§ Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Ann Taylor.]
§ 4.8 p.m.
§ Mr. Barney Hayhoe (Brentford and Isleworth)
Industrial tribunals, which are the subject for the first half of this first Supply Day, have been a feature of the national industrial relations scene for some 12 years, though their work is now vastly increased compared with what it was when they were created in 1965 to deal with disputes and questions arising out of the Conservative Government's Industrial Training Act 1964. They have been given very many additional responsibilities over the years by the Redundancy Payments Act 1965, the Equal Pay Act 1970, the Contracts of Employment Act 1972, the Trade Union and Labour Relations Act 1974, the Health and Safety at Work Act 1974 and the Sex Discrimination Act 1975. Perhaps the heaviest load arises out of the provisions of the Employment Protection Act 1975.
A substantial area of their work is concerned with unfair dismissals. This arose first out of the Industrial Relations Act 1971, the Conservative Government Act which first gave people a statutory right to complain and seek redress if they felt that they had been unfairly dismissed. That right was extended and modified by the Trade Union and Labour Relations Act 1974, which, though it repealed the 1971 Act, in fact re-enacted and extended these provisions, and also by the Employment Protection Act.
As jurisdiction has widened and the case load has been much increased, so public concern has become greater. This debate is an expression of that concern. I hope that it will consist largely of constructive criticism of the many aspects of the work of the industrial tribunals and also of the composition of these tribunals, but before turning to some of the detailed points I want to make, I shall 1114 refer to quite extraordinary comments by the Secretary of State for Employment when he spoke to the National Chamber of Trade on 2nd November, only a fortnight or so ago.
In that speech, after giving figures about the number of unfair dismissal claims—he indicated that they had gone up from 5,000 in 1972 to 39,000 for the 12 months ending 30th June 1977, representing an eight-fold increase in less than five years—the right hon. Gentleman talked of compensation awards of £1,000 and over in these terms:There are very few cases where that can happen, usually where a rare jackpot of circumstances have come up on the industrial relations fruit machine.It really is a remarkably insensitive if not offensive suggestion to compare industrial tribunals with having a go on a fruit machine.
If such a comment had been made by the right hon. Gentleman's predecessor, now the Lord President of the Council—well-known for the extravagance of his language—perhaps it would not have mattered. If such a comment had been made by the Under-Secretary of State for Employment, the hon. Member for Newcastle-under-Lyme (Mr. Golding), whose speech sometimes tumbles rather ahead of his thoughts, we should not have thought too much of it. But when the Secretary of State, who is known and rightly known for the dullness of his language, uses such phraseology, it is surely highly significant. It confirms the worst suspicions of those who see many unfair dismissal claims as capricious and made on the basis that the claimant has nothing to lose and perhaps something to gain.
So, to use the Secretary of State's own simile, on the industrial relations fruit machine the difference from real life is that the person operating it does not have to put in any money. He does not have to risk anything, because payments and jackpots are available sometimes with no, or very little, risk to the person so going to the tribunal.
I turn now to the composition of the tribunals. The latest figures show that there are about 2,300 lay members. A tribunal has a legally qualified chairman and two lay members drawn from a panel nominated on the advice of employers' 1115 organisations and another panel nominated on the advice of employees' organisations. For employees, however, only one such organisation is concerned, and that is the TUC. The employers' panel contains about 22½ per cent. women and the employees' panel just under 20 per cent. women at the moment.
But there is concern about two issues. First, this Government have given the TUC a total monopoly of nomination rights for the employee representatives, which is blatant discrimination against the non-TUC unions. On a number of occasions my hon. Friends have asked Questions about this. I recall some exchanges at Question Time with the Minister of State on 16th November 1976. We were given very unsatisfactory replies by him.
First, the Minister of State argued that, really, since a somewhat similar situation had existed between 1965 and 1971, there was no need to change it. Then he argued that, since the TUC accounted for 90 per cent. of people in unions, it was perfectly proper that the TUC should have the monopoly. What about the 10 per cent.? If there are about 1,000 nominees, 10 per cent. is a sizeable fraction. One could expect the Government to go to other employee organisations, which are not affiliated to the TUC, to ask them for nominations for about 100 of the places available.
The third reference made by the Minister of State in rebutting these proposals was that the Government wanted people who understood the problems of ordinary working people. That is a gross affront to those in non-TUC affiliated unions who perfectly understand the views of ordinary working people. They are no less able to articulate those views than are members of TUC-affiliated unions.
I ask the Government to look again at this question and to see whether they could not break that monopoly of the TUC on the nomination of employee members of the panel. It seems to us that a very strong case has been made for going wider. I do not only refer to the case that we have deployed in the House, but to the powerful reinforcement for our views that has come from the Council on Tribunals, certainly a prestigious body.
In its annual report for 1975–76, which was laid before the House earlier this 1116 year and printed in March, the Council says that it has said to the Department:consultation on employed persons should not be restricted to the Trades Union Congress. These representations have not been successful.This is not a party point which is being made just from one side of the House. This proposal has the support of the Council on Tribunals and it is not good enough for the Government to refuse to respond to these pressures and to broaden the membership of the employee side of the panels for people to serve on industrial tribunals.
The employers' side goes wider than the CBI and it is right that it should do so. It extends nomination rights to a number of other organisations, and as a result there is a wider and more balanced representation.
There is no possible justification for setting aside these weighty recommendations. I can only hope that what might be described as the mean-minded partisan political prejudice which must have been animating Ministers will be set on one side and the TUC monopoly broken.
The second issue on the composition of the tribunals concerns the under-representation of women. I have referred to that by giving the percentages. Under 20 per cent. of the employee members of the panel, on the last figures I say, were women, as against 22½ per cent. for the employers. Yet women represent 40 per cent. of the working population.
This must be looked at again. It is particularly important in the sense that when the terms of service of some women members of tribunals who have not been nominated from TUC sources came to an end, a number of them—over 40 women—found that they would not be reappointed because they did not carry the label of being nominated by the TUC. As a result, there is an even greater imbalance in the membership of the tribunals.
There has been some criticism of the way in which members are selected from the panels to serve on the tribunals. It is important that clear rules and criteria are established. Equally, as the complexities of the work carried out by industrial tribunals increase—and the list of the relevant Acts with which they have to be concerned indicates something of the great complexities that exist—a case can 1117 be made for more formal training of the lay members. I think that some training is given in certain parts of the country. But I hope that the Secretary of State will consider the possibility of wider training for the lay members, and also ways in which they can be kept up to date with the new information constantly coming forward as a result of appeals either to the Employment Appeal Tribunal, or to higher courts.
I turn now to the work of the tribunals. One knows that there is concern about equal pay cases. The Equal Opportunities Commission has been critical of the way in which the industrial tribunal procedures have been followed. I know of one case in my constituency, at Trico, where resource to an industrial tribunal did not lead to the solution of a problem concerning equal pay, and the result was a long and bitter strike before the issue was resolved.
It is important to look again at this aspect of the matter, taking some account of the views that have been expressed, to see whether the industrial tribunal procedures are working properly, because part of the intention was that they would resolve disputes of this kind without recourse to strike action and all the inconvenience and damage to the national interest that follow such action. More women on the tribunals might help. Perhaps the point made earlier about the imbalance there is relevant.
The major load of the work of the tribunals concerns unfair dismissal. We on the Conservative Benches remain convinced that aggrieved employees should have statutory rights in this respect. We introduced those statutory rights, and we stand by them. But we need to learn from the experiences of the past six years. Let me return to the Secretary of State's speech and to the figures that he gave. He said that in the 12 months ending 30th June last there were 39,000 such claims, of which 10,000 were withdrawn, 12,000 were settled by conciliation, and 17,000 went to tribunals, of which 5,500 were successful and 11,500, 67.6 per cent., were turned down.
The 10,000 that were withdrawn we can put on one side. Probably they were withdrawn at a fairly early stage, perhaps as a result of discussions with officers of the Advisory, Conciliation and Arbitration Service. Certainly, not a 1118 great deal of time or expense would have been involved in dealing with the claims that were withdrawn.
Let us take, then, the 12,000 cases which were settled by conciliation. In what proportion of that 12,000 was there genuine conciliation? In how many of those 12,000 cases were the employers paying £50, £100 or £200 so as to cut the inevitable losses that they faced? It is important to recognise that it is now a fairly expensive business for employers to defend cases at industrial tribunals.
Mr. Jayne of the National Federation of Building Trades Employers, who spoke on this subject at the recent CBI conference, gave some estimates. He said that in his experience the costs of defending such a claim varied between £400 and £1,500. That was the cost of representation. It had nothing to do with any compensation that might be awarded. He gave £600 as a typical figure. If it costs £600, win or lose, for employers, it is no wonder that many of them, perhaps on advice from solicitors, who try to settle out of court if they can, say "We shall pay the smaller sum in order to avoid the larger loss", even when they are absolutely certain in their own minds that the dismissal was entirely fair. That is the aspect of the matter which causes considerable concern.
Also, there is the growing legislation of tribunal proceeedings.
§ Mr. John Page (Harrow, West)
Would my hon. Friend be kind enough to answer a question to which I should know the answer? Is it possible to obtain costs in these instances? If so, is the case always brought by an individual?
§ Mr. Hayhoe
I shall say something about costs in a moment. Certainly, it is a relevant question. There is little chance of obtaining costs that amount to anything like the sum of money involved.
§ Mr. Greville Janner (Leicester, West)
Would not the hon. Gentleman agree that the greatest cause for concern in the figures that he has put before the House is that two-thirds of all claims brought before the tribunals fail? Does he not consider that the greatest cause for concern is that employees do not succeed before the tribunals and that there are many reasons for that lack of success, other than his suggestion that their cases are not good enough?
§ Mr. Hayhoe
I find that a somewhat extraordinary intervention. However, I shall say something about the proportion of cases that succeed and those that do not.
The fact that 67 per cent. of cases do not succeed is a reasonably clear indication that a substantial proportion of that number probably should never have been brought. However, one is concerned, too, about the growing legalisation of tribunal proceedings. As legal remedies have been provided, it follows practically inevitably that more and more of the proceedings become involved in the legal bureaucracy. The decisions of other courts are referred to and the whole thing, instead of being the fairly simple, rough-and-ready, quick way of resolving these disputes for which many of us had hoped, is becoming a fairly legalistic procedure. In some people's minds that raises the feeling that the claimant ought to have legal aid.
I know that the hon. and learned Member for Leicester, West (Mr. Janner) has raised questions on this issue. Some legal aid applies now. I believe that an individual may receive £25-worth of advice from a solicitor. Also, the limit applying to legal aid in other areas might well exclude many of the people who are taking these claims to tribunals. I should prefer to see not an increase in the legalisation trend but rather a way of reversing it and moving back to greater simplicity.
§ Mr. John Watkinson (Gloucestershire, West)
The hon. Gentleman is on to a good point. However, is he aware that one of the reasons why the industrial tribunals are becoming so legalistic—to use his term—is that the employers are now almost invariably taking on solicitors or counsel to fight their cases. If employers were prepared to send in their personnel officers, instead of engaging legally trained people, the hon. Gentleman might have what he seeks.
§ Mr. Hayhoe
I do not think that that is the whole story, although clearly it is relevant. I believe that the way in which the proceedings have developed has led employers—on seeing the way some judgments have gone when they have acted in their view, entirely properly—to believe it is right to spend substantial sums of money to defend themselves. They 1120 believe they have to defend themselves against the possibility of having to pay large sums in compensation awards and to defend their interests as good employers. The standing of an employer in a town may well be affected if cases are allowed to go by default, so that an employer is seen to have accepted that he has been dismissing some of his staff unfairly.
There are many reasons. I do not think that the blame should be attributed solely to the fact that employers seek legal advice to defend their interests.
More could be done to reduce unnecessary time-wasting and the expenditure of money than is done now. In this connection I welcome the new guidance which, I believe, the chairmen of industrial tribunals have given—that a pre-hearing review should take place when it looks as though a case may be outside the scope and jurisdiction of the tribunal, so that the thing is stopped before it goes beyond that stage.
