HC Deb 21 July 1965 vol 716 cc1700-8
Mr. Thornton

I beg to move Amendment No. 1, Clause I, in page 1, line 9, after "employer", insert "by reason of redundancy".

It would perhaps be for the convenience of the House if with this Amendment we could discuss Amendments Nos. 2, 3, 4, 5, 6, 8, 10, 24, 25, 26 and 46, all of which are related to the same point.

Mr. Speaker

If the House so pleases.

Mr. Thornton

These are merely drafting Amendments designed to clarify our intentions as regards entitlement following lay-off or short-time. As Clause 1 is at present drafted, dismissal, lay-off and short-time are all dealt with together. This has the result that before entitlement to a payment can arise from lay-off and short-time two conditions must be fulfilled. First, the lay-off or short-time must have continued for the specified period and, secondly, it must have been attributable to redundancy as that term is defined in subsection (2).

It has always been our intention—we have made this clear throughout our consultations with industry—that once a worker has been laid off or kept on short-time for the specified period, and if there is no reasonable prospect of an early resumption of normal working, the worker should become eligible for a redundancy payment. There is the special exception which is provided for in new Clause 4 (3) that no entitlement can arise where lay-off or short-time is due to an industrial dispute.

We have hitherto taken the view that our intentions as I have just described them were adequately reflected in the drafting of Clause 1, because lay-off and short-time would invariably be attributable to redundancy in the same sense that this is defined in subsection (2). Subsection (2) says in effect that for something to be caused by redundancy it must be attributable to a cessation of the business or to a cessation or diminution in the requirements of the business for work. We had taken the view that short-time or lay-off could always be said to be attributable to a cessation or diminuation for the time being in the employer's requirement for a worker.

I am advised, however, that it is possible that the courts might place a diffent interpretation on Clause 1 as it stands. The difficulty is that the stipulation that the lay-off or short-time must be attributable to the factors defined in subsection (2) creates the assumption that these things could be attributable to some other causes. This might, for example, lead the courts to interpret "cessation or diminution" as meaning a permanent or long-term cessation or diminution, as distinct from a temporary or short-term fall in the requirements for labour. Admittedly, it is difficult to see how lay-off or short-time could be said to be attributable to a permanent fall in requirements for labour. By their very nature, lay-off and short-time are resorted to in order to cope with a strictly temporary fluctuation. Nevertheless, I am advised that the present drafting does not make our intentions sufficiently clear.

I hope the House would not dissent from the proposition that if lay-off or short-time continues for long enough and if there is no early prospect of resumption of normal working, the right to redundancy payment should accrue. I am convinced that it would not be practicable to try to distinguish between different kinds of lay-off and short-time according to the factors that have caused them. Apart from the obvious difficulties of establishing what was the cause of any particular case, from the point of view of the worker it makes no difference at all whatever the cause.

Part of the Bill's function is to prevent an employer from evading liability for a redundancy payment by laying off a worker for an indefinite period, or keeping him on short-time, in the hope that he will give up and leave of his own accord and so forfeit any right to payment. If we were to contemplate providing entitlement to payment only where lay-off or short-time resulted from a particular cause, we should be opening the door to the sort of abuse which I have mentioned.

9.30 p.m.

The Amendments make our intention clear. Amendments Nos. 1 to 6, in effect, separate the two concepts of dismissal, on the one hand, and lay-off and short-time on the other. The condition that entitlement depends on there having been redundancy would be confined to cases of dismissal and the only condition as regards short-time and lay-off would be that they should have continued to the extent specified in the new Clause which is to replace Clause 6 and that the other requirements of the new Clause should have been complied with.

Amendments Nos. 7, 8 and 10 delete the words in Clause 1(2) which relate only to lay-off and short-time and are now no longer necessary in that place. Amendment No. 46 makes it clear that references in Clause 1 to "ceasing" or "diminishing" include cessation or diminution which is temporary as well as that which is permanent and include a cessation or diminution irrespective of what has caused it.

Amendments Nos. 24 to 26, relating to Clause 9, deal with references to tribunals and are a straight consequence of the Amendments to Clause 1. I hope the House will accept that these changes will remove a possible source of confusion and make quite clear what is generally agreed should be the effect of the Bill as regards lay-off and short-time.

