HC Deb 26 June 1978 vol 952 cc1178-90

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Frank R. White.]

10.0 p.m.

Mr. Greville Janner (Leicester, West)

I am happy to have this opportunity to discuss the increasing failure rate in claims for unfair dismissal brought before industrial tribunals. The latest figures were supplied to me by the Minister on 9th June and show that the failure rate is now 69 per cent.—that is to say, those who bring unfair dismissal claims stand at least a two-to-one chance of losing. Their prospects of success are now no more than 31 per cent.

In addition, according to the figures for the second quarter of 1977—the latest for which figures are available—even if successful they would recover an average of only £355. In other words, the failure rate is 69 per cent. and even where it is ruled that they were dismissed unfairly they will probably get no more than £355.

I am sure that the House will find these figures profoundly worrying. Employment protection legislation, which had its embryo in "In Place of Strife", which was brought in without dissent as about the only uncontroversial part of the Industrial Relations Act 1971 and which has been strengthened by a series of Acts introduced by the present Government, has been designed to protect people in their jobs, so that a man may truly say, "This is my job." By that he means that it is not to be taken from him without good cause and that if it is taken he will have a reasonable prospect of good compensation to tide him over and cushion him against one of the miseries of fate, which was in no way of his making.

What has happened to the prospects of success? In 1972, about 34 per cent. succeeded. That was regarded as a low rate and was to no small extent due to people bringing claims out of time. Instead of 28 days people were given three months after the termination of employment in which to bring claims. The success rate rose to 37 per cent. in 1973 and 1974, and to 38 per cent. in 1975. Then there was a small drop to 36 per cent. in 1976 and a massive fall of 5 per cent. between 1976 and 1977.

Those of us who are concerned that employees should be properly protected ask ourselves why there has been this drop in the protection of employment. The answer that we commonly hear from the Opposition is that too many claims are brought without justification and should never have been allowed to proceed. It is true that some claims should never have seen the light of day, but equally there are hundreds, if not thousands, which are not brought because the ordinary person remains apprehensive of tribunals anxious about courts and happy to keep as far away as he can from lawyers, tribunals, chairmen and procedures of the law.

I regret to say that other people do not bring claims because they do not want to be labelled as troublemakers, knowing that when they apply for other jobs, if they have been before a tribunal, prospective employers will say "We do not want this man: he is liable to be a nuisance." So we can balance the bad claims which should not have been brought against the good claims which should have been brought but which were not.

So I come to the question of industrial tribunals. Why is it that this failure rate is probably the highest in any tribunal in Britain? I suggest, after not inconsiderable experience in this sphere, that there are two main reasons. First, employers are learning to operate procedures which are at least apparently fair. They document their procedures. Where possible, they give at least one written warning of intended dismissal. Where a tribunal is faced with a fair procedure, the employer nearly always wins.

Equally and conversely, the employee does not know how to operate any such procedure for his own protection. The average person does not know, for example, that when he receives a memorandum of complaint, when he receives a warning suggesting that he may lose his job if he does not change his ways, he should reply in writing and that he should keep a copy of his reply. The documentation of his case is as important to him as it is to the employer. The employer will have his case on file. The employee will be left naked before the storm without any form of documentation and usually with little or no oral corroboration to assist him.

It is true that wise employees who are members of trade unions will go for help, but they generally do so after they have been dismissed. It is equally true, alas, that the average employee does not know that, although he cannot get legal aid, he can get up to £25 worth of legal help, if not more, under the Legal Aid and Advice Act in the preparation of his case.

That leads me to my second point. In general, the average employee is not as articulate as the average employer. I happily pay tribute to the chairmen and members of industrial tribunals who do their level best to assist those claimants who appear on their own and in some cases they lean over backwards to do so. In some cases they descend into the arena, and they cannot maintain that balance which a judicial function requires.

I submit that the lack of representation in industrial tribunals is as sad as it is understandable. One wants to avoid the legalistic approach. One wants to avoid the growth of what some judges have described as a plethora of case law. However, we are dealing with legal rights, with cases in which people's future is to be decided according to the law of the land. We are dealing with cases in which there is an appeal—alas, on points of law only —to the Employment Appeal Tribunal, and one cannot avoid dealing with legal niceties. It is the law which was brought in to protect the employee when voluntary effort has so dismally failed to do so.