While I appreciate that costs may be awarded—we come here to the point raised by my hon. Friend the Member for Harrow, West (Mr. Page)—if the tribunal decides that the action taken in either making or defending the claim was frivolous or vexatious, there is, I believe a great deal of anecdotal evidence—I have seen no full-scale reviews—that this does not prevent abuse. A great deal of abuse is, I believe, going on, and I understand that in practice when such awards of costs are made they tend to be in the region of £35 to £50, which is quite small compared with the figure of £600 that may be involved in all the time and work of people concerned on the employer's side.
Again, therefore, this shows that the balance of the way the tribunals have been working has been such as to make it more likely that an individual who has not a ghost of a chance of sustaining his claim but who goes to the trouble of making it—there is very little trouble for the dismissed employee—has, first of all, a chance of getting a conciliated settlement under which the employer pays him off just to avoid getting deeper into paying costs in defending the action. There is also always the possibility—to return to the Secretary of State's analogy—that by some strange chance in pulling the lever of the industrial tribunal fruit 1121 machine the claimant will receive a jackpot award that he never dreamed of.
Another problem is the waste of time that can occur. The failure of either party to attend the proceedings obviously causes great difficulty, and it is normally more costly to the employer than to the employee. I wonder whether further consideration could be given to the Scottish system which, as I understand it, works in the following way. The tribunal staff check that the parties are available. Then the tribunal deals with the case on the day when people have agreed to attend even if one party fails to show, unless there is a proper excuse arriving at the tribunal in time. In order to cover the case where one or other of the parties may genuinely be prevented from turning up for reasons outside its control, there is the possibility that, if the excuse is made late, the result can be reviewed in the light of any new evidence that may then become available.
That seems a much more sensible proceeding than that which, I understand, happens now on some occasions, when the employer turns up but the employee who is claiming unfair dismissal does not. This can happen not once but twice, and only at the third time is action taken. This places a heavy load on employers and their advisers, and it requires to be looked at.
I turn now to the question of the awards of compensation that are made. The Department of EmploymentGazette is an excellent publication, and I congratulate those who have been responsible for improving its contents in recent months. This month's issue publishes interesting figures about unfair dismissal cases in 1976. One sees that in the last six months of 1976 in only four of the 811 awards that were made did the amount exceed £5,000, and only 39 exceeded the £1,500 mark.
Those figures are not well known, and small and medium-size employers are often genuinely fearful of the liabilities that may exist. Many of them are not taking on employees because they are fearful of what may happen if they find that, after an employee has been in a post for six months or over, for one reason or another, the expected upturn in business has not occurred or the employee is unsatisfactory. If they want to revert to their original size of staff, they have a 1122 heavy financial liability. Whether their fears are wholly justified by the facts is beside the point, because their perceptions of these provisions in fact destroy job opportunities.
If Ministers say, as they have in the past, that the Employment Protection Act and similar legislation does not affect the possibility of people obtaining jobs, they live in a totally unreal world. I go around the country meeting many small and medium-size employers, and it is a story one hears with sickening regularity. I am telling Ministers the facts of the situation, that there is genuine worry, and if perceived fear is sufficient to tip the balance, many people are out of work today because of those provisions.
Another aspect which causes concern is that the legislation makes the employer guilty and he has to try to prove his innocence in these situations. That is the legislation and we cannot try to change it today, but would it not make the whole procedure more even-handed if the employee had to give, before the matter came before the tribunal, his or her reasons for thinking the dismissal unfair? Why should employers have to wait until the hearing in order to discover the reasons? Sometimes it is possible to ask for information before.
§ Mr. Hayhoe
My information is that in many instances the information is not supplied. I am glad that the hon. and learned Member for Leicester, West is with me. He believes that that situation already exists. But if I am right, and the situation does not exist, I hope he will support me in calling upon the Secretary of State to take the necesssary action to ensure that employers do not go blind to the tribunal, in ignorance about the claimant's reasons for saying that his dismissal was unfair.
§ Mr. Greville Janner
Is the hon. Gentleman aware that there are provisions for requests to be made to the tribunal before the hearing for particulars of the document—the details of the case—and for the documents themselves? The hon. Gentleman's intervention is useful because it should emphasise that people should make use of the procedure which is there. At the moment people do not know it is there, and therefore they do not make use of it.
§ Mr. Hayhoe
I gather that the existing procedures are permissive. I should like to see them toughened up—although not to make things too legalistic again. I do not want it to get to the state where the pleadings would have to be stuck to without any possibility of change. But, on the information I have had, it seems there is the possibility of some useful and helpful change in that direction.
Again, one sees excessive legalism in some of the decisions. Perhaps it has already been overturned on appeal, but I saw a case in theDaily Telegraph of 12th November of someone who had been dismissed for stealing and who had then been sent to prison and who, after coming out of prison, had won a case before an industrial tribunal on the ground that he had not been given the written reason for his dismissal within the 14 days laid down by Section 70, I think it is, of the Employment Protection Act. But he had not been given that written reason because the police had specifically requested his employers not to give it. I submit that that is legalism gone mad. In order to maintain law and order the police ask someone to behave responsibly, but he then gets penalised and taken to the tribunal and has to pay—I think the award was two weeks' compensation—in a matter of this kind. One hopes that the decision will be overturned on appeal, but if it is not, something is very wrong with the situation.
I shall say a word more about compensation. The maximum amount at present in this very special case of someone aged 62 with some 20 years' service who has been dismissed and who gets a special award is £11,760. I understand that the Government intend—provided they get the support of both Houses of Parliament—to increase the limits by 25 per cent., which would increase that figure to £14,700. Perhaps the Secretary of State will confirm what will happen if the proposals he is making are brought in.
But the average award is very much lower at about £350. It would be helpful if more people understood that amount. Some of the stories that are spread do no service at all to the whole procedure that should be operating in this area.
The suggestions that I have made could help allay fears among small and medium-sized employers who are very 1124 worried about the additional bureaucratic, legalistic burden placed upon them, much of it involving attendances at industrial tribunals. But there are some other nasty tendencies at work.
My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight), raised a very important point at Question Time last Tuesday. She referred to clerks in employment exchanges urging dismissed persons to claim unfair dismissal. The Minister of State, in an uncharacteristically discourteous and arrogant fashion, brushed aside her comment as a wild allegation. I hope he has by now apologised to my hon. Friend.
§ Mr. Hayhoe
I hope that he will. Surely he is aware of the case of Mr. Caine versus Jesser Engineering which took place in Birmingham earlier this year, at which the chairman of that industrial tribunal had a number of things to say which wholly support what my hon. Friend said. The "Industrial Relations Review and Report"—a highly responsible publication, which provides a very helpful service of information—in the run-in to its description of this case states:A number of Industrial Tribunal cases have highlighted the erroneous advice handed out on occasions by the Department of Employment. The Tribunal chairman in this case, W. R. Handforth, strongly censures the Department's officers for the views they expressed to the applicant.It goes on to refer to the comments of the chairman that:The advice given to the applicant by the Department of Employment was 'unhelpful' and 'totally fatuous'. According to the Industrial Tribunal, rather than advising him to report the matter to the lndusrial Tribunal, 'a modicum of common sense might have encouraged the applicant to return to work and allow the foreman to carry out …and so on. Then, significantly, the chairman went on:This is by no means the first time that the Tribunal has had occasion to criticise the irresponsible advice given by the Department of Employment".In these circumstances it was wrong for the Minister of State to castigate my hon. Friend the Member for Edgbaston and accuse her of making wild allegations when she was doing no more than raising points that quite naturally arose out of a 1125 case that was heard close to her own constituency, and for all I know it may well have affected someone within her constituency.
I have made a number of suggestions for improvements in the way that we deal with industrial tribunal matters. I have covered only some aspects of this complicated pattern. There are many more that could be dealt with and perhaps will be raised in the course of this debate.
I hope that the debate will produce useful and constructive criticism. At the very least, it will provide an opportunity for the Minister of State to apologise to my hon. Friend the Member for Edgbaston, who certainly deserves an apology, and for the Secretary of State to withdraw his unhelpful and misleading comment about the industrial tribunal proceedings being an industrial relations fruit machine. At best, this debate can provide suggestions that will lead to general improvements both in the composition and practice of industrial tribunals. Both those reforms are much needed.
§ 4.46 p.m.
§ The Secretary of State for Employment (Mr. Albert Booth)
The hon. Member for Brentford and Isleworth (Mr. Hayhoe) knows that he grossly misrepresents my position when he suggests that I have said that I regard the industrial tribunal system as being an industrial relations fruit machine. If the hon. Gentleman had gone on to read a further sentence of my speech, he could then have gone on to make clear to the House that I was referring to the number of cases in which large awards came about. I went on to say that:The median award for unfair dismissal is currently £355.That is precisely the point that the hon. Gentleman made.
What I said is made clear right from the beginning of the sentence. I quote:There are a very few cases where that can happen".That is the truth. I continued:usually where a rare jackpot of circumstances has come up on the industrial relations fruit machine.I said that there were very few cases. No one can fairly represent that as suggesting that I expressed the view that 1126 the industrial tribunal system was a fruit machine—far from it. I have a great deal of respect for the system and for those who work it.
I welcome the debate because it gives me an opportunity to say something about that system and about the recent wave of attacks—from the Press and others—on the tribunals, and to make clear that much which has been said has been both misconceived and damaging to a valuable system.
Over the past 15 years the House has built up, piece by piece, legislation to provide a wide range of important individual rights for working people. In doing that, the House has had three main objectives in mind: first, to secure a greater measure of social justice throughout a person's working life: second, to provide a reasonable measure of job opportunity for working people; and third, to outlaw discrimination in employment on the grounds either of sex or race. The hon. Member for Brentford and Isleworth has outlined some of the legislation which has given rise to that system and some which has, in so doing, created work for industrial tribunals.
I would be the first to agree that many of the rights have come about to a large extent as a result of the Employment Protection Act. It was that Act which, for the first time, introduced such rights as guaranteed payments for workers on short time; maternity leave rights—and the right to be paid for that leave; protection for trade union membership and activities; and the right to time off from work for public duties.
Of course, many more rights have been created and it would be surprising if there were not a corresponding increase in the number of cases coming before industrial tribunals. However, I plead with the House to keep the matter in perspective and to look at the numbers coming before tribunals to see whether they are commensurate with the range of rights that this House has provided.
In 1972 there was a total of 6,340 industrial tribunal hearings. In 1973 there were over 7,000, as there were in 1974, in 1975 the number went up to 12,000 and in 1976 there were 19,000—a little over three times as many cases for the vast increase in rights provided by this House for individual workers. I believe that 1127 what the hon. Gentleman and many of his right hon. and hon. Friends are trying to do—in fact, it appears to be Conservative Party policy now—is to represent this legislation as a burden upon employers. That seems to be their theme. I and my hon. Friends see it as a legal framework that reflects and supports the practice of the good employer in this country.
The right hon. Member for Lowestoft (Mr. Prior), on one of the occasions when he was in agreement with his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), put his name to a document issued by the Conservative Party Central Office. Under the section headedRemoving the obstacles to enterprisethere appears this very revealing sentence:We want to ensure that all those concerned with industrial prosperity … are brought to understand how recovery is being hindered by the operation of some parts of employment law, so that the necessary changes can be made with as much good will as possible.It is most surprising, therefore, that we have not heard today from the right hon. Gentlemen what are the changes they want to see. They are saying that changes are necessary. The least they could have done out of courtesy to the House was to outline some of those changes. From what the hon. Member for Brentford and Isleworth said, I take it that they do not want to see any changes in the unfair dismissal law. I shall study carefully inHansard what he said, but that was the impression I had.