Mr. Godber

The Parliamentary Secretary has put forward a whole series of Amendments, but the first is the important one and it is that to which I shall address my remarks. I do not intend to be drawn into whether cessation or diminution should be temporary or permanent, but this is obviously an important matter and I am sure that the Parliamentary draftsmen were right to cover it.

The Parliamentary Secretary has moved the first Amendment for a particular reason which I accept. It has clarified the position of short-time and lay-off, and, although our approaches to short-time may differ, we want to be quite clear about what is being provided. I said on a number of occasions in Standing Committee that I was worried that there might be confusion about certain aspects of the Bill and that people might be confused about their entitlements and that that might lead to bad feeling and the very reverse of what we all want to achieve by the Bill. I welcome the Amendment for the reason that it will clarify the position. But I also welcome it much more from another point of view in that the Parliamentary Secretary has done something which will certainly help me and which, I hope, will help others. He has brought right to the forefront of Clause 1(1) the real reason for the conditions under which redundancy payment is to be granted.

As I made clear in our discussions in Standing Committee, particularly when we were dealing with Clause 2, I was never happy about the general exclusions or that subsection (1) was sufficiently clear about the limitations on entitlement to redundancy payment on dismissal. By bringing it forward right at the start and saying that it must be dismissal by reason of redundancy makes it more clear to everybody concerned. Although that may not have been the intention, I welcome the Amendment for that reason in particular.

It will help in the interpretation of Clause 2 also to have the limitation, "by reason of redundancy", put immediately after the reference to dismissal in Clause 1. We shall discuss one or two points on Clause 2 in due course, so I shall not attempt to anticipate it, but this point has relevance to the anxiety which I felt, that the exclusions were not sufficiently wide. The introduction of the words "by reason of redundancy" in Clause 1 will assist those who are later concerned with the implementation of the Bill. Therefore, although the change is brought about for an entirely different reason, it is for this reason rather than any other that I welcome it, although, as I say, I have no objection to the reason which the hon. Gentleman gave. I welcome this and the subsequent Amendments connected with it.

Amendment agreed to.

Further Amendments made: In Clause 1, page 1, line 11, leave out "section 6(1) of this Act" and insert: subsection (1) of section (Right to redundancy payment by reason of lay-off or short-time) of this Act and complies with the requirements of that section".

In line 12, leave out from beginning to "then" in line 13.

In page 2, line 4, leave out from "dismissed" to "shall" in line 5.

In line 5, leave out from "dismissed" to "by" in line 6.

In line 7, leave out "lay-off or short-time".

In line 11, leave out "is or".

In line 13, leave out "is or".—[Mr. Thornton.]

Mr. Thornton

I beg to move Amendment No. 9, Clause 1, in page 2, line 15, to leave out from "for" to "in" in line 17 and to insert: employees to carry out work of a particular kind, or for employees to carry out work of a particular kind". I suggest, Mr. Speaker, that it might be for the convenience of the House to take at the same time Amendment No. 76. Both Amendments relate to the meaning of "redundancy".

Mr. Speaker

If the House so pleases.

Mr. Thornton

These Amendments are designed to make clear that the definition which we have in the Bill covers certain cases of redundancy which would at present not be caught by it. They are cases which everyone would agree were redundancies in the ordinary sense of the word and would be treated as such under existing redundancy policies in industry. They in no way alter the basic concept of redundancy in the Bill, that is, broadly speaking, the disappearance of a job as opposed to any form of discharge of a worker where the actual number of jobs remains the same as before.

Amendment No. 9 is designed to make the definition wide enough to cover the two types of case. Let us suppose that an employer decides that the same amount of work can be done by fewer workers, perhaps because the pace of work is speeded up or because of a change in the way the work is organised. The same amount of work will continue to be done, but, because it can be done by fewer workers, some workers are dismissed. The Amendment ensures that such a case will be covered by the definition because it makes the test of redundancy whether there has been a reduction in the requirement for workers rather than for work.

Second, there is the case in which employee A is dismissed not because there is any reduction in the employer's requirement for work of the kind done by him but because there has been a reduction in the requirement for some other kind of work, with the result that employee B has become surplus and has been transferred to the work previously done by A and so has displaced A, who is then dismissed. For instance, there might be a reduction in the requirements for foremen, and a junior foreman might consequently be demoted to production work, with the result that a production worker became surplus and was dismissed. In American practice, I understand that is referred to as "bumping", and it is quite likely to happen on the generally accepted principle in industry of "last in, first out". I am sure we agree that in such a case the production worker should be regarded as redundant for the purposes of the Bill.

