Unfair Redundancy (Financial Penalties) (Hansard, 24 March 1982)

§ Mr. Neil Carmichael (Glasgow, Kelvingrove)

I beg to move, That leave be given to bring in a Bill to provide for financial penalties for employers who make employees redundant in contravention of the statutory provisions as to consultation with recognised trade unions, and notice periods.

The whole objective of sections 99 to 107 of the Employment Protection Act 1975 was to ensure that employers facing potential redundancy should engage in proper consultations with the trade unions, give adequate notice to both the unions and the Department of Employment, and give adequate time for consultations to take place. The provisions were meant to ensure that no redundancies took place without a compulsory breathing space.

Redundancy at any time and in any form is a tragedy for the workers concerned, and often for the company as a whole. It is a situation that requires delicate handling, adequate consultation, and equity of treatment. It is an area in which it is vital for management and the recognised trade unions to look at all the alternatives, and to agree any system which eventually arises where redundancies are inevitable. The provisions of the Employment Protection Act gave the opportunity for such discussions to take place, but unfortunately, in all too many cases, they have not worked, and there is widespread disappointment among trade unionists with the results.

Employers have managed to evade the provisions of the Act in a number of ways. In effect, they have offered employees wages for the 30-day or 90-day period in lieu of notice—wages that they would have had to pay in any event. They therefore got the individual workers to agree to their own ultimate redundancy, accept money in lieu in a lump sum or similar payment, thus leaving the shop stewards, staff representatives or the full-time officers of the union with no time in which to put forward alternatives or to suggest different ways of handling the redundancies.

In other cases, employers announced overnight the closing down of the plants and paid off the workers immediately. Thus there was no opportunity to consider any alternatives to redundancy or any reduction in numbers, or any different way of dealing with the individuals concerned, or the time scale of redundancies that was envisaged. In the event of overnight closure, when no notice whatsoever is given, trade unions are in no position to insist on their statutory rights to consultation. The plant will have disappeared by the morning, and the workers will have been paid off, having accepted payment in a panic.

My own union, the General and Municipal Workers Union, has had a number of experiences of this kind, which make extremely difficult the trade unions' role in protecting members and taking advantage of legal provisions on consultation.

Many hon. Members will remember a particularly dramatic case, which eventually led to a reaction by the work force. It was the case of Meccano in Liverpool, where 700 workers were told one Friday evening that they had no jobs to return to on the Monday. No payment was made to the workers until after a sit-in had forced the company's hand. A similar example in the early days of 940 this legislation was the flagrant disregard of legal obligations in the closure of Spillers bakeries. That case involved nearly 3, 000 workers.

Employers disregard the Act with virtual impunity because section 101 on protective awards, as a sanction to ensure compliance with the consultative provisions, is totally inadequate. The limits in section 101 make the maximum protective award the equivalent of the wages which the employer would have to pay if he complied with the law. If the employer pays that in lieu of notice, he is unlikely to be fined any more. If he has a protective award as a result of an industrial tribunal, he avoids entirely the consultative procedure and loses no more in terms of wage payments than he would lose had he observed that procedure.

The objective of the Act to put a sanction on employers to engage in consultation and to give notice is therefore evaded. In practice, in any case, awards are only at a minimal level. The Bill that I propose therefore seeks to amend sections 101 and 102 to provide for a minimum £2, 000 award for each employee whose potential redundancy is not subject to the consultation process provided for in section 99. There would be additional awards of £10, 000 for those employees who wanted to maintain employment but whose reinstatement was not practicable, and £15, 000 incases where the tribunal would award reinstatement as a result of failure to engage in consultatiion but the employer refused to reinstate the worker. Such minimum awards would be a significant sanction on employers to engage in the consultation process that was willed by Parliament.

It will not have escaped the attention of hon. Members that the penalties provided for employers defying the law in this respect bear a close relationship to those proposed by the Secretary of State for Employment for workers dismissed in closed shops.

I hope that such awards will not need to be made, because the sanctions will be insufficient to ensure that all employers, faced with possible redundancies, go through the consultative period required by Parliament. Far too often there has been no period of effective consultation and the period of notice has been far too short. The Employment Protection (Consolidation) Act 1978 was intended to alter that. The objective of that Act was correct, but the means of enforcement have proved to be inadequate.

My Bill aims to deter those employers who fail to observe the will of Parliament to consult in potential redundancy situations by imposing heavier sanctions. Parliament recognised that it must be the joint responsibility of unions and management to take every available step to avoid redundancies where possible, to reduce job loss where possible and to provide acceptable means of dealing with redundancies if they ultimately prove inevitable.

The days when employers could view their responsibilities solely in terms of maximising profits are long gone. There is constraint on that which includes the welfare of the work force and the maintenance of stable industrial relations. Good employers recognise that and will have nothing to fear from the proposals. The Bill does not place any new legal obligations on employers. It merely seeks to ensure that the obligations to consult and to notify in cases of redundancy are met.

That is the modest aim of the Bill. If it is successful, it should allow the present painful situations to be dealt 941 with in a much more constructive light to the benefit of good industrial relations, the workers concerned and, eventually, the whole enterprise.