PAYMENT OF COMPENSATION OUT OF REDUNDANCY FUND IN CERTAIN CASES (Hansard, 30 July 1975)

§ Mr. Brittan
I beg to move, That the clause be read a Second time.
Since the passage of the Industrial Relations Act 1971 there has been a remedy for unfair dismissal, and since the Employment Protection Bill began its passage through the House we have embarked on the task of adding to the law a provision whereby if disciplinary action short of unfair dismissal was taken against an employee, he would have redress. Under the Trade Union and Labour Relations Act 1974, Schedule I, paragraph 19(5) and Clauses 47(2) and 48(5) of this Bill, if an employer has been influenced in his unlawful action by coercion or threats of coercion or industrial action by a trade union, that cannot be taken into account when the question of unfair dismissal or disciplinary action comes before an industrial tribunal.
If a trade union exerts pressure on an employer in respect of an individual in a way contrary to the law, he will find himself in a position where the individual concerned will have a course of action against him before an industrial tribunal and there is nothing the employer can do about it. He has no redress against the trade union, even though the only reason he had taken the action was the threat of strike action by the trade union if he had not done so.
9.15 p.m.
We think that that is a very unfair situation, because it means that an employer has been driven to act contrary to the law because he can do nothing in view of the overwhelming pressure exerted upon him by the trade union. When a comparable point was raised in Standing Committee it was said that the employer should not be in the position where nothing could be done about the situation, because he should not have taken that action against the individual 1925 concerned. That is an unrealistic argument in the case of a small employer who is faced with the threat of industrial action which he might not be able to resist, and in which he therefore acquiesces, sacking the employee as required by the trade union.
The second argument against giving any sort of redress to an employer in this situation was that the whole thing was unreal, that it would never happen. A limited number of such cases arose under the provisions of Section 119 of the Industrial Relations Act, which enabled an employer to take action in such a situation.
It does not lie in the mouth of the Government to say that this situation is unreal and could not occur, because they think it sufficient of a risk for it to be necessary to include provisions such as Clause 47(2) and Clause 48(5) in the Bill to guard against precisely this eventuality. Of course, we accept that this is not a situation which will necessarily arise often, but we take the view that it would be wrong and unfair for an employer faced with such pressure to have no recourse whatever.
In Committee we suggested a procedure whereby it would be possible to join the trade union concerned in the proceedings and to have a determination against the trade union if the tribunal came to the conclusion that in taking unlawful action against an individual an employer had done so largely because the trade union had compelled him to do so.
That proposal was strongly objected to by the Government for reasons which we could not accept. We are not seeking to reinstate that provision in this case, but to deal with the situation in a different way, which will not involve any kind of legal proceedings against a trade union or any other kind of action against a trade union. The alternative method of approach suggested in the new clause is that in the sort of situation I have described a tribunal could make use of the fact that the employer had been compelled to take an unlawful action against an individual because of the coercive pressure of industrial action. Once a tribunal had so certified, the Secretary of State, on receipt of a copy of the certificate of the tribunal, would request in writing from the employer confirmation that he had 1926 paid the amount of the compensation awarded to the complainant, and in those circumstances the Secretary of State should pay to the employer out of the redundancy fund the amount of that compensation.
In other words, we are seeking to transfer to the State an obligation because we do not wish to engage in the difficult area of action against trade unions in this situation. We take the view instead that where an employer has been driven to act unlawfully against his own wishes he is faced with no alternative but to have a strike or act contrary to the law.
In those circumstances, if it is thought, in the general interests of industrial relations, undesirable that the employer should be able to have recourse direct to the trade union, he should instead be able to claim compensation from the redundancy fund. I should have thought that this was an uncontroversial way of dealing with a problem which, although it is likely to arise rarely and, therefore, will not impose a large financial burden upon the State, is likely to arise sufficiently often for it to be referred to in this legislation and for it to arise in circumstances of manifest injustice unless it is dealt with in the way which the clause proposes.