So today there is a failure rate of 69 per cent. There is an average award of only £355 for the 31 per cent. of claimants who are lucky enough to proceed. So why is it that we hear the plaintive cries of chambers of commerce and employers' organisations throughout the land that the employee is over-protected? It is obvious that the employee is under-protected. The protection which the law is meant to accord to him is not providing the cushion which he needs.

The truth is that the employers' associations are making political capital in order to avoid further protection and they are complaining of what they describe as undue protection of the employee for one of two reasons. Either they do not know the truth, or they do not wish to know it and are deliberately misrepresenting the truth. Either they do not appreciate that there is a two-thirds failure rate and that the average successful claimant receives only £355 and that, as far as one can tell, not one claimant has ever received an "additional award" or approached anywhere near the magical £13,400, or they do know it and are deliberately ignoring it.

The fact is that the average employee is not sufficiently protected and the aver- age employer should be told that if he provides that decent measure of protection which the employee is entitled to receive he has very little to fear from the law. There is no reason why this protection should not be afforded. After all, it is no more than the requirement of a decent system, with fair regard for rights and a fair and proper way of dealing with people in their jobs.

In many cases, it is not the inarticulate shop floor employee who is inadequately protected. It is the manager and the executive. The higher up a person goes, the greater is his loss if he is pushed off the shelf into the mire of unemployment, and the greater is the need for his protection since the more difficult it may be for him to get another job.

At every level there is inadequate protection, which is not realised because people do not want to know and not appreciated because there is a deliberate campaign by employers' organisations to make out that precisely the opposite is the case, in the teeth of the truth and in the face of the figures—69 per cent. failure rate and £355, on average, when someone succeeds.

What can the Government do about it? First, I draw my hon. Friend's attention to the assurance which he gave in the debate we had on this subject a few months ago, when he said that he would have the procedures of the tribunals looked into with a view to seeing whether there was some way in which they could be improved so that, for example, the parties to a case could know rather more in advance what they would face when they arrived at the hearing.

That improvement will not necessarily protect the employee. As we have seen, he has no documentation to assist him. In addition, of course, while the employer can generally bring oral evidence to assist his case, the employee cannot do so because the only people who could assist it are his colleagues at work, and they in their turn are afraid of losing their jobs. The employee does not know how to us the witness summons or subpoena to bring them to the hearing, and even witnesses called on subpoena have a nasty habit of losing their memory as a result. The employee may not get more evi-without assistance, but he will at least dence without the documentation and know precisely the case he has to face.

Secondly, I suggest that we ought to provide far more information to employees about how they can help themselves—about how they can, for example, make use of their right to request written particulars of the reasons for their dismissal and about the duty of employers to provide those reasons within two weeks of the request.

The employee and his trade union should be helped to understand the need for documentation and the need to try to set out the employee's case in writing in the same way as employers do. Indeed, the need here is greater for employees than it is for employers because employers will have other evidence and employees will not. Employees should learn to understand, and should be told by the Department of Employment, how best to present their case. I hope that if these suggestions were followed there would be an increase, not a decrease, in the number of those successful in their efforts.

I wish in conclusion to pay a personal tribute to my hon. Friend the Minister of State. He has been at work, beavering away in the background in his modest and unassuming way, trying to help people at work virtually ever since 1974, and before that date, outside the House, for most of his working life. I should not like him to feel that this effort to find common ground in order to assist people is in any way intended as an attack upon him or the service which he is giving and which, I am sure, he will give. It is much appreciated.

On the other hand, somehow my hon. Friend has failed. We have failed. Employees are not receiving the protection which they should have. The latest figures which my hon. Friend has given prove that. I hope that he will be able to provide some hope of improvement, some greater protection for the employee and, perhaps, some hope also that the employer may have reason to worry rather more than he does at present if he does not follow those fair systems which, after all, are designed by the law to protect the employee from unfairly and unreasonably losing his job.

10.15 p.m.

The Minister of State, Department of Employment (Mr. Harold Walker)

I am very grateful for the kind and generous remarks of my hon. and learned Friend the Member for Leicester, West (Mr. Janner). His speech dealt again with a series of very important matters that he touched upon on the last occasion when the House debated the industrial tribunals. He has argued tonight as cogently and lucidly as he did on 21st November last year. I am glad that, in spite of the limited time available, I may be able to deal a little more fully with his case now than I could then.

