REDUNDANCY PAYMENTS ACT (MERCHANT SEAMEN) (Hansard, 18 July 1968)

§ The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley)

I beg to move, That the Redundancy Payments Exclusion of Merchant Seamen Order 1968, a draft of which was laid before this House on 11th June, be approved. This Order has two effects: the exclusion of merchant seamen from the provision of the Redundancy Payments Act and the repayment of redundancy fund contributions to the employers of these excluded merchant seamen. The exclusion is carried out under the powers given to the Secretary of State under Section 16(6) of the Redundancy Payments Act. This enables the Secretary of State to authorise refund of payments under the powers given to her in Section 31. Refunds under Section 1 of the Act can be made only in respect of employees who have been excluded under the earlier section.

This power should clearly be exercised infrequently, and then only after most stringent examination of the circumstances surrounding a particular case.

There are obvious minimum criteria by which exclusion should be judged. The 1806 first requirement is that the employers have set up, at considerable cost to themselves, their own redundancy arrangements. The second is that these individual arrangements should eliminate claims on the general redundancy fund. The third is that the benefits should be at least comparable with those provided by the State scheme. When these criteria are met, it is clearly unreasonable to expect the employer to contribute to both the State and to his own scheme.

This is not the first group of workers to be excluded. The House will know that already the dock industry has been granted exclusion and the refund of contributions in this way. The position in the Merchant Navy is very similar and examination of its redundancy contributions against our criteria justifies its exclusion from the scheme. For many years the Merchant Navy Establishment Scheme—set up to decasualise the merchant shipping industry—has provided a supplementary benefit between voyages and has also provided additional sickness pay. In the year ending on the 31st March, this cost the industry almost £800,000. The scheme now seeks to provide special assistance to men who are not between jobs, but have permanently left the industry—men for whom it may be particularly difficult to find a job on shore.

The National Maritime Board, the general negotiating body for shipping, applied to my Ministry over three years ago for exemption from redundancy payment. Since that time a detailed scheme has been prepared. It turns out to be appreciably more favourable to the employees than the State's provisions. It is, for instance, calculated over 25 years rather than 20 years of reckonable service. Whilst the State scheme's maximum increment for service is 1½ weeks pay for every year served over 40 years, the Merchant Navy Establishment Scheme increases payment for years served over 50 years to the equivalent of 2 weeks pay. Under the statutory scheme payment up to £40 a week is taken into account, but under the Merchant Seamen Scheme the limit is raised to £50 a week. In addition, and perhaps most important, all sea-going service, whether with one or more than one employer, is aggregated when the benefits are calculated.

1807 In our view, therefore, the requirement that exclusion can be granted only if alternative provisions are at least as good as those provided by the State is met. Because of the substantial cost incurred by the industry we believe that it should be relieved of the additional contributions to the redundancy fund.

However, I should explain to the House that either side of the industry can end the agreement provided that they give six months notice of their intention. The Secretary of State has made it clear that were this to happen she would, during that period, use her powers to include the industry within the general redundancy provisions once more. She would also wish to review the position were there a substantial fall in the value of benefit provided under the agreement, compared with the contributions refunded.

Article 2(2)(a) of the Order specifically excludes a further category of merchant seamen—that is, those who are neither domiciled in nor have a place of residence in Great Britain. These seafarers are outside the scope of the private redundancy agreement, but they are unlikely by definition to qualify for benefits under the statutory scheme. It is, therefore, right that their redundancy contributions should be refunded to employers even though it is done for reasons other than the alternative provision of a private scheme, which forms the main part of this Order.

§ Mr. Nicholas Scott (Paddington, South)

The fact that we are dealing with this Order at this time of night and, I suspect, fairly briefly is not a measure of the importance that we place upon it. It is an extremely important Measure. It is an excellent example of an industry making provisions more generous than those provided for in the statutory scheme. It is right that both sides of the House shoud pay tribute to an industry which has worked out such a scheme. It reflects the modern pattern of employment in the shipping industry. As the Minister has said, it is more generous than the statutory scheme. Indeed, the 1808 provision at times is half as generous again as that provided under the statutory scheme. It has been agreed by all parties on the National Maritime Board.

We note that, if the scheme should run into difficulties, if the level of benefit falls or if either side is dissatisfied, they can give notice of withdrawal, and employees will again be covered under the statutory scheme. The Minister said that in order to make an exemption of this sort, the Department takes a very stringent look at any scheme put forward to make sure that it is at least as generous as the statutory scheme. I think that it has been shown already that it conforms with that requirement.

I want to ask three brief questions. Two of them are questions of fact. The first is that I assume that benefit under this scheme, as under the statutory scheme, is tax free. Second, I assume that it has no impact on any right to unemployment benefit to which a seaman may be entitled. Third, may I ask the hon. Gentleman whether he is satisfied that the appeals procedure under the scheme is as satisfactory as that under the national scheme.

He will know that, under the statutory scheme, there is the right of appeal to an industrial tribunal. There, the employee can be represented by counsel or by a solicitor. One would want to think that the provisions under this scheme were at least as stringent, and that there is the ultimate right of appeal to an industrial tribunal.

We on this side of the House welcome the scheme. It is in tune with the special needs of the industry. We hope that more industries will be able to look at whether they can make special provisions for redundancy. It is a matter which as widely as possible ought to be borne by employers in the industries concerned.