REDUNDANT WORKERS (SEVERANCE PAY) (Hansard, 1 May 1962)

§ Mr. John Diamond (Gloucester)

I beg to move, That leave be given to bring in a Bill to provide minimum terms for severance pay for workers dismissed through redundancy or other causes beyond their control. It is, perhaps, not inappropriate that it should be on 1st May that I seek leave to refer to a Measure designed to relieve the hardship of workers who are declared redundant. The Bill I propose would, quite simply, provide that where a worker is declared redundant, or where he loses his job through no fault of his own, he should be paid, by way of compensation, one week's severance pay for each complete year of service. That would be the minimum and not the maximum payment and it would not apply in the case of a worker who had not had the opportunity of working for a complete year.

I will very shortly attempt to describe why I think that the provision of severance pay would be of assistance to the national economy, of assistance to the employer and of assistance to the employee; and why I think that the twin principles involved in the calculation of the sum are appropriate, namely, the amount of the salary or the week's pay and the period for which the man in question has been employed.

It is perfectly obvious that the best way to deal with redundancy is to avoid it. Equally, the best way to deal with fires is to avoid them. But, nevertheless, when the tragedy caused by a fire does occur, those insured are very glad to share in the compensation fund which has been provided through insurance by the joint contributions of everyone. Similarly, it is quite clear that we shall be faced with redundancies from time to time in order to achieve increased efficiency and to keep pace with technical changes. We must be quite realistic and face the fact that redundancy, in some measure, will be a permanent accompaniment of our advancing standard of living; unless we are to be satisfied for all time to depend on that standard of living which we are able to attain by continuing firmly and with determination to make and to sell 818 hat-pins and horse-shoes. If we wish to keep up to date, we must recognise that some changes are inevitable.

The wise employer hopes for good labour relations. That helps him enormously. Labour relations are considerably bedevilled by the anxiety, often an inner and hidden anxiety, about redundancy and the hardship which it will entail. This anxiety is often at the root of strikes which, not infrequently, are no more than protests and demonstrations; and it also is the cause of other difficulties. If we could get rid of this anxiety, we should be getting rid of something which is a bar to good labour relations. The good employer also wants loyalty from his employees, and the best way to command loyalty is to demonstrate it. A good employer will demonstrate his loyalty best by showing that when he is compelled to dispose of the services of an employee he will not allow that employee to be left in the lurch.

The worker is the one who will benefit mainly from the proposed Measure. He is also the person Who suffers most in the event of an amalgamation, or something of that kind, which may result in increased efficiency. But sometimes an amalgamation makes it necessary to reduce the labour force. It is in the national interest that these amalgamations and improvements should take place, but the worker cannot see—and neither can I—why the nation should benefit exclusively at his expense. The worker should be considered first and not last when changes occur which are, as I have said, inevitable up to a certain point.

I consider that the relation of the compensation to wages is appropriate because the higher the wage or salary which a man is drawing the greater will be the drop in his income when he becomes unemployed. It is no use saying that if a man has been receiving a good wage or salary he should have saved something with which to meet a rainy day. Very often he is unable to do so. At all events in most cases workers do not do so. My Bill would enable a man to meet the considerable difficulties following the catastrophic fall in his in-come which, in certain cases, may arise between the time when he leaves one job and goes to the next. I consider, therefore, that the relation of pay with compensation is an appropriate formula.

819 Having regard to the number of years of service is, I consider, also appropriate, because the longer an employee stays with a firm—it is right that he should and it is in the interests of the employer—the more difficult, through advancing years, will it be for him to get another job. For these reasons I think that a Measure of this kind would be of considerable benefit all round.

I may be asked, "What about the cost?" According to my own unaided approximate calculation, the cost is likely to present no problem at all. A large number of employees leave their job voluntarily, so they do not require to be compensated. When redundancies arise they do not affect all the employees of a particular firm, but only a proportion, and redundancies would arise in a particular firm only from time to time. Bearing in mind all those facts, I calculate that the amount involved would be about a thousandth part of the wages bill. For every £100 of wages paid by the employer, 2s. would have to be put aside; an amount not very much different from the premium which we are all glad to pay to obtain insurance cover against fire.

If it is right that this should be done, and if the cost is not too great, one is faced with the question whether it is necessary to have legislation and why, if this is something which is worthy and necessary, it has not already been provided for. There is need for legislation because there are a number of bad or uninformed employers who treat their employees in a disgusting manner. I have had a considerable amount of mail, as a result of the help I have received with my Bill, from a number of newspapers and many cases of bad treatment have come to my notice.

I wish to mention only one, which refers to a lorry driver. He was having a dispute with his firm about the number of hours of overtime he should work. He had been working 11½ hours overtime and the firm wanted him to work more. This he was unwilling to do, so he was given one week's notice. This happened to a man aged 52, after he had given thirty years of service to the firm. It is true that the people owning the firm had changed. No doubt the original employers would not have had the heart to take such action. Nevertheless, 820 the effect was the same. It was the same firm and the same employee. At the age of 52 he finds himself on the labour market, with one week's wages in lieu of notice. There are many other workers who have found themselves in a similar position and such a situation is not good enough.

There are, of course, many good employers. The Civil Service pays a temporary civil servant seven weeks' pay after seven years' service, if the employee is no longer required. In local government the same man would have received approximately nine weeks' pay. An engineer employed by B.O.A.C. would receive six weeks' pay after five years' service. If he were declared redundant after ten years, he would receive ten weeks' severance pay. Those are good examples to set in contrast to the others. In the time available I shall not give details of what happens abroad, but many countries on the Continent and the United States of America provide by way of legislation and common law for severance pay in these circumstances.

I think it right that there should be legislation. I think it right that this matter should be dealt with not in the crisis atmosphere of redundancy, but at the start of the engagement so that when a man is engaged he knows the terms upon which he is engaged. I seek leave to introduce a Measure which, on the grounds of efficiency, improved labour relations and simple humanity, I consider to be much overdue.