The criticisms that the hon. Gentleman was making in this area, the area which unquestionably produces the largest number of industrial tribunal cases, were issues of slight changes in the method of proceeding before tribunals and not of taking away any individual rights. If that is not so, the right hon. Member for Lowestoft will tell the House and we shall hear just what changes in law he and his right hon. Friend the Member for Leeds, North-East had in mind when they put their names to the document issued by their party's Central Office.
I believe that these individual rights of employees are underpinned by the industrial tribunals. Those who are now criticising the tribunals are really criticising the law which the tribunals 1128 administer. Individual workers who believe that they have been denied their statutory rights should be able to obtain an effective remedy from what, in effect, is a labour court. The labour court can deal with complaints relatively informally and speedily. Its proceedings are understandable to the employer and the employee, and, of course, it not only understands the law but understands the realities of day-to-day industrial and commercial life.
That is the task which the industrial tribunals have to undertake. Over the past year they have been aided by the Employment Appeal Tribunal, which has done a great deal to give guidance to the tribunals, to ensure consistency of decisions up and down the country and to establish some unambiguous criteria by which tribunals can work.
I would be the first to admit that tribunals are faced with a difficult task. On the one hand they have to provide some fair decisions across a very wide area of law—decisions which, if necessary, stand up to the rigorous test of the Employment Appeal Tribunal. On the other hand they are called upon to act quickly and informally. These twin goals are not easy to achieve. A delicate balance has to be struck. In general, I think that the tribunals, which operate within a procedural framework laid down in regulations, get the balance about right.
It goes without saying that the tribunals can operate effectively only if they have the support and confidence of employers, trade unions, and individual workers. That is why I am so concerned today, because those who mount general attacks upon the tribunals tend to undermine confidence in them and by doing that they undermine the very rôle of the tribunals. I should not wish to argue that the operation of the tribunals is perfect or that the procedural regulations within which they work cannot be improved. My Department and the presidents of the industrial tribunals are in close touch with both sides of industry on many areas of the workings of the tribunals. In a number of cases we have made detailed changes in order to meet some of the criticisms of procedure.
I shall be happy to write to the hon. Member for Brentford and Isleworth drawing his attention to changes which 1129 have already been made and which go even further than he suggested they should. I think my information would meet his criticism that the procedure might be speeded up or might deal with difficulties faced by employers who have to attend on more occasions than may be necessary. We have taken those criticisms to heart. We have worked out ideas with the presidents of tribunals and have largely met them.
§ Mr. Nicholas Scott (Chelsea)
The Secretary of State is attacking my hon. Friend and others for their criticisms of tribunals and the way they work, yet he is saying that the tribunal system is responding to the criticisms that are being made. Surely it is right that there should be intelligent discussion about the way any system operates. We have that, and it should be flexible enough to respond and to improve itself all the time.
§ Mr. Booth
I suggest that the hon. Gentleman is confusing two things. Naturally, I agree that there should be intelligent discussion and constructive criticism. But what has been mixed up by his right hon. Friend the Member for Lowestoft is a general attack on tribunals and an attack upon employment law with the details of tribunal proceedings. Of course we can improve on the details of tribunal proceedings, and we are only too ready to do so. It is in the interests of all hon. Members to bring about such improvements.
The question of unfair dismissal, which is the area that has given rise to the majority of cases—it has undoubtedly been the area most frequently criticised—accounts for approximately three-quarters of all the applications made to industrial tribunals. I believe it is true to say that the statutory right not to be unfairly dismissed has been supported by both major parties for a number of years. The scope of the matter has been the cause of controversy, as it was in relation to the Employment Protection Act. There has, however, been general support for the proposition.
I therefore think it worth while to reflect on what the Donovan Commission said on this subject, to see how far we have reached since 1968 and the Donovan Report. Donovan said:There is usually no comparison between the consequences for an employer if an 1130 employee terminates the contract of employment and those which will ensue for an employee if he is dismissed. In reality people build much of their lives around their jobs. Their incomes and prospects for the future are inevitably founded in the expectation that their jobs will continue. For workers in many situations dismissal is a disaster.That was Donovan's view, not mine.
I suggest that it was on that view that the House debated the proposition of how we could enshrine within the law the concept that it would be illegal to dismiss someone unfairly. I think that the way in which Donovan has posed it explains why, on grounds of social justice alone, it is necessary to have such a statutory right. The hon. Member for Brentford and Isleworth complains that it is relatively easy for an employee to pursue his case. I ask the hon. Gentleman to follow the logic of his own proposition. What barriers is he prepared to put in the way of that employee in pursuing his case? How much harder does he want to make it for an employee? I hope I shall show that there are important considerations which deter employees from proceeding with claims which are not justifiable.
The legislation demands only that the employer provides employees with a reasonable measure of job security. It requires the employer to observe a few reasonable industrial relations procedures. For employers to do that is not only socially just; it is industrial common sense. They and the country as a whole are amply repaid by the very large improvement in industrial relations that comes about when these procedures are properly observed.
One has only to consider the number of strikes that took place in this country on the very issue of alleged unfair dismissal before we had unfair dismissal legislation. That gives a very strong guide as to what has been happening. But I also think that it behoves any hon. Gentleman speaking from the Front Bench in this House, and going outside to speak about it, to create a far better perspective and a far more intelligent appreciation of the actual size of the work of industrial tribunals.
I have recently read comments that would lead one to believe that employers face an overwhelming task in dealing with the number of unfair dismissal claims. That is not the case. The number of tribunal hearings for unfair dismissal last 1131 year was 13,400. That is one for every 1,600 employees. One employee out of every 1,600 actually pursued a case at a time when 8 million job changes took place in this country.
Even if one extends the consideration to take in all hearings—not just unfair dismissal—there was a total of 19,234 hearings in this country last year. That is to say, less than one in 1,000 employees pursued a case before an industrial tribunal.
If my understanding of what constitutes a small employer is right, there can be precious few small employers who were faced with considerations of going before industrial tribunals if less than one in 1,000 employees on average pursue their case to that level. Of course, an employee who brings the case of unfair dismissal to a tribunal is very much the exception and not the rule. The majority of cases are sorted out long before that stage. About 60 per cent. of the applications have been settled without a hearing, many of them through the good offices of ACAS.
There has also been a great deal of exaggeration about the size of the awards, the point on which I started. A recent article in theDaily Mail stated thatAwards in the region of £5,000 are not uncommon".What would that lead any fair reader to believe? So far this year, out of thousands of cases that have been heard, there have been only eight awards of compensation of £5,000 or over. Yet theDaily Mail says "not uncommon".
§ Mr. Greville Janner
Does not my right hon. Friend agree that one of the reasons for low awards is that an employee can only prove his loss up to the point of the hearing and tribunals do not have the power to say "Go away. Try to get another job and then come back."? Instead, they make a stab in the dark and try to give an employee who has been unfairly dismissed not only a loss that he can prove but a certain loss ahead. Therefore, employees receive not the two-year cover which the law intended but something very much less.
§ Mr. Booth
I appreciate that a very serious question which has to be answered is whether it is more desirable for a tribunal to settle the case completely or 1132 whether it is in the interests of justice to the applicant to prolong the procedure and have him come back. I regard that as a serious point to be considered.
However, the point I am making is not that awards are too small or too large but rather that the size of the awards is being grossly misrepresented. If this is perpetuated, and if one tells a big enough lie long enough and often enough, it may seriously affect employers' attitudes, which may be detrimental to the tribunal system, detrimental to their own interests and detrimental to industrial relations generally.
It was said that in my speech to the chamber of trade I did not include among the costs that I mentioned the cost of legal representation. That is absolutely right. I was not talking about the cost of legal representation. I was talking about the size of the awards—the very point that theDaily Mail was talking about in the article to which I have referred.
After all, to a large degree it is in the hands of the employer and the applicant whether they engage in practices of representation which involve them in legal costs. When this House set up this right, it was not intended that people would have to involve themselves in very heavy legal expenses to have hearings. I therefore suggest that too many employers insist on being legally represented in cases where it is not really necessary to do so. There is now an increasing tendency, of course, for employees to be legally represented if they see the employer represented by a professional legal representative. But the current position is that about 50 per cent. of employers—not the overwhelming majority—are represented in tribunal cases compared with about one-third of employees.
I am by no means sure that this is a desirable development. I hope that there will be some rethinking of whether this trend should continue. There is a risk. I know very well that representation is desirable, if not wholly necessary in some complicated cases where the evidence needs to be sifted very carefully or where novel points of law are raised. But if this leads to a more cumbersome and legalistic procedure before tribunals I think that it will produce a result which the House did not desire when it enacted the legislation.
§ Mr. David Madel (Bedfordshire, South)
Does not the Secretary of State accept that, if an employer in a medium or small town is not to get a bad name, he has to take every action he can to make sure that in a particular case every point of law has been considered? Surely there is nothing strange about that?
§ Mr. Booth
I certainly accept that an employer can be very concerned about whether there will be an adverse reflection on his reputation as an employer arising from a decision that he unfairly dismissed someone. I respect the employer's concern about that. But I equally respect the position of the worker before the tribunal. His reputation is at stake as well when he goes ahead with an unfair dismissal case.
What is the position if that worker goes along to his next employer, applies for a job and is asked for his references? He might say "I have no references because I was fairly dismissed or because the tribunal decided that I was not unfairly dismissed". That worker has only one reputation as a worker, and he puts that on the line. That is at stake when he goes before the tribunal. Although I respect the position of the employer, he does not have quite so much at stake. It might be accepted that possibly a member of the management acted in a way not characteristic of the firm in bringing that situation about. But the employee puts his one reputation at stake when he goes before the tribunal.
There is, of course, also the consideration of the money involved. The cost of legal representation can be high for the employee as well. If an employee is found to have been not unfairly dismissed, he is involved in costs as well. I do not accept the general proposition that it is very easy for the employee and that there is nothing at risk if he pursues a claim of unfair dismissal.
I should like to have details of any advice which has been given by any official in my Department which has been misleading to an applicant. If I can get evidence of that kind, I can assure the hon. Member for Brentford and Isleworth that it will be carefully pursued.
I wish to turn to the question of small firms, for which this is said to be a particular problem. I readily appreciate that 1134 people who run small firms have a considerable task in familiarising themselves with all the provisions and legislation that have come about in this House in 15 years, particularly the Employment protection Act, which has brought new rights to light. It is with that in mind that I am looking carefully at the points put to me by organisations representing small firms to see whether we can improve the procedures of tribunals to ease their difficulties. I shall also consider any suggestions that are made in today's debate.
I emphasise that up to now I have seen no hard evidence to support allegations about the adverse effects of employment legislation on the labour market. However, in view of the importance of these allegations we are monitoring certain parts of the legislation and we have already commissioned research into its effects on the labour market.
§ Mr. Kenneth Lewis (Rutland and Stamford)
Many people, including myself, believe that the Government did a disservice to workers and to small and other businesses when they reintroduced the six-month period. Many people believe that six months is not long enough. A firm may take someone on for six months but then find that it needs that person for a longer period. Something then happens, and that person might be dismissed. This short period of time is creating many problems.
§ Mr. Booth
The six-month limit was one of the changes brought about in the Employment Protection Act. That will be one of the matters covered when the effects of the changes are monitored. Another change was to bring into the scope of the Bill employers with fewer than five workers.
Do the changes which the Opposition say are necessary include a change in that respect? Do the Opposition believe that six months is too short a period? Do they take the view that small firms should be exempt from the legislation? That is not the Government's view. The Government are totally opposed to the proposition that there should be first-and second-class workers. They oppose the proposition that those who work for small firms should have less legal protection than those who work for large firms.
The legislation which has led to the working of the industrial tribunals has 1135 brought to working men and women an important range of individual rights. The tribunals play a fundamental rôle in giving to those who are denied these rights an effective remedy. If the debate does nothing more than enable the attack on this rôle and these rights to be refuted, it will be worth while.
§ 5.12 p.m.
