§ Mr. Derek Foster (Bishop Auckland)
When the Minister is sitting comfortably, I shall tell the House the horror story of the ex-employees of Chamberlain Phipps, 43 of whom were sacked for taking a day's industrial action. They have been described as the wallpaper warriors of Bishop Auckland.
On 23 September, after protracted negotiations, a new package of wages and bonus was proposed, and the men judged that they would be £10 to £15 a week worse off. Unfortunately, that package was accepted by the general secretary of their trade union, the National Union of Footwear Leather and Allied Trades, although he had no authority to do so. Subsequently, the deal was rejected three times by ballot.
The men decided that they would adopt a series of one-day token strikes. Upon doing so, they received a letter from their employer. It has become fashionable for employers to send threatening letters to their employees. The letter was similar in style to the notorious letter that Michael Edwardes wrote to the British Leyland employees, and it was equally threatening. I have it with me, but I do not intend to read it all out.
The nub of the letter was contained in the paragraph:Those NUFLAT members who take part in the unofficial strike action on Wednesday 23 September will be dismissed, and under no circumstances will they be re-engaged or reinstated".At 7 o'clock the next morning the shop steward persuaded the early shift to withdraw its labour. Remarkably, the shop steward was not on the early shift. He subsequently went into work at 3 o'clock and left the men abandoned outside on the picket line. He has never been deemed by the company to have taken industrial action.
The next day, when the men presented themselves for work, they found themselves locked out, and on that same day they received their final pay slips and P45s. I should stress that this was the first day's strike in the company's eight-year history in the area. Some of the sacked men were described by the managing director at a personal meeting with me as model employees who had never given a moment's trouble. He expressed considerable sympathy for some of them and said that he would like to be able to take some of them back.
There can be one of three explanations why this extraordinary event took place. First, perhaps the company thought that it could get rid of a few so-called trouble-makers—those who had rightly insisted on the implementation of health and safety regulations in the factory. The second possible explanation is that the negotiation was completely mishandled by both the company and the trade union. The third is that the company wanted to reduce its work force without having to pay redundancy money.
Whatever the explanation, the innocent people who suffered were the workers who decided to take industrial action. The company had been advised that either it had to take back all its ex-employees, or none, because if it took one back the rest could sue for unfair dismissal and were likely to win. The company did not want to take all the employees back, first, because it did not need them all and, secondly, because there were some whom it was glad to get rid of.
The men were disqualified from claiming unemployment benefit, even though they had been sacked and had 1008 received their P45s and dismissal notices. Not only that, but because of the recent Tory Social Security Act their dependants' supplementary benefit was reduced by £12 a week on the assumption that the men would receive strike pay from NUFLAT, even though everyone—the union, the company and the Department of Employment—knew full well that the men would not be receiving it.
The men were disqualified from claiming benefit because they were deemed to be in dispute. That decision was taken by the regional inspector of insurance at the Department of Employment, who explained to me that in cases such as this he had to take account of two criteria. The first was whether the men had lost their jobs because of an industrial dispute. Clearly, the answer to that was "Yes". The second was whether an equivalent number of workers have been recruited by the company. In this case the answer was "No". Twenty new people had been taken on, but 43 had been dismissed.
That is where confusion arose, because it subsequently emerged that the second criterion was not as clear-cut as that. A more appropriate consideration might have been "Had normal production been resumed?" This is where we need some clarification about the criteria that are applied in these circumstances.
Had an equivalent number of people been recruited, this so-called dispute would have gone on indefinitely and the men, who along with their families were suffering great hardship, could have been disqualified from claiming benefit indefinitely. I therefore hope that the Minister will clarify the confusion about the criteria that are applicable in this case.
There is to be a second appeal hearing in Darlington on 14 January, and this will be a material question to be considered by the panel. I understand that the criterion to be taken into account is whether work is back to normal when market demand is being met. If that is the case, the men were sacked and should have qualified for benefit on the date on which they were sacked. It has not been a case of unfulfilled orders. That is clear.
I shall say a word now about the hardship that the men and their families have had to suffer. The men were shocked and demoralised by their experience. It was not something that they had expected. One man, with six children, received only £22 for more than one week. Another man, who had a wife, received only £9 for three weeks. They were faced with bills for rent, gas, electricity and food which they could not pay. My telephone was red hot with distress calls from the men and their families. It was clear that they had been sacked. They had received their P45s. The company had told ACAS that it had no intention of re-engaging the men. Indeed, it was prepared to write to the Department of Employment to that effect. Nevertheless, those men were still deemed to be in dispute.