First, my hon. and learned Friend expressed concern about the number of complaints of unfair dismissal—and not only the number but the proportion—of all applications to the tribunals that fail. Secondly, he advanced what he believes to be some of the reasons, which he believes may in some cases be beyond an employee's control. Thirdly, he made some constructive suggestions for reform.

Between 1972 and 1976 the proportion of complaints upheld at hearings was about 37 per cent. In 1977 that figure fell to 31 per cent. It is much too early to say whether it is part of a trend over recent years for this figure to decline. Much more noticeable, perhaps, is the consistency in the figures since 1972. In any event, it is not a figure that I would set much store by, for reasons that I shall explain briefly.

It would be wrong to infer that a small drop of this kind in the proportion of complaints upheld necessarily means that employees are failing to obtain their rights under the law. There may be a number of explanations for such a change. It may be that there are changes from year to year in the strength of the applications made, and that the cases which get as far as a hearing are not evenly matched year on year.

In any case, we see that the picture is different if we look at what we might call the overall success rate. By that I mean the proportion of employees whose case was upheld at a tribunal hearing, plus employees whose case was settled at conciliation. That proportion was 39 per cent. in 1972, but since 1975 it has been more like 47 per cent. each year. Therefore, if we look at the system as a whole, we see that perhaps there has not been the tendency that my hon. and learned Friend suggests.

My hon. and learned Friend also made the point that applicants might not be fully informed about their rights and were often at a disadvantage in conducting their cases. We are doing our best to counter that problem. We publish a number of guides about the legislation, guides which explain what employees' rights are, including a very full booklet about employees' rights on dismissal. Indeed, I well remember criticisms from Opposition Members that my officials were too ready to inform people about their rights.

My hon. and learned Friend is right to say that many working people are apprehensive about appearing before any judicial body. That certainly applies to industrial tribunals, notwithstanding their informality. It is natural. But we seek to do everything we can to explain the procedures to applicants and respondents alike. There is a leaflet on the subject. Moreover, I believe that the chairmen try to be as helpful as possible, particularly to unrepresented applicants.

My hon. and learned Friend was concerned about applicants being at a disadvantage as compared with the employer regarding witnesses. This was a point he made in our previous debate—the question of witnesses' reluctance to appear for the applicant. In fact, both parties may bring witnesses to the tribunal, and if there is any difficulty they can ask the tribunal for a witness order. The tribunal may grant such an order if it considers it justified. The reason for giving the tribunal that discretion is that it is important not to lengthen the proceedings with irrelevant detail. If parties could bring whatever witnesses they liked, the tribunal would soon be like law courts. In my view, that would be a retrograde step. I think that already many employers produce too many witnesses, some of whom can add nothing to what has already been said in the proceedings. In such cases, many chairmen discourage witnesses who can add nothing, and I am sure it is right that they should do so.

I share the view that perhaps tribunals are becoming legalistic. I do not want them to become as legalistic as the courts. Nor do the presidents of the tribunals. We want to keep them as informal as possible. To the extent that they are becoming more legalistic, as is often suggested, I believe that there is one outstanding reason, namely, that there is an increasing tendency for employers to engage lawyers to represent them. Not only does that put up the cost to the employer; it increases the legalism, and often prolongs cases. I do not go along with those who want more lawyers in tribunals. They may be necessary in a small number of difficult cases, but in the overwhelming majority of straightforward unfair dismissal cases employers could do themselves a good turn and dispense with legal representation. They would find the tribunals no less sympathetic to their case than they are at present.

Let me come now to some of the other criticisms we hear about tribunals. Some people think that the tribunals may be unduly favouring employers. Yet much of the criticism comes from the other side with complaint that they unduly favour applicants. The truth is, of course, that they are impartial.

Let us look at the facts. The tribunals consist of a legally qualified chairman and members nominated by both sides of industry. They are therefore well suited to their task and are evenly balanced. Virtually all of their judgments are unanimous, which hardly suggests bias towards either side. I suggest that the truth—and this, perhaps, is why they are criticised from both sides—is that they get things right and so, inevitably, one side or the other is disappointed.

