loss. For example, we intend that an unemployed person who acts in person may claim preparation time. This is a technical change which does not form part of the amendment and does not in any way affect the intention behind the provision for preparation time, but I wanted to take this opportunity to mention it so that it does not cause confusion at a later stage.
The first government amendment to Clause 22—Amendment No. 16—is the replacement of the line,
- "the time spent by that other party in preparing his case",
- "time spent in preparing that other party's case".
- "time spent by that other party".
There is no change to the intention behind preparation time where it is the respondent who is claiming preparation time. It should apply regardless of whether the employer is a corporate body or a sole trader. The principle is that where we are talking about an employer who has had to defend a hopeless or vexatious case the preparation time award should cover any time which the employer has had to spend working on the case. The clause as drafted might not allow a sole trader to take account of his employees' time because of the words "by that other party". We want to remove that doubt.
The new wording also refers to "time spent" rather than "the time spent". This is a minor change to reflect that although parties will have to show that they have spent time on the case in order to be eligible for an award, they will not be required to produce detailed evidence of the actual time spent.
The substantive amendment to Clause 22—Amendment No. 17—provides that where regulations are made on costs and preparation time they must include a provision that the tribunal may not award both costs and preparation time to the same person in the same proceedings.
There are a number of ways of achieving the effect that both awards should not be payable; for example, by replacing the current provision with provisions similar to those in the civil courts for litigants in person, or by saying that only unrepresented parties may claim preparation time. However, we believe that the amendment we have proposed is the simplest solution. We do not want to open up arguments about whether a party is represented since many parties engage a representative part way through a case, or seek legal consultations throughout the case. Furthermore, litigants in person in the civil courts can claim for legal consultations so a provision for litigants in person in the tribunal along the lines of the civil courts would not meet concerns about higher costs awards.
The amendment will address fears that the new provision for preparation time may be used to intimidate applicants, but will still enable tribunals adequately to compensate self-represented parties who have had to fight or defend cases which have little hope of success or who have been subjected to vexatious behaviour. I beg to move.
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