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Baroness Turner of Camden: My Lords, I thank my noble friend the Minister for his response. I am glad that he acknowledged that we intend to be constructive with these amendments. However, I am rather disappointed that the Government have not found it possible to come back more sympathetically to the submissions that we made in Grand Committee.
My noble friend said that the procedures could be brought into disrepute. That was one of the statements made on behalf of the Government in Grand Committee. We believe that if proceedings are delayed because of arguments about whether or not documents have been sent, that of itself is likely to bring the procedures into disrepute. It was to avoid that kind of incident that the amendment was drafted yet again for Report stage.
As to the reference to ACAS, as I said earlier, ACAS undoubtedly will be asked to advise on these new procedures. It seems appropriate that it should be clearly stated on the face of the Bill that if any matter of interpretation is to be discussed or investigated, then the guidance from ACAS should be looked at. Undoubtedly ACAS will issue guidance. This is a new set of procedures and I am sure that ACAS will be asked to provide, if not a code, at least some notes of guidance for people operating procedures of this kind for the first time.
There is no point in proceeding any further with this issue at this stage. That being the case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden moved Amendment No. 67:
- Page 36, line 38, leave out "exceptional"
The noble Baroness said: My Lords, Clause 31 deals with the non-completion of statutory procedures and specifies adjustment of awards where procedures have not been completed. Subsection (2) states that where there has been non-completion wholly or mainly due to failure by the employee, the ET must reduce any award to the employee by 10 per cent and, if it considers it just and equitable, it can reduce it by a further amount but not so as to make a total reduction of more than 50 per cent.
In subsection (3) it states that if the non-completion is wholly or mainly due to a failure by the employer, the ET must increase any award made to the employee by 10 per cent, or, if it believes it just and equitable, increase it by a further amount but not so as to make a total increase of more than 50 per cent.
However, subsection (4) allows the tribunal some flexibility. It states that in exceptional circumstances which would make a reduction or an increase unjust or
inequitable, the ET may make no reduction or increase. My amendment seeks to remove the word "exceptional" from this clause. I do not understand the need for it. If it is unjust or inequitable in the view of the tribunal not to make an increase or a reduction in an award, surely that is a matter for the employment tribunal. What is meant by the word "exceptional" in this context? It can simply add to uncertainty. The ET's view of what is just and equitable should be sufficient. I beg to move.
Lord Wedderburn of Charlton: My Lords, this may seem to be a very small amendment, but it is rather important. There are places in the legislation on these matters where special circumstances are mentioned as regards, for example, the employer's duty to consult. That has given rise to a great deal of litigation. Exceptional circumstances will do the same. Either there are circumstances where it is unjust and inequitable to make no reduction or increase in the awards, or there are not.
Exceptional circumstances pose a question which the tribunals and the courts will have to answer. As we have seen with the interpretation of special circumstances, that can be a matter of very great difficulty. I cannot understand why the Government insist on introducing these words especially as the matter was dealt with in the 12th report of the Joint Committee on Human Rights, dated 25th February, which commented on Clause 31(4). It states,
- "In our view it would have been preferable had it been possible to draft clause 31(4) in a way which ensured that it would have operated proportionately without the need to resort to external aids to interpretation in the form of the Human Rights Act and a judicial decision in an unconnected area of the law. This might have been achieved, for example, by giving tribunals a single discretion in clause 31(4) to reduce or increase an amount of any enhancement or restriction of the award, allowing a tribunal to fix an amount of between zero and 50 per cent 'if it considers it just and equitable in all the circumstances to do so'. This would have reduced the complexity of clause 31, improved its transparency, and reduced the risk of tribunals behaving in a way which might be disproportionate. We draw this to the attention of each House".
The comments on Clause 31(4) almost led us to move a much longer amendment to try to incorporate the precise proposal of the Joint Committee, but we did not do so because we thought that the removal of the word "exceptional" would go a long way in the direction of that proposal. I put it to the Minister that paragraph 16, which I have partially read, of the 12th report of the Joint Committee supports the simplification of Clause 31(4) in a way which it would not be very sensible of the Government to resist.
Lord McIntosh of Haringey: My Lords, the purpose of Clause 31 is to encourage the use of statutory procedures. It does that by providing that an employment tribunal must reduce or increase any award if the statutory procedures have not been completed according to whether the fault lies with the employee or the employer.
Because of the importance that we attach to the completion of procedures, we have stipulated that the minimum adjustment for non-compliance must be 10 per cent although there may be an adjustment of up to 50 per cent if the tribunal considers it just and equitable in all the circumstances. However, we do recognise that there may be times when a 10 per cent penalty will be disproportionate, so subsection (4) provides that the duty to make an adjustment of 10 per cent does not apply if there are exceptional circumstances which would make such an adjustment unjust or inequitable. In that case the tribunal may make an adjustment of less than 10 per cent or even make no adjustment at all. It will be for the tribunal to decide when this discretion should be exercised. The amendment would remove the word "exceptional" and would therefore weaken the principle that there will be a 10 per cent minimum adjustment, and hence reduce the incentive to complete the procedures.