§ Mrs. Jill Knight (Birmingham, Edgbaston)
The Secretary of State's speech will be received in the country with dismay. In large sections of it he appeared to fail to understand the reason for the industrial tribunals system occasioning such concern outside the House. Of all his statements the most extraordinary one was that this legislation backed up good employers. Good employers do not sack people unfairly. Good employers frequently are dragged in front of the industrial tribunals when they have done nothing wrong. Even when the tribunal absolves them, the cost that they have to bear is immense. The Secretary of State said that he had no evidence that the legislation acts unfairly. I beg him to read the reports from the CBI conference last week. Ample evidence that it does act unfairly was given at that conference.
The Minister of State, in a reply to me last week, not only was tetchy but showed a sad failure to grasp that the workings of the tribunals are causing great and serious problems. Having heard the Secretary of State today, I am not surprised that the Minister of State took that attitude. It is a wrong attitude. The Minister of State was rather complacent about the numbers involved and the way that they have increased. Different figures have been bandied about this afternoon, but the figures that the Minister of State gave me clearly indicated that there is no reason for complacency. In 1972, 1,854 cases came before the industrial tribunals. By 1976 the number had risen to 13,400. How can that be a matter for anything but grave concern? Those figures referred to the cases that reached the tribunals. Many more were withdrawn.
The cost to industry of industrial tribunals in the way in which they deal with unfair dismissals is enormous. The cost to the taxpayer is disgraceful and the cost in terms of job opportunities is serious.
1136 Let us first consider the cost to industry. The House should not forget that 800,000 small businesses are struggling to make a living. Small businesses are important to the country not only in terms of production but because they provide jobs. Last year there was a record number of bankruptcies among small businesses. If something is not done soon, I fear that we shall achieve another record this year. One of the heaviest of all the burdens that small businesses have to carry is the industrial tribunal. That was spelt out by the CBI last week. Anyone can go to an industrial tribunal and claim that he has been unfairly dismissed.
The Minister of State said that when a person goes to the Department of Health and Social Security to claim unemployment benefit after being dismissed the clerk at the office does not suggest to the claimant that he should ask for the case to be considered by an industrial tribunal. Employers in the Midlands have no doubt that such advice is given to people who are dismissed, fairly or unfairly. The attitude that is taken is "You cannot lose anything by applying to an industrial tribunal".
§ Mr. Deputy Speaker (Sir Myer Galpern)
The hon. and learned Gentleman has indicated that he is anxious to catch my eye. The time available for Back-Benchers is very short indeed. I hope that the hon. and learned Gentleman will restrain himself and avail himself later of the opportunity to take part in the debate.
§ Mrs. Knight
It is important for everyone to understand that no one from either side of the House is suggesting for a moment that people who feel that they have been unfairly dismissed should not have an avenue of appeal. Of course they should.
I am talking of cases such as one that occurred in the West Midlands. It involved a man who was a persistently bad timekeeper. He was warned repeatedly that if his bad timekeeping persisted he would be sacked. After about a year of bad timekeeping he was sacked. When he went to the DHSS he was told about the unfair dismissal procedure. He applied. He did not win his case but three days were wasted deciding whether warnings had been given in 1137 writng or verbally and about how those warnings had been put to him. Yet he knew at the outset that he did not have a case for unjust dismissal. He admitted that he had been warned and that he was a bad timekeeper. It seems an utter waste of the tribunal's time for cases such as that to be heard.
Another such incident was reported to me only this morning. It concerned a foreman on a building site. One of his team of workmen threw half a brick at one of the other workmen, and the brick struck the man under the ear and felled him. The foreman sacked the man on the spot, but the case was taken to the industrial tribunal. The tribunal found in favour of the dismissed man because, it was said, he had never been warned that if he threw half a brick at someone and hit him he would be sacked. That case cost the employer a great deal of money.
The employer is bound to lose even if he wins the case. The onus is on him to show that he acted fairly. That means that he must prepare his case and provide witnesses; and that puts a great burden on small firms which do not have the resources for this purpose. They cannot afford to pay persons to go into court and they cannot spare the time of their executives to appear for them at the tribunal.
It is all very well for the Secretary of State to say that a company does not need to have a solicitor, but if it is compelled to send one of its top executives to spend two or three days in court that can represent a severe cost to the company. Under our law it has always been held that a man is innocent until proven guilty. With the industrial tribunals the employer is guilty from the start, and the onus is on him to prove his innocence. This fact is leading many employers to settle out of court. They know that if they do not settle they will have to spare at least the time of executives or witnesses to fight the case. More and more employers are going to the claimant and offering, say, £200 to induce him to drop the case and to go away. Firms simply do not have the time to fight the case.
The Secretary of State claimed that the legislation worked for better industrial relations. However, this practice of settling out of court has a most demoralising effect on the staff who remain. They 1138 often fully agree with the dismissal because they have seen exactly why the person has been dismissed. It is bad for industrial relations when someone who is guilty of offences which warrant dismissal gets a sum of money simply to deter him from going to the tribunal.
We come then to the cost to the taxpayer. The chairman of the Birmingham industrial tribunal referred to the waste of public money only last week. He said:I want to draw your attention to the way your taxes are spent"—he was addressing his remarks to taxpayers.Two whole days have been spent on this piffling dispute.To my certain knowledge, babies are dying in Birmingham because there is not enough taxpayers' money to pay into the National Health Service. Members of the public are in danger from fire, vandalism and thuggery because we do not have enough taxpayers' money to pay the firemen and the police. In those circumstances, I do not see why we should be paying money in this way for industrial tribunals.
The Secretary of State said that employers could always get costs. But who foots the bill? It is the taxpayer, if the employer is lucky enough to win costs, and even that is in dispute. We are talking about a very great sum of money which the taxpayer has to pay on such "piffling" cases.
I come to the question of job opportunity. The Secretary of State seems totally to have failed to grasp this point. He said that the scheme extended job opportunities, but I am afraid that he was totally wrong, because it cuts them back. Many business men say quite openly today that they are so worried about the law in this respect that they are strenuously avoiding going beyond essential recruitment. Schemes to increase the number of jobs could be embarked upon, but employers are holding back through fear of future claims of unjust dismissal.
It is clear from what business men have said at the CBI conference and to hon. Members in their constituencies that expansion is "out". They refuse to enter into short-term contracts to employ because of the problems of dismissing employees once they are hired. Yet 1139 a short-term contract is important in two respects: first, because it does a job that needs doing to work, and, secondly, because it eases unemployment. This legislation is a deterrent to employment in the West Midlands, however, and the dole queues are longer because of it.
What is to be done? It has been suggested that there should be a better system of vetting applications to take cases to tribunals. That could certainly be examined. It is said that a certain amount of vetting is already done. Perhaps the idea of a financial deterrent is better. No one wants to cause harm to an applicant or diminish the justice due to someone who is unfairly dismissed, but a financial deterrent would curb the vexatious complaint and the person with nothing to lose. If such a person had to pay a certain amount into court—it could be only £5 or £10—he would not take a piffling case before the tribunal but he would get his money back if his complaint was upheld. If he went to court and the finding went against him, however, he would lose his money.
I ask both Ministers to appreciate that this is not a party matter. It is a matter which goes to the heart of industry and is an issue of great seriousness. It cannot be shrugged aside with the complacent view that the difficulties do not cause grave concern.
§ 5.28 p.m.
§ Mr. Greville Janner (Leicester, West)
This is a complicated and delicate area of law, and if the understanding of that area by the average employer is anything like that of the hon. Member for Birmingham, Edgbaston (Mrs. Knight), it is no surprise that employers are afraid of it. If only they took the trouble to discover the law in so far as the courts have succeeded in interpreting it, they would take a different approach.
I take the example of the short-term contract, to which the hon. Member referred. To my knowledge—which is very wide on this issue—there has not been one case in which a person on a short-term contract that has been properly documented who accepted the contract on a short-term basis has been held to be dismissed unfairly when the term of the contract ended. I feel that the hon. Member and her hon. Friend the Member 1140 for Brentford and Isleworth (Mr. Hayhoe) do not like the entire system and they are attacking what Lord Justice Sachs described as the right of an employee to his job, which is the right of a person not to be unfairly dismissed.
The tribunals operate rough and ready justice, and some of the chairmen and members are not necessarily those whom one would have picked oneself. In the main, however, these people are doing an excellent job and the House should pay tribute to them for their efforts to do justice.
The attack on the legalisation of the system is inevitable because, as Mr. Justice Donaldson remarked in the days of the National Industrial Relations Court, the days when this area can be operated as a means of palm-tree justice where the judge sits under a coconut palm dispensing his own rules are gone—because of, amongst others, Lord Denning. When one has the problems of constructive dismissal interpreted, re-interpreted and re-re-interpreted within a period of two months, it is amazing that anybody can manage without a lawyer at all.
One has the rights of employees who work overseas, people who work partly in this country and partly outside, only now given a rational interpretation. One has the problems of fixed-term contracts. I am asked why some of us campaigned to have legal representation made available to people at these tribunals. The answer is that the points of law are as great and as difficult in these tribunals as as they are in the courts. Whilst a county court now has jurisdiction up to £2,000, these tribunals have jurisdiction today up to about £12,000. They are very important places, indeed.
I deal first with how the cases arise. There have been criticisms from the hon. Member for Brentford and Isleworth and the hon. Member for Edgbaston about the clerks in the employment exchanges. I should like to pay tribute to these clerks who tell people their rights. What happens is that a man who has been dismissed goes along to the employment exchange and says "I want my money". The clerk asks "Well, why did you leave your job?" and he says "I resigned. I did not like it." The clerk then says "Maybe you were dismissed, or you were pushed out. Maybe you were forced to 1141 resign. If you were, you are entitled to claim compensation for constructive dismissal." The ordinary person does not know about constructive dismissal. The ordinary employer does not know it. The person who tells the employee is the clerk in the employment exchange, who has been so greatly maligned today.
I believe that the employees in the Department of Employment who work in the employment exchanges do a first-class job in informing ordinary people of their rights. There are occasions when they do it incorrectly, when wrong information is given. I regret to inform the House that even lawyers have been known, on occasion, to give the wrong advice.
However, at least somebody tells the ordinary person who comes to the employment exchange "You may have rights. Go to your solicitor and you can have £25 worth, at least, of free advice." Somebody may say to him "Go to your union and inquire." The trouble in this area of law is that people do not realise what their rights may be. The employers do not realise that this is an area of rough and ready justice.
To some extent the criticisms are right. In such a system it is true that an employer cannot win and that the preparation for the case costs money. It is true that he loses time even when the employee loses a bad case. It is true that the employer's reputation is at stake. This, unfortunately, is only one side of the balance.
The other side is that a man who has gone to an industrial tribunal very often finds it difficult to obtain another job even if he wins his case, because the next employer says "Ah, a trouble-maker". When somebody goes for a job his prospective employer does not want a troublemaker on his staff. Both sides take a risk. Both sides take trouble.
The idea that an ordinary employee enjoys going to the industrial tribunal is rubbish. The ordinary person is afraid of courts and apprehensive of tribunals, and normally he is not nearly as articulate as the employer or his representative, whom he must meet.
I intervened when the hon. Member for Brentford and Isleworth mentioned the number of failures. He said that it was an extraordinary intervention. But 1142 it is the failures that concern me, because I am convinced that many of those failures are due to a number of causes beyond the control of an employee. For example, an employer can usually obtain witnesses to help him. if he follows a fair system—this is the point of the warning to which the hon. Lady referred; we must have a fair system for people—and if he looks around, he can nearly always get somebody to testify as a witness on his side.
An employee who has been dismissed cannot do so, because his potential witnesses are still employed and fearful of losing their jobs. It is rare in practice for a dismissed employee to be able to bring corroborative evidence or to bring documents.
That is one of the reasons for the number of failures, which is a very high percentage. A second reason is that the employer is much more likely to be represented by someone articulate. I agree that in most cases it need not and should not be a lawyer. It should be somebody from the employer's own staff, who is trained, knowledgeable and articulate.