There is one remarkable aspect of this case. If we are to believe the Daily Express, the Daily Mail, and most Tory Back Benchers, this country has the strongest trade unions in the world. It is believed that trade unions have brought Governments to their knees. The present Secretary of State for Employment is determined to saw off the trade unions at their knees. Nevertheless, in this country, which has reputedly the strongest trade unions in the world, a company can get away with sacking 43 people for taking one day's industrial action.
This case has been taken as a warning to every employee and trade unionist in the North-East of what can 1009 happen. It is indicative, too, of the new realism—we have heard about the new realism on the shop floor—among managers, which seems to be sweeping through the country. Certain managers feel that they can ride roughshod over employees and get away with it, and it appears that they can. I warn the Minister that if they do, those managers will reap a bitter harvest of confrontation when the upturn comes, if it ever does.
I talked earlier about the effects on the men. At first they were demoralised and browbeaten. When they picked themselves up, they became angry and frustrated at what they regarded as the company's despicable treatment, at their trade union's weakness, and at the incredible harshness of the social security legislation. They became determined to fight for their own dignity against injustice and to fight for their families. From being demoralised, they became radicalised.
Previously, the men had been moderate to the point of compliance, but they have been greatly radicalised by their experience. It is a warning to the Government, who are determined to push through anti-trade union legislation. If the net result is to radicalise moderate people, the Government will reap a bitter harvest. Those men have manned the picket line ever since, even in the severely cold weather. They joined many thousands of Labour Party people on the "Back to Jarrow" march and were proud to do so. They held the first march through Bishop Auckland since 1935, led etc. etc. Roland Boyes. Auckland since 1935 led by myself and the European MP Roland Boyes. Two of them walked the 288 miles from Bishop Auckland to Westminster, where they were greeted by the Leader of the Opposition and many Front Bench
Their story has reverberated throughout the North-East, alerting trade unionists to the dangers and giving new heart to thousands of people who felt that they were in danger of losing their jobs. I am proud to represent those men and their families. Now they have a new sense of confidence, and because of their experience they are ready to take on almost the world.
I am glad to know that the men have now received their unemployment benefit, but what about their back unemployment benefit? They were sacked on 24 September, and for four weeks they were disqualified from benefit. That amounts to about £200 for the men and their families. It would be a good Christmas present for them if the Minister could tell us today that they will receive that back unemployment benefit.
What about their jobs? In an area where 25 per cent. of the men are out of work, and where a quarter of the unemployed have been unemployed for well over a year, these men have little prospect of getting a job. They are completely fed up with being unemployed and are desperate to get work. I hope that the Minister will intervene and encourage the company to reinstate those people, although, in view of the conference speech by the Secretary of State for unemployment, all that he may deign to do is to set up a bag factory, perhaps, in my constituency. A magic carpet factory might be more appropriate, because the only place where my people will get work at the moment is in the Far East.
These men have felt the full brunt of the harsh and heartless management that is applauded by the Tory Party. They have been browbeaten by the crushing social security 1010 legislation that has been enacted by this Tory Government. Now they march for the return of a Labour Government, and that is what they dearly hope for.
I want to ask the Minister four questions. Will he undertake to arrange for their back benefits to be given to them? Will he undertake to intervene in an effort to persuade the company to give these men their jobs back? Will he undertake to bring forward changes in the legislation to make impossible summary sackings of this nature, when people have taken one day's industrial action in the eight years of the company's history? Will he give an undertaking that the criteria applied by the regional insurance officer in deciding whether workers are in dispute will be clarified? If the Minister can give those undertakings, I and the whole House can adjourn with some peace in our minds at this time of peace and good will.
§ The Minister of State, Department of Employment (Mr. Michael Alison)
I think that it will be best if I comment on the issues raised by the hon. Member for Bishop Auckland (Mr. Foster) by saying first what the law is and how it works, and, secondly, what has happened in the case of Chamberlain Phipps Coatings Ltd.
The intention of the law is quite simple: that people who go on strike should not qualify for unemployment benefit. That benefit is one of the wide range of national insurance benefits to which the general principles of insurance apply. People whose own deliberate actions result in a claim find that their claim is turned down. For instance, in a parallel case, arsonists cannot collect on their fire policies if they deliberately start fires. Similarly, strikers cannot collect on their unemployment insurance. This principle has been fundamental to national insurance law from its inception and has applied throughout the terms of office of successive Governments, and not just that of the wicked Tories, as the hon. Member seemed to imply.
