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Lord McIntosh of Haringey moved Amendments Nos. 97 to 106:
- Page 42, line 10, leave out paragraph (b) and insert—
Clause 39 [Compromise agreements]:
Lord McIntosh of Haringey moved Amendment No. 107:
The noble Lord said: My Lords, Clause 39 on compromise agreements caused a great deal of concern when we debated it in Grand Committee. My noble friend Lord Sainsbury announced to the House on 30th April, in answer to a question from my noble friend Lord McCarthy, that the Government had decided to bring forward an amendment at Report stage of the Bill to delete the clause.
We continue to feel that some of the concerns expressed are misplaced and perhaps it would be helpful if I run through our reasons for the deletion of Clause 39 once again. They are twofold. First, although we continue to believe that any agreement that attempts to compromise away an employee's future rights would not be a valid agreement, we recognise that recent case law—my noble friend Lord Wedderburn argued this part of the case effectively in Committee—has created some uncertainty in this area.
Secondly, we recognise the risk that even though such an agreement would in our view be invalid, an employer might nevertheless attempt to persuade his employee to sign such an agreement. And if that happened, the fact that its legal validity was highly questionable would not alter the fact that having signed the agreement the employee might well then be deterred from going to a tribunal in the future in the belief that he no longer had the right to do so.
I have made clear, as have the noble Lord, Lord Sainsbury, and the noble and learned Lord, Lord Falconer, that it is not the Government's intention that any employee should be deterred in this way. We have concluded that we cannot risk Clause 39 of the Employment Bill being misused like this and we ask the House to support our amendment to delete it from the Bill. The other amendments are purely consequential.
Lord McCarthy: My Lords, I had wanted simply to say that we thank the Government and wish that they could find it in their hearts to do this kind of thing more often. However, the Minister dares me to say something more. He seems to be trying to go back on what he has conceded. He said that his was a good case but he has given in on it. I cannot think why. So I have to draw some quick lessons.
I give three examples. The real significance, if only the Government could acknowledge it, is that they start with a bum brief. When that brief is examined it falls apart. Everything goes back to the bum brief. SETA was a bum brief. The Government began by saying that they had to do what they had to do because employers told them that cases were being held up. They could not settle outside tribunals; and if they did so they still had problems because residual points kept cropping up. The doctrine of residual points is a bum brief. They could not find any examples of residual points, so they moved off that.
Then the Government said that it must be all right because ACAS does it. That is a bum brief. ACAS would be horrified at the whole idea. So when that was examined, it fell down. Finally, they said that the employers would not want people to sell rights like this. But the more the Government looked at it, the more likely that was. They realised that they cannot just put provisions on the face of the Bill and say, "That's the way tribunals and judges will interpret them; and that won't happen". Employers may seek to make it happen. If the Government had been properly briefed, with proper information and research, without accepting everything they are told by the CBI, they could have given many more concessions.
Lord Razzall: My Lords, I, too, welcome the Government's concession. Perhaps I can say what the Minister may not wish to say. In answer to a Question in your Lordships' House, the noble Lord, Lord Sainsbury, indicated that he was minded to take this action. I suggested that perhaps it was a mistake not to have given the credit for it to either the noble Lord, Lord McCarthy, or the noble Lord, Lord Wedderburn. The remarks which have just ensued may demonstrate how right I was.
Baroness Miller of Hendon: My Lords, unlike the noble Lord, Lord McCarthy, and the noble Lord, Lord Razzall, I confess that I was surprised when I saw the amendment on the Marshalled List. The Minister wrote courteously to me to say that the provisions had been changed. I was surprised when the answer was given to the noble Lord, Lord McCarthy. Nothing that has been said has made me change my mind about what I regard as a U-turn by the Government.
Subsections (2) and (3) of Clause 39 provide for the repeal or amendment of nine clauses in the several Acts or regulations referred to in Clause 39. The clauses in the Acts and regulations dated between 1975 and as recently as 1999 effectively provided for the right, under very stringent conditions and circumstances, to contract out of the Acts to the extent that the employer and employee were compromising some issue between them. I am sorry if I appear to over-simplify the provisions affected by Clause 39 of the Bill. The noble Lord, Lord McCarthy, laughs. I do not suppose that he is surprised by what I said. The detail is not important for the purpose of considering the Government's volte-face.
Clause 39 was introduced to Parliament on 7th November 2001. It has remained there totally unaltered throughout the stages of the Bill in another place and in your Lordships' House. Not only was it unaltered, it was accepted without discussion in the Standing Committee of another place.
The Government's proposals on Clause 39 would have the effect of removing some of the restrictions on compromise agreements between employers and employees. This would have ensured that agreements compromising disputes did not have to be limited to the particular complaint in issue but could also form a final settlement for related claims or even possible claims.
The clause would have removed the ludicrous necessity for employers to list possible disputes that had not arisen and were not even likely to arise when one particular issue was compromised. For example, it would have removed the possibility for a severance package on redundancy to be settled, only for the employer to be faced with a new claim for race discrimination, sex discrimination, disability discrimination and whistle-blowing and a whole shopping list of other claims. That would be done by the parties entering into an agreement confirming that the settlement was in full and final settlement of all claims then existing between the parties. I stress the words "then existing". "In full and final settlement" is the equivalent of what in divorce cases is called a clean break settlement.
I have to conclude that the reason the Government have been prevailed upon to retain the rigid conditions in the various Acts and regulations is some fear that employers would somehow prevail upon or, worse still, coerce employees to give up the rights that Parliament has given them.