Here I pay tribute to the trade unions for the representation that they provide for their members, without which their members would go almost always unrepresented and inarticulate. My worry is that where persons are unrepresented, the chairman of the tribunal has to descend into the arena and take the part of those who are unrepresented. He is in a very delicate and difficult position because he is acting as both judge and advocate in the same cause. It is for this reason that I pay tribute again to the chairmen of tribunals for the way in which, on the whole, they manage to do things in a fair, reasonable and decent way.
Employers are right to accept conciliation in these disputes, as they are in any other. Conciliation is of very great importance. Instead of the work of conciliation officers being attacked, as it has been, the officers should be praised for the way in which they have kept so many disputes out of court.
It is true that some employers pay up because they are afraid of the nuisance value of a claim. It is equally true that many employees accept settlements because they do not wish to go to court, because they are afraid that they may 1143 receive less, whereas had they gone there, they would have been awarded more. This is the sort of problem that arises in every legal action, in every business concern. One has to decide, as a matter of business and of good sense, whether one should settle in the circumstances.
I believe that conciliation officers, on the whole, maintain a fair balance. They are criticised for leaning too much on employers. I have friends sitting on industrial tribunals who take the view that many conciliation officers lean too much on the employee, because if the employee went to a tribunal, they believe, he would get more than the sum offered by the employer to get rid of the case. So there is that balance.
We have here a system set up in 1971. It was one of the few matters under the Industrial Relations Act not in dispute. This system emerged from "In Place of Strife". It went through this House without difficulty or dispute. On the whole, it has worked pretty well.
How can it be improved? There may be ways in which a preliminary investigation or a view may be helpful, but I am very much against the system which used to operate, with some tribunal clerks telling people that they had no chance, because sometimes the cases that look as though they have not a chance are those that are won, and cases looking as though they are going to be won are lost. Every lawyer knows that. It is very difficult for the clerks to know the job and to know the law.
I believe that, in spite of all the problems, some of which are perfectly genuine and which have been raised on behalf of the employers, the balance is in favour of justice. The balance has given people a right to their jobs. The balance has been reasonably well held. In so far as the balance has tipped in the wrong direction, I think it has tipped not against the employer but against the employee.
§ Mr. Graham Page (Crosby)
I am sure that with all his experience the hon. and learned Gentleman would agree that the originating application, the IT 1, is very insufficient usually for the employer to answer it, to know what case he has to meet. Would it not improve the whole 1144 proceedings if there were some process in the early stage of the IT 1 that was really a statement of claim of some sort? Should not the employee be helped in putting the case so that the employer knows what case he has to answer?
§ Mr. Janner
I think that there is a good deal in what the right hon. Gentleman says. On the other hand, once one enters the realm of statements of claim, one is meeting legalisation of the process, which the hon. Member for Brentford and Isleworth was trying to avoid. I believe that both sides are entitled to know the case that they will have to meet. I believe that it is right, under the Employment Protection Act, that written reasons for dismissal have to be given by the employer within two weeks of the employee's request. There is no reason why an employee should not be asked to set out in ordinary English the nature of his claim and why he sees his dismissal as unfair. It does not work out like that at the moment, and I hope that my right hon. Friend will look at this, because it is an eminently sensible suggestion.
When one reaches the end of the trail, what is there? My right hon. Friend mentioned a fruit machine. It is not quite a fruit machine, but all litigation is a gamble. At the end of the trail the compensatory award was £4,160 in 1971; it went up to £5,200, and it has apparently stayed at that level. In answer to a question from me my right hon. Friend said that the basic award would go up to reflect inflation and that part of the additional award also would be increased to reflect inflation. But the compensatory award, which is so seldom reached, is to remain at the same level. I urge him to reconsider this. The level of compensation should rise along with the rest of the awards. I cannot see why it should not.
We have a system that requires consideration and possible amelioration, but the sort of attack that we have heard from Conservatives is unworthy of those who really understand the basic need of an ordinary worker at every level—from the chairman to the foreman, from the shop floor to the board room—to retain his job. These powers have done a great deal of good, and I pay tribute to those who have enabled this to be so.
§ 5.41 p.m.
§ Mr. Jonathan Aitken (Thanet, East)
I find myself in some measure of agreement with the hon. and learned Member for Leicester, West (Mr. Janner), who highlighted the difficult plight of those who think that they have been dismissed unfairly and have a bona fide case for appearing before a tribunal without assistance or representation. These circumstances are particularly acute in cases of closed shop unfair dismissal where the worker does not even have the support of the union.
In its critical analysis of some of the defects of the present procedures the hon. and learned Member's speech was a refreshing contrast to the staggeringly complacent remarks of the Secretary of State who, in his anxiety to avoid answering a single substantive point put by my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), gave the impression that everything in the garden was rosy for industrial tribunals. This is far from being the case.
If I were asked to design a statue to symbolise industrial tribunals that was comparable with the blind figure of Justice with sword and scales on the Old Bailey, I would suggest the image of that mythical beast, the centaur, with its equine hind quarters being represented by the traditional trade union cart-horse and its face being that of a litigious barrack-room lawyer in full flow. That represents the worst of both worlds. In many ways these tribunals are getting the worst of both worlds.
In trivial cases the employer does not get fair treatment because of exorbitant costs in time and money defending himself against what often turns out to be groundless complaints—and were from the start. In serious cases the employee is at an unfair disadvantage, because he finds himself up against barristers and solicitors, while he is unable to get any kind of legal or union representation. That is because of the law that denies workers any form of legal aid when appearing before industrial tribunals. It is upon this aspect of industrial tribunals that I concentrate my remarks.
I have appeared at an industrial tribunal on behalf of one of my constituents who was claiming unfair dismissal from his job. That is an unusual rôle for an MP to play and I was very 1146 reluctant to assume it. But I was literally the only person to whom this man could turn. Mr. Ken Edwards of Broadstairs came to my surgery and told me that I was his last hope. He had been dismissed after four and a half years' employment with a local industrial company. He was a good worker earning £80 per week as a skilled panel wire-man. The sole reason for his dismissal was that he declined on grounds of conscience to join a union when there was a closed shop. After conciliation attempts with ACAS and negotiations with the unions, Mr. Edwards wanted to go before an industrial tribunal, and he did so.
The first thing to be said about industrial tribunals is that the delay surrounding the hearing of cases is often intolerable. Mr. Edwards was dismissed in March this year. A decision on his case will be reached finally on the second day of the hearing—28th November. That is nine and a half months after his dismissal. Not all this time has been wasted because of delays by the industrial tribunal itself, but a very substantial proportion of that period resulted from the log-jam of cases before the Ashford tribunal. This is true of other tribunals up and down the country. It causes very grave financial hardship to a man who was earning £80 per week when he was employed if he has to wait nine months when all he is getting is £30 a week on the dole.
The second feature that I noticed about the tribunal procedures was the fact that the legal technicalities could be very baffling indeed. Immediately the case of my constituent began there were complex references to case law, precedents, the construction of the statute and objections to alternative pleas. There was a lot of difficult and technical cross-examination of witnesses, particularly relating to the implications of points in the closed-shop agreement, which is an immensely complicated document.
I pay tribute to the scrupulous fairness of the tribunal and its chairman and the amicable atmosphere that is created. Nevertheless, the Secretary of State is right to describe industrial tribunals as labour courts. My constituent was at a grave disadvantage having me to represent him, but he would have been at a far greater disadvantage had he had no one at all. The unions were there with 1147 solicitors and the employers were there with solicitors and barristers, but who is there to stick up for the small man or the individual, particularly in instances where there is a bona fide case?
Why is legal aid not available? The present Solicitor-General was a great champion of legal aid being made available before he took office. The £25 green form scheme is no use as it does not cover representation in front of the tribunal. The Lord Chancellor has the power to prescribe legal aid in some cases. The Richard White Report on the need for legal services has been on the Lord Chancellor's desk for nearly two and a half years and obviously it needs looking at, because there is an injustice here which needs to be remedied in cases where industrial tribunals themselves or ACAS believe that the case is serious, bona fide or involves points of law.
The third point I make is that greater powers are needed by the tribunal to sift the wheat from the chaff. If an employee insists on proceeding with a case against the advice of ACAS or the tribunal, he should pay the costs or a proportion of them. It is interesting to note that cases in courts of civil law are not so frequent, because there is some form of preliminary sifting. This is necessary in the industrial tribunal system, because it would get rid of much of the present expensive time wasting.
I am worried that no appeal appears possible in respect of amounts awarded by tribunals. People do not know how to claim an adjournment to claim greater loss or damage.
Furthermore, it is wrong that the TUC should be the only body to appoint employee representatives. That is unfair to men in cases involving closed shops. The constituent to whom I referred was worried about this factor. He thought that, because he was not a member of a union, the TUC representative on the tribunal would be biased against him. It is also unfair to anybody in a non-TUC affiliated union who appears before such a tribunal.
Tribunals should have power to make unions as well as employers share the costs and compensation if a case goes against a union, particularly in a closed shop situation. If the union has been 1148 predominantly responsible for such a situation, why should it be the employer alone who has to pay the damages, compensation and costs of the tribunal?
If the present trends continue, there is a real danger that industrial tribunals will fall into disrepute in the same way as the ecclesiastical courts fell into disfavour in the Middle Ages. The benefit of trade union will be as pejorative a phrase as the benefit of clergy. The system needs overhauling—and soon.
§ 5.52 p.m.
§ Dr. Oonagh McDonald (Thurrock)
I shall try to keep my remarks brief because I know that the Chair hopes to call as many hon. Members as possible.
I wish to draw attention to one or two matters of concern in the conduct of industrial tribunals. They are quite different from the matters of concern which have been mentioned by Conservative Members. They have repeatedly referred to the anxieties caused to employers by the existence of industrial tribunals, and to the costs of compensation. Only towards the end of his speech did the hon. Member for Brentford and Isleworth (Mr. Hayhoe) mention that the median figure of settlement is only £355—well below some of the frightening figures quoted in the national Press. Many Conservative Members give the impression that employers should fear industrial tribunals, especially in cases of unfair dismissal, but last year 11,500 of such cases were judged in favour of employers.
I am concerned about the conduct of industrial tribunals, regarding decisions made on the Equal Pay and the Sex Discrimination Acts. Last year there were about 1,700 such applications. Of those 709 were heard by the tribunals, 213 of them were judged in favour of the applicant, and 347–49 per cent. of those heard by tribunals—were dismissed on the ground that women were not doing the same or broadly similar work as men, or work rated as equivalent to men's work. A total of 78 such cases were dismissed on the ground that there was a material difference between the man's work and the woman's work other than on the ground of sex.
So far the equal pay decisions have not been favourably received by the trade union movement or the Equal Opportunities Commission. There may be 1149 reasons for this, partly arising out of the equal pay legislation, which I do not propose to discuss in detail now. Those reasons arise partly from the procedure adopted, in that the Equal Pay Act is the only item of industrial legislation affecting the rights of an individual within the scope of industrial tribunals which gives an employer a right to make an application. It does not similarly give the union a right to submit a claim to an industrial tribunal on behalf of a member or group of members. The view taken at this year's TUC women's conference was that the Act should be amended to give the unions this right. I believe that there should be further consultation with the unions on this point.
Reference has already been made to the Trico case which an employer took before an industrial tribunal. This in no way advanced industrial relations in that company, and did not lead to an immediate settlement of the dispute. Instead, it led merely to a long strike. If unions had the right to bring forward cases on behalf of an individual member or group of members, I feel that this would strengthen the functions of industrial tribunals.
If the unions had the right to take such action, they could perhaps ensure that any decision made on behalf of a woman pleading her case for equal pay who was successful in so doing before an industrial tribunal was made to apply to other employees in the company or institution who were in a similar situation. In this way the decisions of the tribunal would be more effective and perhaps lead to a reduction in a number of such cases brought before industrial tribunals. If only one woman were given a judgment in her favour, others in similar situations could fight the case before a tribunal.