The application of this principle to strikers claiming unemployment benefit is set out in section 19 of the Social Security Act 1975. This says that people who lose their jobs because of a stoppage of work at their place of employment which is due to a trade dispute in which they are participating or in which they have a direct interest shall be disqualified from benefit. This disqualification lasts for as long as the stoppage of work due to the strike continues. The law is concerned not with the merits of the dispute but merely that its existence has caused a stoppage of work.
The law does not define when a stoppage ends. The circumstances surrounding the ending of a trade dispute and the associated stoppage of work caused by it can be infinitely varied in the possible permutations and mutations which can arise. Over the years, however, a body of case law has developed. This enables a sensible decision to be made about when a stoppage is over and when, as a result, benefit can be paid.
That is the law in the theoretical framework, but it might be helpful if I outlined how it is generally applied. When a striker makes a claim to benefit, any possible payment of that claim is held in abeyance from the start in the case of the striker applying. I must emphasise that this action is purely an administrative act to withhold benefit from someone who may not be entitled to it. Should the decision on the claim be favourable, payment 1011 is fully backdated. I should add that arrears payable can be payable only in respect of a period of entitlement. That is a technicality. I understand that the insurance officer has decided that benefit is payable in this case from Monday 26 October, and the hon. Member for Bishop Auckland confirmed that.
Decisions on whether someone is entitled to benefit are taken by the independent adjudicating authorities and, because of their independence, neither I nor any other Minister nor any official can influence their decisions. I am afraid that this must bear upon the hon. Gentleman's request to give a number of undertakings. There are whole areas here in which I have no jurisdiction.
The independence which the adjudicating authorities enjoy is an important principle. It ensures that the law passed in this House is administered by a body which cannot be influenced by what may or may not be convenient for Ministers and officials. There are similarities with the administration of the law in general and its independent judiciary.
There are three tiers to the adjudicating authorities. The first stage is the insurance officer who makes the initial decision on whether benefit should be disallowed and, if appropriate, when the disqualification in question should end. The insurance officer's decision can be subject to appeal to the second stage of the adjudicating process, the local tribunal. In similar fashion, the decision of the local tribunal can be subject to appeal to the final stage of the process, which is the social security commissioner. All are independent of the Ministers and their officials. It is the decisions of the social security commissioner which form the case law to which I referred earlier about when a dispute can be judged to have ended.
It is important to spell out in some detail these rights of appeal. People who make claims to unemployment benefit and who are disqualified from it by the insurance officer have an automatic right of appeal to the local tribunal within 28 days of being notified of the decision of the insurance officer. If they fail to meet that deadline, they can still ask the chairman of the local tribunal for leave to appeal out of time.
If on appeal the decision of the local tribunal is unfavourable to the claimant but the three tribunal members are not unanimous in their view, the claimant again has an automatic right of further appeal to the social security commissioner. Such an appeal must in turn be made within three months of the claimant being notified of the tribunal's decision.
If the decision of the local tribunal is unfavourable to the claimant but is unanimous, slightly different rules apply. Despite the unanimity of the decision, the claimant may be given leave to appeal to the commissioner by the tribunal chairman at the hearing. If the tribunal chairman does not give such leave, the claimant may seek specific leave to appeal from the tribunal chairman. If the claimant decides to do that, he has 28 days in which to do it from the date on which he was notified of the tribunal decision. If on application the tribunal chairman gives him leave, again he has three months in which to make his appeal to the commissioner.
Should the tribunal chairman refuse leave to appeal, the claimant may ask the social security commissioner himself for leave to appeal to him. This right must be exercised within six weeks of his being notified that the tribunal 1012 chairman earlier has turned down his leave to appeal. If the commissioner grants leave to appeal, once again the claimant has three months in which to make the appeal.
All levels of the adjudicating authorities are most careful to ensure that they have sufficient information—as much as necessary and as much as possible—before coming to a decision. They direct my Department's officials in collecting whatever information is needed for adjudication purposes, so they have an initiative in saying what they need to know and the dates that they need to have. In trade dispute cases, they can obtain written information from both parties to a dispute, and at local tribunal hearings and those of the social security commissioner both the insurance officer and the claimant can present their arguments orally and may call witnesses to support them. They can also comment on the evidence given by the other side.
From what I have just said, it will be fairly clear that the rights of claimants are well safeguarded, both in working their way through the appeals process and in being able to put their side of the case.
§ Mr. Foster
Does the Minister accept that these processes can occupy a considerable time and that it is likely that there will be lengthy delays in paying any money subsequently adjudged to be due to claimants? A great deal of hardship may result.
