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Lord Macdonald of Tradeston: My Lords, on fragmentation, the particular area of concern highlighted by Lord Cullen was that of the contractors and subcontractors. Across the industry I believe that it is now understood that there can be a degree of consolidation in the contracting regimes. Indeed, Railtrack had embarked on that course some time ago. I anticipate consolidation there. It is also possible that, following some previous declarations, the franchising process pursued by the Strategic Rail Authority would lead to a kind of consolidation and less fragmentation in train operation. I believe that the fragmentation can be reduced, but more importantly we need strong management and strong co-operation across the industry of the kind that has emerged in recent months.
The noble Viscount, Lord Goschen, asked about the board committee. The company will be accountable to its members, but of course it will be accountable also to the independent regulator. It will have a network licence requiring it to be operated as though it were a stand-alone limited company. The board will eventually be elected by its members, although as I said, the Strategic Rail Authority will have membership of the board and retain special rights. The appointments committee will be independent and make its judgments independently when appointing the 100 to 120 members of the company. But it is difficult for me to describe in detail to your Lordships the articles of association of this nascent company.
The question of government borrowing is of such profound complexity that I am not sure that I can offer the noble Viscount a quick and ready answer. I shall see if I can come back with something to address his concerns.
Industrial and Provident Societies Bill
Read a third time, and passed.
Employment Bill
4.22 p.m.
Lord McIntosh of Haringey: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Employment Bill, has consented to place her prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Lord McIntosh of Haringey moved Amendment No. 1:
- Page 32, line 20, at end insert—
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 2 and 4. My noble friend Lord Wedderburn tabled an amendment on Report restoring tribunals' discretion to consider a party's ability to pay when making a costs award, which had, in effect, been removed by the decision in the Kovacs case. We agreed in principle with my noble friend and gave an undertaking to table a government amendment to enable the regulations to provide that a tribunal has the discretion to take into account a party's ability to pay.
The amendments we have tabled provide that tribunal regulations may include provision authorising a tribunal to take into account ability to pay when considering making a costs award in the employment tribunal or the Employment Appeal Tribunal, or an award in respect of preparation time. The detail will of course be set out in the regulations,
Baroness Turner of Camden: My Lords, in the absence of my noble friend Lord Wedderburn, who unfortunately cannot be here today—he has a hospital appointment—I thank the Minister for introducing the amendment. As he rightly said, the issue was originally raised by my noble friend Lord Wedderburn and we were given an assurance that the Government would table amendments to meet the points we made. It is deeply gratifying that that has been done, and I would like to place on the record my thanks to the Government.
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendment No. 2:
On Question, amendment agreed to.
Baroness Turner of Camden moved Amendment No. 3:
The noble Baroness said: My Lords, the amendment is tabled in the names of my noble friends Lord Wedderburn of Charlton and Lord McCarthy. I have already explained that my noble friend Lord Wedderburn has a hospital appointment. My noble friend Lord McCarthy regrets that he is unable to be present as he is presiding at an arbitration case.
I return to the matter of preparation payments as provided for in Clause 22(2). The Minister may say that it has been thoroughly debated in previous stages, and I agree, but I remain disappointed that the Government have not addressed the main concerns of myself and my noble friends.
The amendment was drafted by my noble friend Lord Wedderburn. To put it simply, we believe that the possibility of facing heavy expenses if the case is lost intimidates a number of would-be employment tribunal claimants, including those who may have a well-founded case. Evidence exists—to which we referred earlier—provided by NACAB, among others, that solicitors acting for employers already attempt to intimidate claimants by threatening that there will be large, probably unaffordable costs, should the claim fail.
If an employer is able to claim preparation expenses, which could be high, that could act as another obstacle to a would-be claimant. The Law Society has pointed out that the position of the parties is hardly equal. The claimant may prepare his case in the evenings on his kitchen table. It may be an onerous task, as the Minister has said, but not one likely to involve the kind of expenses an employer could claim. He could claim for the time of his senior directors, the members of his personnel department, administrative and specialist staff, and overtime pay.
It is to be noted that Judge John Prophet, president of the employment tribunals, has on a number of occasions voiced concern about this provision in the Bill. It will be recalled that on Report I followed his recommendation and tabled an amendment based on applying the Litigants in Person (Costs and Expenses) Act 1975. The Government did not find that acceptable. Indeed, when the Minister was asked if the Government intended Clause 22(2) to apply to directors, managers and employees dealing with the matter in the normal course of their duties, his response was that where companies are represented and incur costs, they can claim such expenses under costs.
Judge Prophet has pointed out in correspondence I have recently seen that that is misleading since costs can be awarded only where there is legal representation. The question remains as to whether companies will be able to claim preparation time for directors, managers and employees who are attending to cases as part of their normal paid duties or who are provided with paid advice by outside advisers or consultants.
The amendment strives for some equality between the parties. Obviously, the employer could make a much greater claim than the claimant for preparation time and expenses if the Bill remains unamended. My noble friends and I have been concerned about the issue, which is why we are raising it this final time at Third Reading, particularly as the president of the employment tribunals still shares our view. I hope for a favourable response from the Minister. I beg to move.
Lord McIntosh of Haringey: My Lords, in response to points made by noble friend Lady Turner and other noble Lords in Grand Committee, we tabled on Report an amendment to provide that a tribunal may not make an award for both costs and preparation time. That is a significant amendment that meets the key concern about the effects of the new provision for preparation time.
This amendment seeks to go yet further. Its first part seeks to exclude an award of preparation time in respect of work on the tribunal case which is within the normal duties of an employer or its employees and contractors. The amendment's effect would be to exclude employers almost entirely from preparation time awards. I understand that it is aimed at companies that employ staff to deal with personnel matters, but it could be argued that it would be within the normal duties of the manager of a small newsagent, for example, who pays the wages and hires and fires
Employers have to accept that in running a business they may at some point become involved in a tribunal complaint, and even if that complaint is not upheld by the tribunal they must bear the costs of defending the case, because to have a system of loser pays the winner's costs could have a serious detrimental effect on applicants in particular. That is part and parcel of running a business or company. But why should employers be expected, as a matter of course, to bear the costs and disruption of defending complaints which have been brought or conducted vexatiously or which had no reasonable hope of ever succeeding?
Preparation time awards will be awarded only in very limited circumstances—hopeless, vexatious, unreasonable cases. Those cases are exceptional and we do not accept that defending them should be considered part of the normal execution of duties.
The second part of the amendment proposes that preparation time payments should not include work done by legal advisers, including in-house legal advisers. Although we are aware that the power in new Section 13A(1) could conceivably cover time spent on a case by anyone, including outside lawyers, Sections 13 and 13A are clearly drafted on the basis that preparation time awards and costs awards will cover different matters; in particular, there is a prohibition on a tribunal making both kinds of awards to a party, as I have already pointed out.
We consider that the appropriate place for the detail on how preparation time awards are to be assessed is in the regulations. When we draw up and consult on the regulations, we will consider how best to give full effect to the prohibition on receiving both a costs award and a preparation time award. We intend that assessment of preparation time awards will be by reference to matters which are not recoverable in costs awards.
I understand that these amendments are motivated by concern that applicants may be deterred from bringing cases or may suffer disproportionately as a result of preparation time. Given what I have said about the exceptional nature of preparation time awards, I do not believe that they will. We know that tribunals use their costs powers with great care, but my noble friend Lady Turner and other noble Lords have raised concerns about the impact of Clause 22 and we have acted on them.
We brought forward on Report an amendment to provide that a party may claim costs or preparation time, but not both. We have just restored in Amendments Nos. 1, 2 and 4 the tribunal's discretion to take into account a party's ability to pay when determining whether to award costs or to set the level of costs, and we have included preparation time.
We have said that we will set out in regulations guidelines on how preparation time should be calculated to ensure that awards are reasonable and proportionate to the case. We shall consult very carefully with the tribunal judiciary to establish what
In addition, we have given an undertaking to address intimidation by representatives through better guidance on how the costs regime operates, to make it clear that the circumstances under which costs can be awarded are very limited.
I think that we have demonstrated our willingness to address the points of concern raised my noble friends Lady Turner, Lord Wedderburn and Lord McCarthy about the impact of costs and preparation time on applicants. The integrity and efficiency of the tribunal system relies upon a costs regime which is both fair and effective. I believe that that will be achieved through the Bill and the supporting regulations. For those reasons, I cannot accept the amendment.
Baroness Turner of Camden: My Lords, I thank my noble friend on the Front Bench for that response. It is quite true that the Government have moved on the whole issue of preparation time since we first raised it. The reason why we have been so keen to advance the case for it once again at Third Reading is that we have striven to achieve what we perceive as a measure of equality between the parties. We felt that preparation time would be more likely to involve the employer in being able to claim a large payment rather than the employee.
However, I am gratified to learn that regulations are to be drafted which seem to take on board many of the points that have been made in the course of our debates. Furthermore, the employment tribunals will then have that guidance on which to base their decisions. In the circumstances, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 [Employment Appeal Tribunal]:
"( ) Regulations under subsection (1) may include provision authorising an employment tribunal to have regard to a person's ability to pay when considering the making of an award against him under such regulations."
Page 33, line 2, at end insert—
"( ) Regulations under subsection (1) may include provision authorising an employment tribunal to have regard to a person's ability to pay when considering the making of an order against him under such regulations."
Page 33, line 8, at end insert—
"( ) Payments of the kind mentioned in subsection (1) do not include any sums in respect of—
( ) time spent in the normal course of the execution of their duties by a party's directors, executives, managers or employees or by a person under a contract for services with a party, or
( ) advice given to, or work done for, a party by a legal adviser, whether employed by him or not."
4.30 p.m.
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