When equal pay matters are under consideration, the cases go first to ACAS and they are then perhaps forwarded to an industrial tribunal, but often when this occurs the union is not informed. That union may have members in the company and those members may be equally affected by the case brought by an individual before the tribunal. If these procedures were examined in consultation with the unions, in the coming years better judgments on equal pay matters—and, to a lesser extent, in matters of sex 1150 discrimination—may well be made than have been made in the past.
There has been considerable confusion in a number of judgments from industrial tribunals on the subject of sex discrimination. It is obvious that members of such tribunals have not understood the purpose of the Equal Pay Act. They have not understood what is meant by "material differences" or "differences of practical importance" relating to jobs carried out by men and women. The Department of Employment has taken some steps to clear the confusion, but[...] still has a long way to go to ensure that laymen properly understand equal pay legislation. This is important, because if a case fails simply because industrial tribunal members have not understood the complexities of cases under consideration a woman may lose out. She may not take the case further because she is discouraged from so doing, and will lose in terms of pay. Furthermore, other employees in the same company or institution may be discouraged from trying to improve their conditions by seeking to ensure that they are covered by the equal pay provisions.
Certainly the unions are concerned about the differences of practical importance between the jobs of men and women as applied to the equal pay legislation. It appears that this matter has not always been properly used or understood in these cases. This process has discriminated against women who have brought cases on equal pay before industrial tribunals. Such cases are often well publicised in the Press and judgments often go against the women who bring them. This has the effect of discouraging other women to bring similar cases, and I believe that if this continues the industrial tribunals may fall into disrepute.
It has been suggested rightly that industrial tribunals would deal with issues in a much better fashion if more women served on them. The Department and my right hon. Friend the Secretary of State for Employment have expressed concern on that score time and again. It has been argued in the past that insisting that the lay members were sponsored by the CBI or the TUC would reduce the number of women serving on industrial tribunals, but this does not seem to have been the case. There has been a slight drop in the number of women serving on 1151 industrial tribunals. There are now 487 compared with 494 last year.
I believe that sponsorship is irrelevant. What would be relevant is a concerted campaign by the Department of Employment to encourage more women to allow themselves to be nominated by the TUC or the CBI. The TUC should have plenty of women to choose from, since one-third of the membership of the trade unions now consists of women. These women should be positively encouraged to go forward. Perhaps the Department could also consider deliberately nominating more of the women put forward by the TUC and CBI to ensure that a greater number of women served on industrial tribunals. We shall not get very far simply by expressing anxiety. We shall secure a better position for women only by positive and constructive action, not by sighing and uttering regrets at the lack of women on these tribunals.
Another area of concern is the tendency for industrial tribunals to become more legalistic and for there to be increasing representation by lawyers. Opposition Members have bemoaned time and again the costs to employers. I point out to Opposition Members that there is now an insurance scheme costing £8 per employee which enables employers to insure against the cost of compensation and the costs of legal representation and also provides them with an advisory service. Perhaps the fact that the premium is as low as £8 shows that the insurance company involved regards this as a low risk.
For the employee there is access to legal advice up to a value of only £25. There is compensation, but with a median figure of £355 in unfair dismissal cases it is small. If the employee is not reinstated, that means the loss of his job and all that that implies—perhaps a long wait during a period of high unemployment before obtaining another job, perhaps a change of skills and a change of life style. The loss of a job is extremely serious, and a couple of hundred pounds does not seem adequate compensation.
The increasing introduction of lawyers into industrial tribunals suggests that the tribunals have departed from what was originally intended. I remember my right hon. Friend the Member for Blackburn 1152 (Mrs. Castle) talking about the Government's proposals to introduce legislation on sex discrimination. She explained that the Government were planning to use, not the courts, but the industrial tribunals, because they were more informal, less intimidating and much less expensive. She said that taking such cases before industrial tribunals would mean that we would not further line the already well-lined pockets of lawyers.
That statement seems to fall rather flat now. The whole concept of the industrial tribunal seems to be changing. It seems to be becoming yet another court rather than what it should be—a place for an informal discussion before experienced lay people who have knowledge of industry and employment and who can form a judgment about the reasonableness of decisions already made by employers, which it is their duty to assess.
There must be even more cause for concern over some of the decisions of the Employment Appeal Tribunal in the past few years. I refer to the cases of Vickers v. Smith in 1977, Ferodo Ltd.v. Barnes in 1976, and Trust Houses Forte Leisure Ltd. v. Aquila in 1976. I quote from the judgment in the case of Ferodo v. Barnes in the Employment Appeal Tribunal, which will serve as a basis for one or two points that I wish to make:What should be done, in a case like this, is for the evidence to be given, as it was in this case, and then for the Industrial Tribunal to ask Itself, 'Now, in the given circumstances of this case, does the evidence satisfy us that the employer had reasonable grounds for taking the action which he did? 'What should be discussed by the industrial tribunal is not whether the employer thought that he had reasonable grounds. Very often he will think that, and sometimes, if not often, he will think it sincerely. What the industrial tribunal should be considering is whether that is a reasonable way for the employer to behave. One of the three cases that I mentioned concerned a redundancy. A volunteer for redundancy was overlooked and a person who did not wish to be made redundant was made redundant. That is contrary to the reasonable practice of a good employer who will take a willing volunteer for redundancy.
In the case of Ferodo v. Barnes a particular offence was alleged against an employee. The industrial tribunal, whose 1153 decision was rejected by the Employment Appeal Tribunal, considered the question whether the employee was guilty of the offence. Here we have a difficult problem, which I shall illustrate by referring to a constituent of mine. I ask my right hon. Friend the Secretary of State to consider the questions raised by such cases.
My constituent was accused of theft. His case went before an industrial tribunal, which found that the employer had listened to his own security officers and had carried out the correct procedures, and therefore decided that the employer was justified in dismissing my constituent. My constituent was never brought to court and tried, although his claim for unfair dismissal was not upheld. The tribunal decided that he had been rightly dismissed.
The trouble is that it now appears as if the man were guilty of theft, although he has never been brought before the courts and has never been charged by the company concerned. He appears to be guilty because his unfair dismissal claim was rejected. His problem was that he was unable to find similar employment at a similar level of skill. After a long period of unemployment he obtained another job in a different industry at a different level of skill and lower pay.
If this kind of decision is to be made by an industrial tribunal and upheld by the Employment Appeal Tribunal, as it was in the case in Ferodo v. Barnes, we have difficulties. A man will be said to have been fairly dismissed because he is thought to be guilty of a certain offence, but he will not have been found guilty by the courts. However, in the eyes of other employers in the neighbourhood he will be thought to be guilty. His reputation will have gone, as will his opportunity of employment in a similar sphere.
Serious questions are posed by the principles that seem to be emerging from the Employment Appeal Tribunal, which is upholding managerial prerogative to an extent which is not generally acceptable today. Problems are also caused by an unfair dismissal which seems to imply guilt of an offence with which a man is never charged.
§ Mr. Deputy Speaker
There are still four hon. Members wishing to speak in the 25 minutes that remain. I hope that they will try to co-operate. I am sorry 1154 that the hon. Member for Thurrock (Dr. McDonald) took longer than any other Back Bencher, although she began by saying that she would be brief.
§ 6.9 p.m.
§ Mr. Fred Silvester (Manchester, Withington)
The reasons for initiating this debate should not be misunderstood by the Secretary of State. I am sorry that he took such umbrage at our raising this issue and cast aspersions on our purpose.
The Secretary of State should understand that my experience is not uncommon. I have not sought representations about industrial tribunals and the way they have worked, or about the way in which the Employment Protection Act has worked, but I have received representations from all sorts of businesses and personnel managers who are as well up as the right hon. Gentleman in the best industrial practices and who are as keen as he is to see the tribunals operate. I have received representations from small and large companies. This is a spontaneous desire for reform and questioning, and it would be foolish of us not to take note of it.
Some of the criticisms undoubtedly go to the heart of the Employment Protection Act as well as the procedures of the courts, and we should not balk if the Secretary of State's inquiry shows the same results. He should look at those results justly and sensibly. When he announced the inquiry, he said that it was Government policy that no change should be made in relation to the six-month rule or the size of the companies involved. To make such decisions before the results of the inquiry have been received seems to be rather foolish.
During Question Time last week I quoted to the Secretary of State what had been said by the Chancellor of the Duchy of Lancaster, who does not entirely agree with the right hon. Gentleman. I quoted the words of the Chancellor of the Duchy of Lancaster then and I want to quote more now. The quote comes from theManchester Evening News, which is probably not the Secretary of State's daily reading. The report said:He"—that is, the Chancellor of the Duchy of Lancaster—admits that he has no intention of making the employees of small businessmen the ' second class citizens' they once were. But he wonders 1155 whether anything can be done about the application to smaller businesses of the Employment Protection Act.This Act was passed to give security of employment to workers. But it threatens the once-essential flexibility of small businesses. If a small employer with half a dozen employees is offered a big contract, requiring ten more workers, he once would have jumped at it. with the Employment Protection Act in operation, he might now pass up the chance, fearing heavy redundancy payments.Mr. Lever fears that this may be having a bad impact on the necessary mopping up of unemployment. 'Flexibility of employment is in jeopardy,' he admitted.This may be one of the Acts in which special exemptions may have to be given to smaller businessmen.That is not a wicked evil Tory employer speaking but a member of the Secretary of State's own Government It is reasonable that we should raise these questions.
I now want to refer to a point which has already been made by a number of hon. Members namely that the whole thing is becoming too legalistic. I have some sympathy for that view, but we must remember that it is inevitable. It is no good sitting here saying that industrial tribunals are not behaving as we should wish them to do. The hon. Member for Thurrock (Dr. McDonald) said that it would be nice if the tribunals were staffed by those who were versed in industry. However, the tribunals have to go by precedent, and as soon as there are precedents and an appeal tribunal one enters the whole court system. It is no use complaining that solicitors and counsel are employed, because any self-respecting large business will employ those with the necessary skills to do the job and not send its personnel manager. That is an inevitable consequence. However, it is right that we should raise this matter.
There are other fundamental points that I should like to make. There should be some greater form of sifting of cases. The hon. and learned Member for Leicester, West (Mr. Janner), who writes and speaks learnedly on these matters, dismissed the fact that 67 per cent. of claims were unsuccessful in the courts. That is an amazing figure. Even if one makes every possible allowance for the fact that many employees are net represented or are not articulate, this 1156 still means that, after there has been some sifting and after all the piddling little cases and the matters have been dealt with by ACAS, when cases reach the tribunals nearly 70 per cent. are thrown out. That indicates that we are not providing an adequate sifting operation.
I intend to be brief so that my right hon. Friend the Member for Crosby (Mr. Page) will have an opportunity to speak. I hope that some of the suggestions that have been made will be taken up.
We are developing what people call a labour court. It is not that. It is a curious thing in that it is a court plus a statutory obligation on the part of ACAS. There are probably other courts that have conciliation officers attached to them by law, but I do not know of them. However, here we have the makings of a sifting system. I hope that it will be possible for the Government to find some way of using ACAS conciliation officers more effectively, perhaps by strengthening their powers, so that those who insist on proceeding with cases that are regarded by the conciliation officers—perhaps because of precedent or for other reasons—as being too small to warrant the time involved, unlikely to succeed or frivolous, might be liable to pay a penalty should they proceed and subsequently lose. That is a possibility worth considering.
§ 6.15 p.m.
§ Mr. John Watkinson (Gloucestershire, West)
I am sure that all my right hon. and hon. Friends would be prepared to accept criticisms of the workings of industrial tribunals, but we are not prepared to accept a rejection of the fundamental philosophy that underlies the whole tribunal system. The Opposition spokesman said at first that his party defended the philosophy in principle, but by the end of his speech he was virtually implying that there are so many faults that the Tories can hardly go along with the system. I understood that many of my hon. Friends received the same impression.