Mr. Keith Stainton (Sudbury and Woodbridge)

Could the Parliamentary Secretary develop his theory of "bumping" a little? He has described a man who is completely pushed out of a job, but he did not explain the case of a sub-foreman who is demoted to a production position. Does that constitute redundancy in terms of the Bill?

Mr. Thornton

We have always intended that it should apply. If in the case I have indicated a foreman becomes surplus to requirements and, because he is a long-standing worker, is offered another job and accepts it, but, as a result, he replaces a production worker who then has to go out, we want to make it quite clear that a redundant worker in those circumstances, at the end of the chain, shall be entitled to redundancy pay under the Bill. That is our intention.

Mr. John Page

In giving that example of the link in the chain of the junior foreman, one assumes that the junior foreman has accepted the job on the production line again and has elected to say that he wishes to accept it rather than contest whether that is an alteration in the job he was doing and therefore might afford him an opportunity to claim redundancy pay. The foreman, in this instance, had he wished, could have possibly contested the fact that he was given the other job. Am I right?

Mr. Thornton

I think the hon. Gentleman is quite right. I am assuming the position, which I think will happen in practice, that a junior foreman demoted because his services are no longer required as a junior foreman would elect to go back on to the production line rather than seek his redundancy pay and move off to some other employer. Those cases will happen; I do not think there is any doubt about that. I am sure that the House will agree that that would be a case of redundancy, and we want to make sure that such a case is caught by the Bill.

The Amendment allows us to cover this case by a redrafted subsection (2,b) so as to refer to a reduction in requirements for employees to do work of a particular kind The test becomes a reduction in the employer's requirements for employees to do a particular kind of work; that is to say, his demands for such employees anywhere in his business.

Amendment No. 76, which relates to Clause 42, is intended to cover a similar situation in the case of associated companies, as that term is defined in the Clause. I think it is clearly right that if we are treating associated companies as one employer for purposes of offers of alternative work—and this is the effect of Clause 42 as it stands—then we should similarly treat them as one employer for this purpose, so that workers displaced at one company because of transfers resulting from redundancy elsewhere in the group, shall be treated as redundant and be entitled to payments.

Those are the purposes and the intentions of the Amendments.

Mr. Godber

Again, we welcome the intention of the Joint Parliamentary Secretary which seems to be wholly honourable. I admit that when I first saw the Amendment on the Notice Paper I was a little puzzled in that it seemed to be repeating itself twice over. However, on studying it, I find that there is some semblance of sense in its wording. No doubt it will have the effect intended.

It is right that greater flexibility should be provided in cases of this kind. I was interested in the example quoted by my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton). It seems to me that in that case there is one redundancy. The redundancy could arise in regard to a junior foreman if he chose to leave. It could arise for someone else if he chooses downgrading at the next grade. But there is one redundancy. The purpose of the Amendment is to provide flexibility so that either party is entitled to his redundancy payment even though the junior foreman has changed his type of employment. That would seem to be sensible and right, and we on this side would not resist it.

On the second Amendment, the introduction of the idea of associated companies was an improvement. It is right, if we are making this provision, that it should go in both places. I recommend my hon. Friends to accept this Amendment.

9.30 p.m.

Mr. John Page

There is some doubt about the future of the Grand National, but if it is run again I would put a lot of money on the Joint Parliamentary Secretary because I have seldom seen a man take so many large fences so quickly and without, apparently, suffering damage on the way.

On the first Amendment, I wish to ask about the question of the means by which an employee who has been served with a counter-notice by his employer can bring the notice to the attention of the tribunal. Earlier the Parliamentary Secretary referred to the question of going to the tribunal in questions of doubt as to whether redundancy payments are allowable or not. After a counter-notice has been issued by an employer, what steps does the employee have to take to have his case heard? Could the hon. Gentleman tell us what the mechanics are and what means the man has of applying for his case to be heard by a tribunal?

Mr. Thornton

If a counter-notice is served, it is the responsibility of the employer to make the approach to the tribunal. I will correct this later if I am wrong.

Amendment agreed to.

Further Amendment made: Clause 1, in page 2, line 18, leave out "is or".—[Mr. Thornton.]