New Clause.—(IMPLIED OR CONSTRUCTIVE TERMINATION OF CONTRACT.) (Hansard, 21 July 1965)

§ The Solicitor-General (Sir Dingle Foot)

I beg to move, That the Clause be read a Second time.

I can deal with this Clause in a few words. Its purpose is to remedy an omission in the Bill. The Bill covers the normal case where the worker is dismissed owing to redundancy. It does not cover the case where a worker's contract of employment is terminated either by operation or by implication of law. 1691 The Clause is designed to correct that defect.

The situation with which the Clause deals is defined in subsection (1), which says that a worker's contract of employment may be terminated by operation of law otherwise than by dismissal as defined in Clause 3. Such cases can occur where the employer is a partnership firm and the partnership is dissolved, where the employer dies, where the employing company is wound up, either compulsorily or voluntarily, and, in the case of certain employees, where the employer is adjudicated bankrupt.

Subsection (1) says, in effect, that where a contract is terminated by operation of law as a result of any of these events that shall be treated as a dismissal for the purposes of the Bill. It does not mean that the employee is automatically entitled to a redundancy payment, because subsection (2) makes it clear that he can only be so entitled if he is not re-engaged within a certain time, and the fact that he is not re-engaged is wholly or mainly attributable to redundancy, that is to say, to the circumstances defined in Clause 1(2).

The time within which the employee must be re-engaged if the termination is not to count as a dismissal is laid down in Clause 3(2)—that is, where the re-engagement is on the same terms as before, it must take place without a break in employment, and where it is on different terms any break in employment must not exceed four weeks. But in the case of the death of an employer the interval allowed in either case is eight weeks. That provision is more conveniently discussed in connection with new Clause No. 10.

Subsection (2) puts right a defect in Clause 18 which was pointed out by hon. Members opposite in Committee. That Clause refers to the situation where a business ceases because of the employer's death, but not to the situation where the business is carried on though with reduced requirements for labour, resulting in employees not being re-engaged by those carrying on the business. Subsection (3) of the new Clause has the effect that in deciding whether a business has ceased, it is the action or intentions of those who have the power to dispose of the business that is the relevant consideration.

1692 I suggest that this is a very simple Clause. It remedies the omissions that I have referred to in the original draft. It means that an employee will not forfeit his rights under the Bill where he loses his job as a result of redundancy, and his contract is not renewed, simply because he has not been formally dismissed.

§ Mr. Ronald Bell

Again, we welcome the new Clause. As the hon. and learned Member has said, it is designed to deal with certain defects in the Bill. From his appearances in Committee the Solicitor-General will realise that the Bill did not emerge from the Government wholly free of defects; in fact we had a long and fruitful Committee stage, during which we had 45 Government Amendments. Now we are ploughing our way through 10 new Government Clauses before starting on a fine crop of Government Amendments.

We do not wish to discourage the Government in well doing; indeed, we congratulate them on remedying, in subsection (1) of the new Clause, a defect in the Bill which our diligence had not discovered. We must concede that to them. Casting one's mind back it is a little amusing to remember that in Committee we spent a certain time discussing the effects of insolvency and bankruptcy, and the reserve powers of the Minister in respect of them to make payments for which he could recoup himself out of the Redundancy Fund. I do not think that it occurred to the Government and their advisers, or to the Opposition, that there might not be a technical dismissal within the definition of Clause 3 if one of those events occurred.

However, we are not in quaeri delicto in this matter, because the Government should have realised it. The Opposition are only the longstop in these matters. I congratulate the Solicitor-General on introducing the new Clause, but I must reproach him and his colleagues for not having discovered the defect earlier.

As for subsection (2), we are grateful to the Government—or rather, perhaps I should say, we note with approval that they have taken advantage of the fact that on this occasion the Opposition drew their attention to the omission. Subsections (3) and (4) are virtuous without being 1693 harmful, which is a combination not always achieved in this life, as the hon. and learned Gentleman, with his West Country background, will appreciate.

I am, therefore, able to advise my hon. Friends that we shall accept the new Clause as an earnest of the Government's intention to remedy some of the more negligent defects in the Bill, which they so imprudently and prematurely brought forward.