§ Mr. Booth
The effect of the new clause, if carried, would be to enable an employer to gain a certificate from a tribunal to confirm that action taken against an employee, in contravention of the employee's rights in relation to trade union membership and activity or the employee's unfair dismissal, would not have occurred if it had not been for pressure exerted by industrial action or the threat of industrial action; and to enable an employer who presented such a certificate to the Secretary of State for Employment to recover the whole amount of the compensation award paid to the employee from the redundancy fund.
The new clause would enable employers to transfer liability for their own unfair treatment of employees to the redundancy fund whenever they took action in response to industrial action.
We see in the new clause a bastard offspring of Section 119 of the now-repealed Industrial Relations Act. Just 1927 over a year ago, when we were debating the re-enactment of the unfair dismissal provisions of that Act in the Trade Union and Labour Relations Act, the Opposition tried to save Section 119 from repeal. This new clause tabled for our consideration tonight shows that they have still not abandoned their affection for a procedure which would in some ways relieve an employer from what he considers to be an employer's liability for actions on unfair dismissal where any question of industrial action or threat of it is involved.
Many of the objections to the Section 119 procedure and that of joining trade unions in unfair dismissal action on an allegation by employers that they were responsible for the employer's actions apply to this new clause. I fully recognise that the compensation would have to be paid not by a union but from the Redundancy Payments Fund. I do not believe that that in any way alters the principle. Of course, the union would have to be involved if this procedure were to be followed.
It would clearly be wrong for the tribunal to decide to issue such a certificate as is suggested here without first of all hearing representations regarding the union's action or alleged action. It would be wrong not to give the union a right to be represented before the decision of the tribunal was taken. The decision of the tribunal on whether or not to issue the certificate would be a judgment on the action or alleged action of the union. Therefore, it would be wrong to see this as being any different in principle from what we considered on at least two previous occasions in this House.
However, there are also other objections to the course proposed in the new clause. By enabling employers to escape financial liability for their actions it would encourage them to yield to pressure from industrial action which they might not otherwise do. Therefore, I am fairly confident that Opposition Members will not be too disappointed to learn that we shall object in principle to what is being proposed here.
Also, it would be wrong to seek to justify using the redundancy fund to finance an employer's unfair treatment 1928 of his employees. That is not the purpose for which the redundancy fund was set up. Although it might be the case, as the hon. Member for Cleveland and Whitby (Mr. Brittan) said, that there might be very few calls upon the fund for this purpose, it would still not be proper for this House to agree to an arrangement to use that fund for a purpose for which it was not created. For these reasons, I hope that the House will reject the new clause.

§ Mr. Brittan
The hon. Gentleman normally shows himself responsive to reason, but on this occasion so deadly in his mind has been the legacy of the Industrial Relations Act that it has obscured the argument we have been putting forward on the new clause and prevented him from seeing the logic of our case. It has led him to fall into a number of fallacies, which I shall not underline although I must refer to the fact that it was suggested that employers would easily be inclined to take unfair action which would give rise to liability because they could then get the money back out of the redundancy fund.
The hon. Gentleman plainly could not have read the new clause if he came to that conclusion. If he had read it he would have seen that it says that the tribunal has to be satisfied that but for such pressure, that action would not have been taken or the complainant would not have been dismissed. The tribunal has to be satisfied of that, and the employer cannot simply shuffle off his obligations. He has to prove before a sceptical tribunal that it is only because of the action that has been taken by the trade union that he has taken the action against the individual.

§ Mr. Booth
On an even more careful reading of the clause, does the hon. Gentleman agree that the tribunal has to be satisfied not that there is action but only that there was a threat of such action?

Mr. Britton
That makes no difference. The threat is what is important, obviously. It is even more difficult to be satisfied of a threat than to be satisfied of the action. Therefore, the onus of proof upon the employer is all the greater.
It seems to me that the Minister of State has misrepresented what is required 1929 by the new clause in saying that this is an excuse for employers to transfer liability. There are other objections to what he has said. In the interests of progress, I shall not elaborate on them. I advise my right hon. and hon. Friends to support the new clause in the Division Lobby.