§ Order for Second Reading read.
§ 2.48 p.m.
§ Mr. T. L. Iremonger (Ilford, North)
I beg to move, That the Bill be now read a Second time.
It makes a small amendment to the Redundancy Payments Act, 1965. To put matters into perspective, perhaps I should explain briefly the background of that Act. The main object of it is to require employers to pay compensation to workers who become, in the jargon of the day, redundant. Such workers are those who lose their jobs not because of their own misconduct or incompetence but because the jobs themselves disappear through improved methods of production. The sail-maker became redundant, not when he got drunk in San Francisco and hit the third mate over the head with a belaying pin, but when the engineer usurped his function.
The underlying idea of the Act is to make it less painful for workers to change their jobs in accordance with the needs of "technological progress" and "science-based industries"—to quote two hideous phrases which had currency when the Act was going through the House. It is intended to take the social sting out of industrial change, anticipate potential Luddite-ism, and minimise the temptation to over-manning and under-employment of labour, thus allowing Britain to move more swiftly and achieve the modernisation generally considered to be necessary.
Redundancy payments are the workers' silver handshake and are part of the drive to encourage the mobility of labour. Other parts of the drive are the Government retraining schemes, grants and allowances for those who move to employment in other areas, and increased unemployment pay. This is a social and industrial policy to which both sides of the House have continuously contributed.
Redundancy payments are, therefore, compensation for loss of security and the anxiety and uncertainty of a change of job. They are not—and this is the important point—for the purpose of providing a source of income during unemployment.
1782 It is against that background and in the context of that purpose that this small amending Bill has to be considered by the House.
The purpose of the Bill is to allow the tribunal which awards the redundancy payments to award to a claimant less than the full entitlement on his becoming redundant when there has, in fact, been no real redundancy at all but only a nominal theoretical and technical one.
The extreme example of what can happen is the case of Lloyd v. Brassey. In that case, a farm worker, doing the same work continuously on the same farm, became technically entitled to redundancy payment from the vendor of the farm when the farm changed hands. I hasten to add that the decision in Lloyd v. Brassey given by the Divisional Court, on appeal from the tribunal, and which illuminated the whole latent menace, has now been reversed by the Court of Appeal. But the technical details of that case were peculiar to the business of farming. Therefore, although farmers, as such, are now safe, it may well be that employers in other businesses will find themselves still in jeopardy if a claim is made against them in similar circumstances.
I ask the House, therefore, to give a Second Reading to the Bill to save them from that jeopardy. I should explain exactly what that jeopardy is. An employer may be required to meet a claim for redundancy payment to an employee who does not in any real sense, though he may do so technically and legalistically, suffer redundancy. I am referring to the employee who does not have the anxiety or insecurity of losing a job, nor even any break in its continuity, and merely transfers doing the same job for the same firm from one nominal employer to another, as, for example, on a change of ownership of a company.
It is in these circumstances, or in similar ones, that under the Bill the tribunal may on the application of the employer, despite the technical entitlement of the employee, so adjust the amount of redundancy payment as may seem fair and equitable.
I have pointed out that the tribunal's discretion under the Bill extends beyond the extreme example of the jeopardy which I have given. I am sure that this 1783 latitude will be especially welcomed by smaller businesses, and even more so now that their contribution to the fund is being increased by the Bill to which the House gave a Second Reading yesterday.
As the Act now stands, if an employer wishes to introduce a new system of working or move to different premises, it is highly probable that his employees may refuse to accept employment in the new circumstances and claim automatically that they are redundant and, therefore, entitled to redundancy payment. Where, as is often the case, such employees can readily find comparable, or even better, employment with little or no time lapse between leaving one firm and joining another, the Act provides the ludicrous situation of compensating people—better still, bribing them—to leave their employers.
The principle and, indeed the overriding interest of smaller firms in the Bill is that it might prevent further and even more dramatic increases in the weekly contribution to the Redundancy Fund. Thousands of firms employing from ten to 400 or 500 people operate happily with no question of redundancy ever occurring, and these feel justifiably irritated to be mulcted of an increasing levy to finance the sort of nonsense that the Bill seeks to terminate.
One final small point. I am sure that if the "suitable employment" referred to in the Bill were subsequently terminated, the employee concerned would not be prevented from re-establishing his original claim for redundancy pay. The Bill does not extinguish that right to claim. But if there are legitimate doubts about that, they can be settled in Committee.
All in all, therefore, I hope that the House will think this a helpful Bill and will give it a Second Reading.
§ 2.55 p.m.
§ Mr. Donald Dewar (Aberdeen, South)
I rise only briefly to comment on this proposition.
I have some sympathy with the motivation of the sponsors in this case. Anyone who is in touch with the workings of the redundancy payments scheme since it was introduced will realise that peculiar circumstances can arise which, on their face value, appear a little unreasonable.