I do not criticise the noble Lords, Lord McCarthy and Lord Wedderburn, whose views are strongly and genuinely held and who have honourably and doggedly fought their corner throughout the proceedings in this House. But I have to say that in respect of this concession they have seemingly wrung out of the Government, their fears are what I can only describe as old, old Labour. I am sure that the two noble Lords will regard that as a compliment.
The days of dark, satanic mills have gone. The days of wicked capitalists grinding the faces of the poor have gone. With all the social legislation passed by this Government, or imposed on us from Brussels—it includes maternity leave, paternity leave, adoption leave, family emergency leave and so on—the employer is more likely to be the grindee than the grinder, especially as the vast majority of workers in this country are now employed by small or medium-sized businesses and not vast international monolithic corporations.
The Government introduced Clause 39 as a result of mature consideration of the workings of the Acts over a period—in some cases a quarter of a century, as appears from the Explanatory Notes to which I shall refer in a moment. The result of the Government's belated change of mind is that the rigid conditions for compromise agreements are restored.
This provision was a sensible one which would have vastly simplified matters and would have reduced the costs payable by both employers and employees in reaching settlements. I am told by lawyers specialising in the field of employment relations that with the formalities currently required, these costs could amount to between £250 and £750 per case and the only people who benefit from the continuation of these unnecessary restrictions are the lawyers.
In the Explanatory Notes the Government refer to the provision that the compromise must relate to a particular complaint. It is stated,
That was a laudable objective of ensuring consistency between ACAS-sponsored agreements and those arranged between the parties themselves. The Government are now going to abandon that objective because of unjustified fears that workers will somehow be tricked out of their legitimate rights. That was the case made by the noble Lord, Lord McCarthy.
I am prepared to concede that instead of the blanket proposed cancellation of Clause 39, a little more careful drafting could have clarified the matter by limiting the amendment of the various existing statutes and regulations to agreements either made on the termination of employment or, if the employment continues, to the compromise of existing disputes and excluding matters occurring after the date of the compromise.
Like other noble Lords, I have a received a brief from the Law Society complaining about the Government's proposal to delete the clause, which it had previously asked the Government to modify. That, as I said, would have been possible. It wanted the Government to make clear that employees could sign away rights only in relation to past events when a dispute was being compromised. It now complains that the Government have abandoned the clause entirely rather than improved its functioning. I agree with its interpretation.
In rejecting their own sensible proposals, without tabling anything clearer, if necessary to mollify their supporters, in their place, the Government have thrown out the whole clause with the bath water. Rather than do that, they should find a new plug. I urge the Minister to abandon this proposal and instead come up with a proposal at Third Reading in line with the objectives of the Explanatory Notes. Without giving a blank cheque—which, of course, I cannot, as I do not know what the Minister is going to do—I would be happy and willing to discuss any such proposal in a constructive manner before the next stage. As it stands, I totally oppose the Government's proposal.
Lord Prior: My Lords, I strongly support my noble friend's remarks. Perhaps I may tweak the Government's tail a little. Whenever I listen to these debates, I find either the noble Lord, Lord McCarthy, or the noble Lord, Lord Wedderburn, on his feet assailing the Government. I know for the first time in my career that the Government must be right because over the years the noble Lords have introduced legislation through Michael Foot, Albert Booth and others that was disastrous to this country and that had to be repealed.
I thought that the Government had for once come to the conclusion that they could stand up to the noble Lord, Lord Wedderburn, and the noble Lord, Lord McCarthy. It is a great pity that they cannot.
"(b) when the proceedings were begun the employer was in breach of his duty to the employee under section 1(1) or 4(1) of the Employment Rights Act 1996 (c. 18) (duty to give a written statement of initial employment particulars or of particulars of change),"
Page 42, line 11, leave out "shall" and insert "must, subject to subsection (5),"
Page 42, line 11, leave out "appropriate" and insert "minimum"
Page 42, line 12, at end insert "and may, if it considers it just and equitable in all the circumstances, award the higher amount instead"
Page 42, line 16, leave out paragraph (b) and insert—
"(b) when the proceedings were begun the employer was in breach of his duty to the employee under section 1(1) or 4(1) of the Employment Rights Act 1996 (c. 18),"
Page 42, line 17, leave out "shall" and insert "must, subject to subsection (5),"
Page 42, line 17, leave out from "and" to "may" in line 18.
Page 42, line 19, leave out from "by" to end of line 20 and insert "the higher amount instead"
Page 42, line 21, leave out subsections (4) to (6) and insert—
"(4) In subsections (2) and (3)—
(a) references to the minimum amount are to an amount equal to two weeks' pay, and
(b) references to the higher amount are to an amount equal to four weeks' pay.
(5) The duty under subsection (2) or (3) does not apply if there are exceptional circumstances which would make an award or increase under that subsection unjust or inequitable."
Page 43, line 1, leave out subsection (7).
Leave out Clause 39.
"This requirement has led to uncertainty about the extent to which all claims and potential claims to the employment tribunal can be contracted out via a compromise agreement. This change will ensure that a compromise agreement does not have to be limited to agreement about the particular complaint, and is thus consistent with the current extent of ACAS-conciliated agreements".
It states also,
"The Government's objective in making this change is to ensure that compromise agreements are as effective and as wide in extent as ACAS conciliated settlements".
4.30 p.m.
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