We should stand up and say unequivocally that the creation of industrial tribunals and the unfair dismissals procedure has been a fundamental advance of rights in this country. If one considers the development of English law, 1157 it is extraordinary to see that over the centuries there has been a development of protection of property rights. It is amazing that we have had to wait until the latter part of the twentieth century for statutes to be brought forward protecting the rights of men and women in their jobs.
The most fundamental aspect of a person's life is what he does, where he does it and the relationship between him and his employer. The philosophy that underlies our approach is the need to establish basic rights for both parties. In law books one can still read sections entitled "Master and Servant". That is exactly the attitude that we should seek to remove.
I have appeared before tribunals as counsel. It is quite apparent that the rôle and the significance of the chairman of a tribunal is crucial, and it is therefore incumbent upon the House to ensure that both chairman and lay members are as well trained as possible. This has already been pointed out by some hon. Members.
This criticism extends to the whole of the quasi-judicial framework and judiciary. Training at these levels is not adequate. I entirely agree that we need to ensure that there are more women on industrial tribunals. My hon. Friend the Member for Thurrock (Dr. McDonald) gave us the figures and it is clear that there is an imbalance and that more women should be represented there.
I agree that informality is important. It has certainly been my experience in appearing before industrial tribunals that they are much more informal than other courts, and it is vital that this should be so. As a lawyer I find the formality that exists within our courts appalling. The average person does not have the foggiest idea what is going on most of the time. I therefore welcome this informality in industrial tribunals, and I want to see it preserved. However, I doubt whether it would be undermined by an extension of representation.
I should like to see the courts kept informal with just the employer and the employee, with possibly a friend or a trade union official to assist, sorting out the cases and seeking the justice of the matter. Unfortunately, as soon as one has to deal with precedents, difficulties 1158 appear, and I have been involved in cases that were highly complex and in which it would have been impossible for an ordinary employee to argue his case. It is difficult to argue a case concisely and when an individual attempts to do so there is often much longer delay and much greater confusion.
Firms now employ solicitors and bring in counsel and trade unions are relying to a much greater extent on specialists within their own areas. A trade union official in my area told me that in Southampton the trade unions are appointing a full-time official whose sole job will be to deal with industrial tribunals and unfair dismissal cases.
There is no escaping the fact that as these tribunals develop and if we want to ensure rights within these tribunals—which must be the fundamental obligation of the House—we may have to take upon ourselves the duty to supply funds in those cases where a person cannot obtain representation. This may mean an extension of legal aid. If this were done, it would cover the point made by the hon. Member for Manchester, Withington (Mr. Silvester), because the legal aid system would act as a sieve and would weed out cases that should not be brought before the tribunals.
There are sometimes settlements at the door, but one does not make a settlement at the door unless one thinks that the case will be lost or there is an area of doubt in one's mind. With a cast-iron case, one goes into court and wins it. I am all for settlements at the door, but I must point out that if that happens, most of the costs of a lawyer have already been incurred.
There are circumstances in which an order should be made for the costs in some cases to be payable from public funds. It is rare for costs to be awarded against a party. I do not believe that the definition of "frivolous or vexatious" is sufficiently wide. Very few cases fall within those narrow limitations. There may be cases where the tribunal feels that, in the circumstances, the employer or the employee should not have to bear the costs, and there should be scope for some sort of order allowing the costs to be met from public funds, as happens in the rest of the court system.
I hope that we all agree that a significant advance has been made in the 1159 provisions of the law of this land by extending rights in industrial tribunals Let us improve that system; let us not go back on it or remove it.
§ 6.24 p.m.
§ Mr. Graham Page (Crosby)
I sincerely apologise for not being here for the opening speeches. It is entirely the Secretary of State's fault. He left me the legacy of the chairmanship of a Select Committee, on which he served so honourably, and, unfortunately, we had a meeting of the Committee this afternoon.
In a recent study on Merseyside of the size of firms it was discovered that the number of small businesses had decreased enormously over past years and was decreasing rapidly even in the past 12 months. One naturally tried to find out why. One of the reasons—I do not say that it was the chief reason, although it came high up the list—was the terror of the small business man that he would not be able to get rid of an employee he did not like without being dragged before the industrial tribunal. There is that fear among the small business men that they will be put to great expense if they happen to think that an employee is not worth what he is being paid and they wish to get rid of him.
As long ago as 1957 the Franks Committee said that what a tribunal needed was:a clear procedure which enables parties to know their rights, to present their case fully and to know the case which they have to meet.The Franks Committee went on:What is needed is that the citizen should receive in good time beforehand a document setting out the main points of the opposing case.That is not happening in unfair dismissal cases before industrial tribunals. I declare my interest as one who has acted for both sides before tribunals.
What happens is that the employee goes to the tribunal and gets form IT 1—the originating application—on which he is supposed to set out the grounds of his claim. He often puts only "I have been unfairly dismissed". This goes before the secretary of the tribunal who has the power to tell the applicant that, in his opinion, the case has not been properly stated and to ask whether the applicant wishes nevertheless to proceed. 1160 He has no power to tell the applicant to take his application away. If the applicant says that he wants to go on, the secretary has no power to go to the tribunal and ask whether it believes that the case is within its jurisdiction. The case has to be heard.
However bad the case may be and however far outside the jurisdicition of the tribunal, the employer has to appear and answer the case. This is a very great burden on the small business man. It is all right for the big boys who go along with counsel, solicitors and so on, but for the small contractor employing, say, 10 or 12 people, it is a very great burden to have to spend a day before a court and, perhaps, be involved in the expense of taking legal representation with him.
These problems could be relieved if at the outset the claim were properly stated and if, when claims were not properly stated, the secretary could take them before a member of the tribunal,ex parte, and say that this case had not been presented well enough. If the applicant did not then state his case fully, the tribunal should be able to throw it out. Unless the applicant states his case so that his opponent knows exactly what the case is, the tribunal should be able to throw it out.
There is also the power for the tribunal to alter the nature of a case while it is being heard. Frequently a claim is made for unfair dismissal but, as the employee explains the facts, the tribunal decides that it is not an unfair dismissal case, but a redundancy claim. Time and again tribunals have said, during the hearing, that they would deal with a case on the basis that it was a redundancy claim. The unfortunate employer arrives prepared to answer a claim for unfair dismissal and is faced with a claim for redundancy payment.
There should be an opportunity for the employee to state his case fully before the employer is called upon to answer it, and if a case changes in the course of a hearing, there should be an adjournment so that the employee's case may be properly stated to the employer. This could be done if legal aid were extended.
It may not be necessary to have legal aid representation at the tribunal, but to draw up a statement of the employee's 1161 case for the legal advice fee of £25 is expecting a legal adviser to work a miracle for that small sum. The extension of legal aid would solve the problem. Alternatively, extended legal advice might solve the problem without extending legal aid to the hearing.
In some way we must meet the position in which the small business man is faced with all the expense. For instance there is the time that he is away from his business to face what may turn out to be a bad case, or to face a case that lasts very much longer than expected because it has not been properly stated at the outset. No doubt such a case would be shorter if there was a proper statement of the facts on the originating application at the outset.
I am interested in the statement that there might be exemptions from this process before the tribunal hearing and I am glad that there is to be an inquiry into tribunal proceedings. If the inquiry is seriously to consider the position of the small business man who is faced with a claim before a tribunal, I hope that there will be some way found of exempting him from the burden that is now placed on so many. The result is that son-le small business men are not prepared to continue the responsibilities of running small businesses and would rather be employees themselves. That is a tragedy. Certainly it is an attitude that is found among contractors.
I hope that from the inquiry we shall have some reform of the procedure of commencing these claims and some form of exemption for the smaller business man when he has to face the tribunal.
§ 6.32 p.m.
§ Mr. James Prior (Lowestoft)
My right hon. Friend the Member for Crosby (Mr. Page) has raised an important point in taking up the remarks of the hon. and learned Member for Leicester, West (Mr. Janner) about originating applications. My right hon. Friend may think that the Statutory Instrument is one that can be understood by the non-legal mind, but my view is that it requires a legal mind and that the average worker would be very much put off by such a document. Unless there is considerable reform, I do not see how anyone can go to an industrial tribunal without being represented by a lawyer.
1162 I believe that the whole debate has shown that the Opposition were right to select this subject for debate. It has been debated in a quiet and responsible manner. There will be no Division at the end of the debate. I willingly confirm for the hon. Member for Gloucestershire, West (Mr. Watkinson) that there has never been any question of disputing the relevance of industrial tribunals or the unfair dismissal concept. As my hon. Friend the Member for Brantford and Isleworth (Mr. Hayhoe) said it was a Conservative Government who introduced the whole concept of the industrial tribunal and unfair dismissal in the Industrial Relations Act 1971. It would be unlikely that we should now seek to undermine that which we set up, for which we have not had the credit that we should have enjoyed.
What we have been concerned about today and for some while is the way in which the tribunals are operating and the climate of confidence that has been created by the Employment Protection Act and the unfair dismissal provisions. We are concerned about the effect that this legislation could have on unemployment.
Whatever else we may do, and however much we may wish to protect the rights of the individual, we are not doing a service to workers generally if we do anything or say anything that causes the level of unemployment to rise. When the Secretary of State starts to ask us whether we think that six months is the right interval before the unfair dismissal provisions operate or whether we should have some other period, I must remind him that in Committee he was at one time committed to 52 weeks. He thought that that period was right, and not six months.
We are not doing any disservice to the worker—we may be doing him a good turn by posing the question—by asking whether six months is not too short a period. As my hon. Friend the Member for Kidderminster (Mr. Bulmer) has said to me on a number of occasions the question is especially relevant when we consider the position of young workers. An employer may be willing to take on a mature individual in the knowledge that six months is long enough to assess him, but he may not feel anything like so certain when he takes on 1163 a young person. That tends to militate against the employment of young people.
I am by no means certain that six months is the right period. I think that the length of the period may need revision. There should be a thorough inquiry to decide whether six months is right.
§ Mr. Prior
The hon. and learned Member for Leicester, West obviously wants to create further unemployment. At least, there should be a proper inquiry. All that the Opposition have said is that there should be a proper review. Let us ascertain the facts and act accordingly. It ill becomes the Secretary of State to ask whether we want to go back to two years, for example, when he thought that 52 weeks was right when the Bill was being discussed in Committee.
§ Mr. Kenneth Lewis
I have made inquiries, as have many of my hon. Friends, and in my judgment we do not need a Government inquiry. In my view, the period should be 12 months. If my hon. Friend suggests that there should be an inquiry, I hope that it will be a short one, otherwise there will be an opportunity for the Government, or any other Government, to avoid making a decision. We need to go back to 12 months now.
§ Mr. Prior
My hon. Friend gives us important information. It is the sort of information that I have been getting from many other sources. However, I prefer not to have the sort of anecdotal information with which I sometimes get landed. I prefer to have factual information. I agree that the view is prevalent, especially among small industries, that six months is not enough.
When my hon. Friend the Member for Manchester, Withington (Mr. Silvester) quotes from theManchester Evening News the views of the Chancellor of the Duchy of Lancaster, it appears that the right hon. Gentleman does not agree with the Government's policy. The right hon. Gentleman does not often agree with anything that the Government do, but he does not agree with the Government in respect of the Employment Protection Act. Generally the right hon. Gentleman talks 1164 good sense, and I have no doubt that he is talking good sense when addressing himself to these matters.
It is not good enough for the Secretary of State to spend a long while attacking us and defending every dot and comma of the Employment Protection Act, saying that the Government have no intention of making any changes to it, only to announce that already the Government have given fresh instructions to the tribunals and that an inquiry is taking place to ascertain what else is necessary. That is a complete contradiction and turnabout.
The right hon. Gentleman made no mention of the composition of tribunals. I hope he will read what was said by his hon. Friend the Member for Thurrock (Dr. McDonald). There are not enough women serving on the tribunals. Action needs to be taken in that respect. The right hon. Gentleman made no reference to other organisations representing employees apart from the TUC. If we want to build up confidence in the industrial tribunals, they must be fair and they must be seen to be fair. There is certainly room for other employee representatives besides those who represent the TUC. It does not do the TUC any good to have a total monopoly in such cases.