1784 I have met workers who have benefited considerably under this scheme and who, as a result, have been glad to see the firm by which they were originally employed closing down, because they were operating in a labour market where they knew that the time they were about to spend out of work, as it were, would be extremely limited and they would get a sizeable sum of money in return for the marginal inconvenience of changing their job within their own district. That can be an unfortunate situation, and it is one which I presume has motivated this proposal.
Despite this, I am unhappy about the proposal as it now stands. The number of cases where this happens is very small indeed. It cannot be described as a common occurrence. I suspect that the workman who would be pleased to see his firm going out of business in this fashion must be a rare bird indeed. He is probably the kind of man who is likely to drift from job to job and would have little interest because he would be getting only a very limited payment on redundancy. One trouble is that we are jeopardising the smooth working of the scheme for a small minority.
As a result of redundancy payments legislation, we have a whole mass of Statutes and a jungle of administrative tribunals of one kind or another. There is very real concern, which can be seen in many pamphlets and research projects going on at the moment, about the extent to which these tribunals are being worked and the extent to which people are getting the rights that they should have. The result of this proposal would be to lay upon the tribunal system another very heavy weight indeed.
I understand that before the Redundancy Payments Tribunal there may be long and complicated dispute and debate whether redundancy has occurred, whether a man is entitled to payment, or whether he has lost his job through inefficiency, good cause or industrial action of one kind or another. This can lead to considerable complication.
But a whole new area of dispute would be added by the proposal in the Bill. Instead of having the simple-sounding job of deciding whether a man was entitled to a redundancy payment, the whole new problem would be created of deciding what the amount should be. The 1785 question of quantum would become hotly disputed before tribunals. Employers who were faced with difficulties, or with liquidation, would inevitably be greatly tempted to argue that there were special circumstances in their case, and that it was unreasonable, in all the circumstances, for them to have to pay the full amount—which, at present would be automatically awarded.
If this new area of discretion were to be placed upon tribunals the redundancy payments scheme would be asked to bear a weight which it is not qualified to bear. It would be out of all proportion to the amount of money saved. It would be a charter for all sorts of people to try to hold up payment or to reduce, by marginal amounts, the money which ought, in most cases, to be awarded to people who have genuinely suffered because of redundancy.
Well-intentioned and understandable though the proposal is, in some ways, it applies to a very small number of cases, and I suspect that the Government spokesman will state that it would make unworkable a scheme which is undoubtedly contributing a great deal to the restructuring of industry and the mobility of labour.
This would be an extremely unfortunate event, and for this reason my first impression is that the House should look sceptically at the Bill before according it a Second Reading.
§ 3.0 p.m.
§ The Under-Secretary of State for Employment and Productivity (Mr. Harold Walker)
I seek to intervene only briefly. As is traditional on the part of the Government when a Private Member's Bill is being debated, I withhold final judgment, and do not seek to sway the House. I apologise to the hon. Member for Ilford, North (Mr. Iremonger) for not being present at the outset. He will probably agree that even members of the Government can find themselves "caught with their pants down".
When looking at the Bill that the hon. Member has introduced it is important to bear in mind the original purposes of the Redundancy Payments Act. I recall serving on the Standing Committee which examined the 1965 Measure and hearing discussions about the need for a greater mobility of labour and the deploy- 1786 ment of labour throughout the economy so that we could take the best advantage of the resources and skill which we possess, and the need, above all else, to overcome the obstacles to greater fluidity and mobility of labour.
One of the obstacles, clearly, is the need to ease the transition between one employment and another—not by giving a golden handshake, which was, for a period, so much a part of the publicity surrounding mergers of large companies and the consequent redundancy of company directors, but at least by giving a copper handshake to ease a difficult period between jobs.
The Bill, as proposed, would have the general effect of deterring people from finding alternative employment as speedily as I am sure the hon. Member, the Government and the House would wish. It would act as a deterrent to a person's seeking alternative employment. It would mean that a person confronted with redundancy, and hence the need to find a new job, would have a vested interest in postponing the day when he started his new employment, and consequently would not further the general purpose of the original Act as intended by Parliament.
There are also some practical difficulties. There is the difficulty which would confront any tribunal in trying to assess whether an applicant for redundancy payment was genuinely seeking employment or, to qualify for redundancy payment, was avoiding accepting new employment, which might or might not—according to one's view—be suitable to his abilities or training. The tribunal would be confronted with difficulties of interpretation.
There is also the important consideration that arose in the mind of the House when it approved the original Act—the fact that redundancy payments have the other purpose of compensating a man for all the opportunities that he has lost and the rights that he may have forfeited as a result of decisions over which he had no control and in which he did not participate. For example, a man often suffers the loss of promotion opportunities when having to change employments. There is the forfeiture of pension rights in some cases, and the loss of other civil benefits.
When the former Measure was going through the House hon. Members had 1787 very much in mind the need to compensate a man for the loss of his job as a result of a technological change, or a decision over which he had no control. The effect of the proposal would be to deny this compensation for those lost opportunities.
Therefore, there are practical difficulties in the way of implementing this Measure and objections in principle as well. We should have to study these very carefully. There are, of course,