The noble Lord, Lord Wedderburn, has quite properly raised the issue of the views of the Joint Committee on Human Rights. He has quoted the views of that committee. In her letter to it, the Secretary of State argued that even if Article 6(1) does impose requirements as to the way in which compensation is to be calculated, the obligations require no more than that any restrictions on compensation are imposed for a purpose which is in the public interest, that any restriction is proportionate and that it is in accordance with the law. She further argued that the restriction on compensation provided in Clause 31 is proportionate. In line with Section 3 of the Human Rights Act 1998, Clause 31(4) would have to be read and given effect so far as is possible in a manner compatible with human rights.
I know, and the House has been told, that the committee would have preferred Clause 31(4) to have been drafted in a way which ensured that it would operate proportionately without the need to resort to external aid to interpretation such as the Human Rights Act 1998. But in conclusion, the committee found that the Government's approach was legitimate. It found that the approach was unlikely to give rise to incompatibility with Article 6(1) of the European Convention on Human Rights. Therefore, from the point of view of the Joint Committee, there is no need to remove the word "exceptional". That word is included because we want to have the principle as strongly as possible that there will be an adjustment of an award in order to strengthen the encouragement to use the statutory procedures available.
6.45 p.m.
Baroness Turner of Camden: My Lords, I note what my noble friend has said, but I do not believe that the Minister has adequately answered the plea from myself and my noble friend that the presence of the word "exceptional" will lead to a great deal of uncertainty. We have heard from my noble friend Lord Wedderburn that he believes that it will lead to a great deal more. However, I do not believe that there is much point in pressing the amendment at this stage and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey moved Amendment No. 68:
- Page 36, line 42, at end insert—
The noble Lord said: My Lords, there is a difficulty of presentation about this group of amendments, which includes Amendment No. 68 and Amendments Nos. 97 to 106. The difficulty is that the substantive amendments are Amendments Nos. 97 to 106 which refer to Clause 38. I have to include in the group Amendment No. 68 because the others do not make sense without it. In effect it is a paving amendment.
Amendments Nos. 97 to 106 arise because of the huge difficulty that we all had in Grand Committee in understanding Clause 38: it was exceptionally complicated. It was generally felt in the Committee that something had to be done to simplify it. It is the penalty structure for non-compliance with the written statement of employment provisions in certain circumstances.
During consideration of Clause 38, the noble Lord, Lord Razzall, in particular drew attention to the complexity of the system of penalties set out. As currently drafted, where an employee brings a successful claim of one of the types listed in Schedule 5, and it is evident that the employer has failed to meet his obligations under the written statute provisions, the tribunal will increase the award between 5 per cent and 25 per cent. The award uplift will be subject to a floor of one or two weeks' pay depending on whether the statement was absent or just incomplete or inaccurate.
We are confident that the general principle behind this measure is right and that it will help employers to recognise how crucial is the written statement to clarity in the employment relationship and how important it is, therefore, that all employers should meet their obligations to provide the statement. The general principle of encouraging compliance in this way was welcomed by most respondents to the consultation. However, as I said in Grand Committee, on reflection we agree with those who have commented that the penalty regime is unnecessarily complex.
Therefore, we have introduced these amendments which have a fixed-rate penalty in place of the current percentage-based approach. We believe that this will do the job just as well and will be simpler for tribunals to administer. Taken together they will substitute an award of two or four weeks' pay for the current system of compensation. Just as in the current drafting, the award will be payable if the statement is incomplete, inaccurate or absent, or if a notification of any change to the particulars has not been given. The award will be a flat rate rather than a percentage uplift.
Perhaps it would help if I outlined how the amendments will work. Amendments Nos. 97 to 100 reword subsection (2) of Clause 38 to direct the tribunals that even where an employee has not received a financial reward they may make an award of two weeks' pay or, if the tribunal considers it just and
Whether the tribunals make the higher or lower award will be at their discretion. It will not necessarily be tied to the type of failure. So, for example, tribunals will have discretion to decide that an employer's failure to issue a statement in certain circumstances is not as serious as its inaccuracy in others and hence give the lower award.
I hope that the House will agree that, taken together, these changes can only be for the good because the revised remedy will serve the intended purpose of putting employers on notice that they ignore their written statement obligations at their peril; and it is now a simpler and more readily understandable formula for calculating the penalty.
I turn now to Amendment No. 68, which is a technical amendment. The change that we are making by substituting an award of two or four weeks' pay for the current system of compensation in Clause 38 would have the effect, without this amendment, that the overall amount awarded would vary according to whether the Clause 31 adjustment or the Clause 38 adjustment was made first. If I am forced to do so, I can illustrate that with an example, but I would much rather not. As Clause 38 is currently drafted, the order of adjustment does not matter because the increase in the overall amount awarded is the same in either case.
Tribunals now need to know in what order the adjustments should be made. This amendment makes it clear that the Clause 31 adjustment should be made first. If it were not, the effect would be that the penalty for failure to supply a written statement would vary according to whether the Clause 31 adjustment or the Clause 38 adjustment was made first—and that is not our intention. I beg to move.
On Question, amendment agreed to.
Clause 32 [Complaints about grievances]:
[Amendment No. 69 had been withdrawn from the Marshalled List.]
"( ) Where an award falls to be adjusted under this section and under section 38, the adjustment under this section shall be made before the adjustment under that section."
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