§ Mr. Alison
There is a dilemma here. As much time as possible must be allowed to enable a claimant to present his case, get evidence and discover what are the rules of the game. This may have the effect of extending the time during which benefit is not paid, but the backdating principle applies, so that in the end no one is more than very marginally disadvantaged by the time lapse, on the assumption that the appeal is successful.
I come to the specific case of Chamberlain Phipps Coatings Ltd. The firm had agreed a new wages and productivity agreement with the recognised trade union, the National Union of Footwear, Leather and Allied Trades. However, a number of workers were dissatisfied with the new agreement and threatened to carry out a series of one-day strikes starting on 23 September. On 22 September, the firm's management warned the dissatisfied workers that their action was not supported by the union and that anyone who struck on 23 September would be dismissed, presumably for being in breach of contract.
In the event, about 40 workers carried out their threat to strike on 23 September and were dismissed as a result. When these workers came to make their claims to benefit, they agreed that one claim should be selected as a test case. The claim was duly referred to the insurance officer, who decided that the workers were disqualified from benefit as the stoppage of work was due to the strike. It is important to remember that the question whether the workers were on strike or were dismissed was immaterial. The essential fact for the insurance officer was that there was a trade dispute, and that, as a result, there was a stoppage of work affecting the 40 workers. Unemployment was not therefore involuntary, but was the result of a deliberate decision to strike.
However, as I have said, the decision of the insurance officer can be subject to appeal to a local tribunal. An appeal against the disqualification from benefit was heard on 3 December at Darlington local tribunal. This appeal was adjourned until 14 January to enable the NUFLAT 1013 representative to provide further evidence. The present position is therefore that the insurance officer has disqualified the strikers from benefit from 23 September, but he has also decided that the firm was back to normal working from 26 October—the date we referred to. Therefore, benefit was payable and has been paid from that date.
I have been asked what normal working, and a return to it, mean. Interpretation is the job of the adjudicating authorities who, as I have already said, are independent. They, therefore, do not respond to anyone's intervention. However, case law has built up—in the gift, as it were, of the social security commissioner—which defines the resumption of normal working in terms of what is to be the normal pattern for the future, rather than what was the normal pattern in the past. Once the insurance officer is satisfied that the firm is back on a settled pattern of working which should continue for some time, he may decide that normal working has been resumed.
Chamberlain Phipps has traditionally worked a three-shift system, but after 23 September it was forced to operate only two shifts. I understand that, between 23 September and Monday 26 October, 20 or so new workers were recruited and that from 26 October the three-shift system was restarted. Benefit is therefore payable from 26 October and the local office have paid the 40 people concerned. The only question remaining on benefit entitlement is that before the local tribunal—should the strikers get benefit for the intervening period from 23 September, when the trade dispute started, to 26 October, when normal working was resumed?
The hon. Member for Bishop Auckland suggested that the company's dismissal of the workers in the circumstances that I have described was unfair and that by restricting its bonus scheme in a way which allegedly led to a wage cut of £10 per week per individual the company 1014 contrived a situation in which it could get rid of its existing experienced workers, replacing them by a smaller number of unemployed men prepared to work for lower wages, without having to make redundancy payments or face unfair dismissal claims.
The law relating to dismissal during a strike or other industrial action reflects the policy of successive Governments, that such dismissals need special treatment, both because an employer ought to have some rights to dismiss those who take industrial action against him and who are in breach of contract and because industrial tribunals should not be called on to determine the merits of industrial disputes as distinct from individual complaints of unfair dismissal. There is a distinction to be drawn. Section 62 of the Employment Protection (Consolidation) Act 1978 precludes industrial tribunals from hearing unfair dismissal complaints provided that an employer dismisses all employees taking part in the strike or other industral action.
On the issue of redundancy pay, where an employer considers the employees' conduct to be a breach of contract—which, I understand, is the case—he can dismiss the employees with or without notice and deny their right to a statutory redundancy payment under section 82(2) of the Act. In this case, the employees had been given notice. Any employee who is denied a redundancy payment in such circumstances has the right under section 91 of the Act to apply to an industrial tribunal to have his entitlement determined.
I understand that a number of the dismissed workers from Chamberlain Phipps have now complained to the industrial tribunal that they were "constructively" unfairly dismissed, in that the company allegedly forced a wage cut on them. The matter is now sub judice and the hon. Gentleman will understand that I cannot comment further on these aspects of the case. That must be my last word on whether redundancy payments should be made.