My hon. Friend the Member for Thanet, East (Mr. Aitken) dealt with a number of important points in an extremely good speech. He was right to draw attention to the fact that in trivial cases the employer does not always get justice while in serious cases the employee is very often at a disadvantage. He was right to suggest that we need a much better sifting mechanism. That point was also made by my right hon. Friend the Member for Crosby. A preliminary sifting would do much to cut down the number of vexatious cases that are coming forward.
The fact that 67 per cent. of cases that come forward fail is an indication that the system is not working properly. We have to add to that the number of cases which are settled by conciliation. In some cases they are settled by the conciliation officer saying to the employer "This will cost you a couple of hundred quid in costs, so you had better settle for a couple of weeks' pay and be done with 1165 it, because it will be cheap at the price". That is not good for the tribunal or for management.
We talk a great deal in terms of the employer and the employee. Very often in these cases the employer is a manager who might in other circumstances have a case of unfair dismissal to bring against some other manager. Therefore managers, by the nature of their job, bend over backwards to be fair. This is particularly true of personnel management, because it is not in the interests of those managers to be other than fair.
We are constantly undermining the authority of management. There is nothing worse for management or for the rest of the workforce than to see someone who is acknowledged to have behaved badly and who has been dismissed go to a tribunal and have his case upheld by it. If anything is lacking in Britain at present, it is the authority of management to manage. We need some discipline in the way we conduct our industrial relations.
We on the Conservative Benches wish to be fair in assessing the operation of industrial tribunals. There are a number of glaring examples which are undermining the confidence that employers or management have in the way these tribunals operate. As my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) has said, there is a widely held view that a dismissed employee has nothing to lose and might as well take his case to the industrial tribunal. That is not correct but it is undoubtedly thought to be correct by a great many people.
What we are trying to do—and we shall go on trying—is to draw attention to the effects of Government legislation. We all know that in the past few years there has been a spate of employment legislation. The Secretary of State must get this thrown at him day after day. If he does not, he is not seeing as many industrialists as I am. They tell me that it is not only the quality of the legislalation but the sheer volume of it that is undermining confidence in management. Our competitive position as a nation and our present unemployment figures do not allow us any room either for complacency in industrial relations or for extravagance in legislation.
1166 This debate, held in a quiet and sensible atmosphere, will have drawn attention to some of the problems facing people in industry. We hope that the Government will take the advice of the House of Commons. Everyone who has spoken has admitted that the system does not work well at the moment and is in need of review and improvement. If nothing comes out of this debate other than an agreement by the Government to look quickly at what is happening and to make the sort of changes that my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) has suggested, we shall have achieved something for industry and possibly for employment prospects—something that we would otherwise have been unlikely to obtain from the present Government.
§ 6.45 p.m.
§ The Minister of State, Department of Employment (Mr. Harold Walker)
I agree with the right hon. Member for Lowestoft (Mr. Prior) that we have had an agreeable and constructive debate. I must reproach the hon. Member for Manchester, Withington (Mr. Silvester) for part of his speech. My right hon. Friend welcomed the fact that we were debating industrial tribunals because it gives us the opportunity to look at matters which are properly a cause for concern. While I cannot accept some of the points that have been made, some of the matters which have been discussed certainly deserve consideration.
I assure the House that if I am unable now to deal with the matters which have been raised during the debate they will, nevertheless, be considered carefully. There are some issues to which we must give careful consideration.
Before dealing with specific points, I wish to make two general criticisms of the speech by the hon. Member for Brent-ford and Isleworth (Mr. Hayhoe). Like others of his hon. Friends, while he understandably devoted a good deal of his speech to reflecting employers' criticisms of tribunals and employment legislation, he uttered hardly a word of sympathy and understanding for the plight of the dismissed worker. Equally, he completely ignored, as did hon. Members on both sides of the House, the industrial relations benefits which flow from this system. The inconvenience and difficulty 1167 which might arise for employers from the introduction of the statutory provisions that have been attacked this afternoon must be set aside in favour of such benefits.
At the centre of the debate has been the issue of the administration of the unfair dismissal provisions and the rôle of industrial tribunals. Since the introduction of statutory provisions in 1971, there has been a steady decline in the number of stoppages as a result of alleged unfair dismissal. We are entitled to expect the benefits of that to be taken into account.
A number of hon. Members have referred to the need for a sifting mechanism to ensure that the increasing number of cases being referred to the tribunals is soundly based. The House might find encouragement from the fact that the chairmen of the tribunals share the view that inadequate particulars are often given, both by applicants and by respondents. In the light of that, and certainly in the light of this debate, we must consider whether some slight amendments might be made to the rules of procedure which, without requiring the particulars to be given in all cases, would make it easier for more particulars to be requested when they are felt to be deficient. We have been thinking about this, but our thinking is not yet complete. We shall need to have discussions with the Council on Tribunals. I cannot promise early alteration, but we must be prepared to take into account and respond to the points which have been put fairly from both sides of the House.
The right hon. Member for Crosby (Mr. Page) quite fairly admitted that he had come into the debate rather late, so I will point out that one theme which has run through most of the speeches has been criticism of the growing legalism of the tribunals—the growing tendency for lawyers to be invoked, the result being that the more they are invoked as representatives of the parties the more will decision and discussion in the tribunals tend to reflect the aridities of the law rather than the good, practical common sense upon which we want them to base discussion and decision. When I hear a plea for legal aid in these cases, I must respond by asking the right hon. Gentleman and others who request such provision to re 1168 flect on whether the very availability of legal aid would not contribute towards this growing legalism.
§ Mr. Graham Page indicated dissent.
§ Mr. Walker
The right hon. Gentleman shakes his head, but it is an aspect that we have to ponder. There is in any case a limited amount of legal aid available at present, not for representation but to facilitate the preparation of cases by parties.
Another matter in which we can be helpful and positive in response is the question of training. My hon. Friend the Member for Thurrock (Dr. McDonald) appealed for more training assistance for lay members in respect of both the Equal Pay Act and the Sex Discrimination Act. I know from bitter experience that both measures are extremely complicated pieces of legislation. It may encourage my hon. Friend to know that the presidents of the tribunals are currently making plans for new members to take an expanded course, possibly of three days, which will be devoted to the sex discrimination and equal pay legislation. All members already have a two-day induction course, consisting of one day's instruction followed by a day sitting in at a tribunal.
The question of an adjournment when a party fails to appear without explanation was also raised. It was suggested that something could be learned from the Scottish practice. The president of the tribunals in England and Wales informs me that he is experimenting with the system in use in Scotland—that of checking dates with the parties before a case is set down for hearing. Where an applicant fails to appear, the chairmen are being encouraged to dispose of the case, and the president will continue to see what can be done to improve the situation. In saying what I have said, I am glad to have the reinforcement of my right hon. and learned Friend the Lord Advocate.
Quite rightly, attention has been drawn to the inadequate representation of women both on the panels and on the tribunals. The Government share that concern. They share the anxiety to increase the number of women on the panels and on the tribunals until they are representative of the proportion of women in the working population. We 1169 have asked the nominating bodies to pay particular regard to this, to do what they can to encourage the nomination of women and to put themselves in the position of submitting the names of more women.
At present, the women's membership of the tribunals is 21.2 per cent. That is too little and an unsatisfactory situation. How we get under way the campaign that my hon. Friend the Member for Thurrock asked for I am not sure, but I am sure that she will campaign for an improvement wherever she can.
The hon. Member for Brentford and Isleworth referred to the position of independent women members, and perhaps I should touch briefly on the history of the matter. In more general terms, the hon. Member will acknowledge that the system of having two panels was the system which pertained from the inception of the tribunals in 1965 until 1971. In 1971, following the introduction of the Industrial Relations Act, the TUC withdrew its co-operation from the whole system. The then Conservative Government went beyond the two-panel system, as they were compelled to do, in order to get the necessary numbers for staffing the tribunals. Following repeal of the Industrial Relations Act we have returned to the former system, which means that we have had to rule that some of the people appointed during the hiatus between 1971 and 1974 have had to seek nomination for reappointment through appropriate sponsoring bodies.
Of the 43 independent women members serving on tribunals up to 24th October 1977, five were not suitable for reappointment because of age or other reasons, one voluntarily withdrew and 24 have now obtained sponsorship and been reappointed. We do not know whether the remaining 13 either sought or were refused sponsorship or simply did not wish to continue. We have allowed the independent members to continue until the expiry of their term.
I now want to deal with the point raised by the hon. Member for Birmingham, Edgbaston (Mrs. Knight) both in this debate and in the House last week. Following the suggestion of the hon. Member for Brentford and Isleworth, I have looked carefully atHansard to see whether there was anything for which 1170 I should apologise. I have carefully studied the hon. Lady's words and mine, and I do not think that I have anything for which to apologise.
I am not suggesting that the hon. Member for Brentford and Isleworth was wrong—I shall study what he said—when he referred to the strictures of the chairman of the tribunal concerning the advice given by the staff of the Employment Service Agency. I asked for information about it. The only case of which we know at the moment is one in which an employer sought information from ESA staff as to whether a particular dismissal would be all right and was advised in the affirmative. The chairman subsequently passed strictures. Following that incident, we reinforced the standing instructions to the ESA staff.
§ Mrs. Knight
I felt that the Minister's claim that I had made a wild allegation called for an apology, bearing in mind that it was the chairman of an industrial tribunal who made the statement on the advice given. I did not think that it was a wild allegation, nor did my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe).
§ Mr. Walker
I would not want the House to think me lacking in chivalry, in spite of the Sex Discrimination Act. If the hon. Lady feels that I used intemperate words in reply to what she said, I ask her forgiveness. Having said that, however, I am sure that, when the hon. Lady says that clerks in employment exchanges have been urging dismissed persons to claim and telling them that it would not cost them anything even if the claim were not proved justified, she would expect me to defend people who are not here to defend themselves. I hope that the hon. Lady is now at peace with me. It is important to get this clear.
As I was saying, we have instructed staffs of the Department's own offices and of the ESA that they must give factual information only. It is right that information should be given. People who have been dismissed often come to our offices to get information and advice on how to get redress, and it is right that we should provide such information. We tell the staffs that they must give factual information only, and they are told to issue an application form to members of the public if they think that there is 1171 likely to be any entitlement to complain of unfair dismissal.
I think it right that people should know of their statutory rights and that we should be under an obligation to provide such information, but there is a balance here which is sometimes rather difficult to determine.
I promised that I should try to finish my speech promptly in order not to trespass on the time for the debate which is to follow, and I promised also that I should try to deal with as many as possible of the points raised. I apologise for having dealt with but few of them, but I assure the House that we shall give careful consideration to all the suggestions made, many of which, as I have already agreed, deserve consideration.
I conclude on this note. My right hon. Friend referred in opening to the Donovan Commission's expressed belief—a belief which, I hope, is common ground among us all—that the pursuit of statutory rights, rights which Parliament has given, on behalf of workers is best done not through the courts but through procedures which are easily accessible, informal, speedy and inexpensive and which give the best possible opportunities for arriving at an amicable settlement of differences.
Although some of the arguments used in the debate today require further consideration, I am sure that none of us would wish in any way to reflect adversely on the tribunals or to diminish our wish that they should continue to seek to fulfil the spirit of the Royal Commission's words All of us recognise that the industrial tribunals and their members have a difficult and challenging task, a task demanding much in time and energy, and I hope that, in looking at our words today, they will not feel that in any quarter of the House there was a wish to criticise either the tribunals or their members. I hope that, on the contrary, they will recognise that we appreciate the contribution which they make to industrial peace and justice and will feel that our criticisms are intended to help and in no way to impede the valuable work which they do on our behalf.
§ Motion, by leave, withdrawn.