My hon. and learned Friend rightly drew attention to those who seek to scare employers by quoting the possibility of an award of £13,400 being made against them. Let me confirm what my hon. and learned Friend has said. What most people fail to say is—that that can happen only in the most exceptional cases. To the best of my knowledge it has not yet happened. It can happen only to someone over the age of 61 who is earning more than £5,000 a year, who has been with his employer for more than 20 years, who gets the maximum basic and compensatory award, whose employer refuses to reinstate him following a tribunal decision and whose original dimissal was on race, sex or trade union grounds. I suggest that that is a most unlikely set of circumstances. Well over half the awards made—55 per cent. —are for less than £400 and nearly four-fifths are for less than £750.

Much has been made of increasing caseloads. It has been suggested that the number of unfair dismissal cases is increasing dramatically. In 1977 there was a slight increase of 5 per cent. Experience so far this year is that there is a slight decline of about 10 per cent. Those who were predicting 100,000 this year have been proved to be wildly wrong.

There are some, including Tory Members, who, as my hon. and learned Friend reminded us, attribute a high failure rate to the flimsiness of many of the claims. We are often given the impression by critics that people who have nothing to lose lodge a complaint of unfair dismissal just to try it on. That is certainly not the impression that I get from letters to my Department. I have had many comments from employees about the consequences of applying to an industrial tribunal. Applicants who are legally represented have to pay solicitors' fees. More seriously, the publicity resulting from an industrial tribunal's decision and from the evidence given during the hearing can adversely affect an employee's ability to obtain other employment—even when he has won.

I have had comments in letters such as: So I failed to clear my name. I was now classified as a troublemaker—industrial misconduct. Where could I get employment with a character like that? No one would want to employ me. I think that comments such as that show that employees will not apply to tribunals lightly because they know that they risk their reputation.

Certainly the tribunals are less intimidating to the ordinary man than the rest of the judicial system. That is deliberately and intentionally so. They may not be perfect, but the tribunals were set up to provide a speedy, informal and inexpensive means of settling disputes. I am anxious however, to stop them becoming more like law courts, and I know that the presidents are also. They are constantly seeking improvements in organisation and procedures which will save everyone's time and trouble, while giving both employers and employees a fair hearing.

My hon. and learned Friend asked about the improvements that I touched on and, indeed, promised in the course of our last debate. I am glad to be able to tell him that I am proposing to introduce some changes in the tribunal procedure regulations which I hope will be to the benefit of both applicants and respondents, and which will mean that more information is available, as my hon. and learned Friend asked, before the tribunal hearing. They can only be of help to all the parties, and should help to shorten hearings. I am aiming for those changes to be effective by about the end of August.

In conclusion, may I say that in all this criticism of the tribunals and the employment legislation it would appear that too many people lose sight of the advantages which flow from them. For the first time in this field, employees have legal rights in employment which prevent those employers who would otherwise do so from behaving unscrupulously and recklessly. The good employer, of course, has nothing to fear and need have no anxeties from this legislation. But, in turn, the increased security which employees now have reduces the antagonism between employee and employer, and helps to promote stable industrial relations.

My belief is that there can now be no going back on the new rights which employees have. Among other things, to do so would be to step out of line with the rest of Europe, and to shift the basis for the development of sound industrial relations which the legislation has created. I believe that the way forward is for employers and employees alike to familiarise themselves with the basic provisions of the new laws and to set about building sound procedures which are based on them.

Mr. Greville Janner

Before my hon. Friend sits down, will he give an indication of the nature of the changes in procedure that he has in mind? In view of the fall in the number of cases before industrial tribunals, can he give any hope of wrongful dismissal cases being transferred to the tribunals within the powers given to the Lord Chancellor in the Employment Protection Act 1975?

Mr. Walker

On the second point, my hon. and learned Friend will know even more sharply than I the distinction between wrongful dismissal and unfair dismissal, and the statutory provisions deal only with unfair dismissal. There is some provision within the Employment Protection Act to enable certain matters relating to contracts of employment to be dealt with in specified circumstances by the industrial tribunals. I do not think that it extends their jurisidiction to cover wrongful dismissal. We are looking very carefully at the possibility of implementing that remaining power within the Employment Protection Act to extend the jurisdiction of the tribunals to cover contracts of employment in the specified circumstances. But I rather doubt whether it will be to cover cases of wrongful dismissal.

The procedural changes will be those that I suggested, which will enable the parties to have, as my hon. and learned Friend wishes, rather more information before the proceedings of the tribunal commence than they have at present. If my hon. and learned Friend wishes, I shall be happy to send him details—

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock