EMPLOYMENT

HC Deb 02 November 1993 vol 231 cc256-62

Lords amendment: No. 253, leave out Clause 86 and insert the following new Clause—

Assignment of employees to particular parts of undertakings.

1. (" .—(1) Schemes may be made—
   1. (a) assigning such qualifying employees, or qualifying employees of such a class or description, as may be specified in the scheme to such part of their employer's undertaking as may be so specified;
   2. (b) modifying the terms and conditions of employment of those employees; and
   3. (c) providing for the payment of compensation to any of those employees by his employer in respect of any overall detriment incurred by the employee in consequence of any modifications made by the scheme to his terms and conditions of employment.
2. (2) A scheme shall be made only for the purpose of facilitating, or otherwise in contemplation of, or in connection with,—
   1. (a) the disposal of the undertaking, or part of the undertaking, of the Board or of a wholly owned subsidiary of the Board;
   2. (b) the transfer, by virtue of a transfer scheme, of any property, rights or liabilities—
      1. (i) from the Board or a wholly owned subsidiary of the Board to any such subsidiary or to a publicly owned railway company or a company wholly owned by the Franchising Director; or
      2. (ii) from a company wholly owned by the Franchising Director to another such company;
   3. (c) the provision of railway passenger services, or the operation of additional railway assets, under a franchise agreement, in circumstances where a previous franchise agreement relating to the provision of those services or the operation of those assets comes, or has come, to an end;
   4. (d) the performance of any duty imposed on the Franchising Director by any provision of Part I above to secure—
      1. (i) the provision of any railway passenger services;
      2. (ii) the operation of any network or part of a network;
      3. (iii) the operation of any station or light maintenance depot, or any part of a station or light maintenance depot; or
   5. (e) the exercise of the power conferred on the Franchising Director by section 26 above-to secure the operation of any additional railway assets.
3. (3) The power to make a scheme shall be exercisable—
   1. (a) by the Board, in respect of employees of the Board or of any wholly owned subsidiary of the Board; or
   2. (b) by the Franchising Director, in respect of employees of any company which is wholly owned by the Franchising Director.
4. (4) Where a scheme modifies the terms and conditions of employment of any person, the person's terms and conditions of employment after the modification takes effect must overall, and taking account of the amount or value of any compensation payable to him by virtue of subsection (1)(c) above in respect of any such detriment as is there mentioned, be no less favourable to him than his terms and conditions of employment before the modification takes effect.
5. (5) The duty imposed on an employer by section 4 of the Employment Protection (Consolidation) Act 1978 (requirement for written statement in respect of certain changes relating to an employee's employment) shall extend to all of the modifications made by a scheme to a qualifying employee's terms and conditions of employment, as if those modifications were changes required to be dealt with in a written statement under that section.
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6. (6) If any qualifying employee whose terms and conditions of employment are modified by a scheme is aggrieved—
   1. (a) at the provisions made by the scheme with respect to the payment of compensation, so far as applicable in his case, or
   2. (b) at the fact that the scheme does not make any such provision,
   he may make a written complaint to the maker of the scheme not later than twelve weeks after the date of issue of the written statement required by section 4 of the Employment Protection (Consolidation) Act 1978 in consequence of the modifications made by the scheme in the qualifying employee's terms and conditions of employment.
7. (7) Any complaint under subsection (6) above shall be referred to, and determined by, such arbitrator as may be agreed by the qualifying employee and the person to whom the complaint was made or, at the request of either of them, by a panel of three arbitrators appointed by the Secretary of State and consisting of—
   1. (a) a person who appears to the Secretary of State to be representative of employers in the railway industry;
   2. (b) a person who appears to the Secretary of State to be representative of employees in the railway industry; and
   3. (c) an independent chairman.
8. (8) A scheme may make such incidental, consequential, supplemental or transitional provision as appears necessary or expedient to the person making the scheme.
9. (9) A scheme may make different provision for different qualifying employees or for qualifying employees of different classes or descriptions.
10. (10) A scheme shall not come into force unless it has been approved by the Secretary of State or until such date as the Secretary of State may, after consultation with the maker of the scheme, specify for the purpose in giving his approval.
11. (11) In the application of this section in relation to Scotland, any reference to an arbitrator shall be taken as a reference to an arbiter.
12. (12) In the application of this section to Northern Ireland, for any reference to section 4 of the Employment Protection (Consolidation) Act 1978 there shall be substituted a reference to section 4(4) to (6B) of the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965.
13. (13) In this section—
    • "qualifying employee", in the case of any scheme, means a person who, immediately before the coming into force of that scheme—
      1. (a) is an employee of—
         1. (i) the Board;
         2. (ii) a wholly owned subsidiary of the Board; or
         3. (iii) a company which is wholly owned by the Franchising Director; and
      2. (b) is not assigned solely to duties in that part of his employer's undertaking to which he is, or is to be, assigned by that scheme;
      "scheme" means a scheme under this section;
    and expressions used in this section and in Part I above have the same meaning in this section as they have in that Part.")

Mr. Freeman

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

I understand that the Opposition do not want to move amendments (a) and (b).

Mr. Freeman

For the convenience of the House I shall make a few comments about employment arid the provisions of TUPE. Several trade unions have expressed concerns about the interpretation of this group of amendments.

I shall mention two basic points. First of all, there is no doubt that the acquired rights directive and the provisions of TUPE apply to the railway industry. That is Government amendment No. 317, and there is enshrined in the Bill a clear reference to the application of TUPE. There is no doubt that, in a transfer of undertaking from one ownership to another, whichever undertaking it is, the provisions of TUPE apply. That protects the terms and conditions of employment.

Mr. George Stevenson (Stoke-on-Trent, South)

What might those conditions be at the time of transfer?

Mr. Freeman

The terms and conditions of employment under the TUPE regulations include, obviously, the pay and conditions, the hours of work and the conditions of work. They do not include pension rights. They apply throughout industry. The railways are not unique. It is not a matter for me, as a Transport Minister, to define the acquired rights directive or the provisions of TUPE, but they will apply in any change of ownership in the railway industry.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

In a case in my constituency, various people were informed that, unless they agreed to transfer automatically, they would not only lose their employment but would be at considerable risk in relation to any redundancy payments. Will the Minister give us an undertaking that any railwayman or woman who is required automatically to transfer to another private undertaking will not be penalised with new contracts and new terms of employment, but will, if he or she wishes, be able to retain his or her full entitlement at that moment and for his or her continuing contract?

Mr. Freeman

I can give that assurance, because the law requires those terms and conditions of employment to transfer cleanly, without any amendment or compromise. What happens to the terms and conditions thereafter is a matter for voluntary negotiation between the employee and the employer. The hon. Lady shakes her head, but I am citing the law. I can give the hon. Lady the assurance that the provisions of TUPE, which apply whether it is Marks and Spencer, Unilever, ICI or the railway industry, are clear and unimpeded. The Bill does nothing about their application.

The second—and, I suspect, more important—subject of the debate is Government amendment No. 253. That is where the misunderstandings have arisen. I shall seek to allay them. Government amendment No. 253 is new clause 86. That allows British Rail or the franchising director to remove uncertainties where there is double employment in British Rail at present between different divisions of British Rail—that is to say, the individual is not wholly employed.

I cite the example of drivers who drive both the Gatwick express, which is InterCity, and trains on Network SouthEast. The driver may spend 50 per cent. of his time driving one set of trains and 50 per cent. the other. We are advised that, as the driver in that case is not wholly employed by one enterprise in British Rail, if there is a transfer to a private sector franchisee, the provisions of TUPE might not apply. That is the legal advice that is available to the Department of Transport. What clause 86 does, therefore, is to enable individual employees who are working for two distinct businesses to be assigned to one of them.

I hope that the assignment will be made with the voluntary agreement of the individuals involved and that agreements with the trade unions about the negotiating procedures that should be followed will be honoured. Once the assignment is made, without question the provisions of TUPE will apply when the undertaking is transferred—for example, from complete ownership by British Rail to a franchising company.

New clause 86 makes it clear that, if it could be argued that an individual's terms and conditions of work had been changed by the assignment, there is a process for compensation and independent arbitration to deal with any dispute between British Rail and the individual involved. I think that that is fair, and I hope that I have cleared up any misunderstandings.

Mr. Prescott

rose—

Mr. Wilson

rose—

Mr. Prescott

There seems to be a bit of competition.

We do not wish to take a great deal of time on the amendment, but having discussed amendments nos. 6 and 31, we have skipped over important debates on passenger transport executives, competition, the disabled, codes of practice and consultative committees, to reach the 18th debate. The others were all important amendments, but due to the guillotine we have had to miss them. However, it is important to place on record the fact that we have missed them out and have begun an important debate on TUPE.

The amendment may seem to be technical—indeed, it is often introduced as a technical amendment—but its implications are considerable and complex. No doubt in the other job that I shall have to do shortly I shall have to understand the subject better than I do at present.

The subject that is causing concern has been mentioned by the Minister and arises directly from a change since the issue was first mentioned in Committee by my hon. Friend the Member for Cunninghame, North (Mr. Wilson). Then, the Government made it clear that they intended to include in the Railways Bill—in clause 82, I believe—a statutory provision to ensure that all transfers would be covered.

In the debate, it was said that the present trade union egulations—TUPE—would still apply. However, the Minister still felt that it was important to contain the provision in the Bill. He said: Clause 82 has been included in the Railways Bill to apply TUPE to all kinds of transfers resulting from the privatisation of BR. Certain transfers may be of undertakings forming part of BR that are not properly regarded as commercial. Other transfers may include a collection of property rights and liabilities, which would not normally be regarded as an undertaking, because, for example, they are not a going concern."—[Official Report, Standing Committee B, 11 March 1993; c. 773.] The Minister was concerned that in some operations within British Rail, commercial and non-commercial, workers would normally be transferred from the various organisations. Reorganisation has created problems involving identifying employees with specific parts of the operation. The Minister mentioned the Gatwick operation, where some drivers use 30 per cent. of their time on the Gatwick run and are unable to work on other parts of the railway network. The problem is whether those workers should be identified with a specific company.

I think that one case was known as the Butts End case. The European Court identified cases in which people had not worked for a company long enough to qualify as full-time workers with the company. Many such examples occur when an organisation such as British Rail is split up into different operations. Will ticket sellers be selling tickets for Regional Railways or InterCity? Who are they employed by? Unless those sellers are placed in separate ticket offices—as has recently occurred at Victoria in relation to the Gatwick service—difficulties are created.

No doubt exists about employees who are directly employed full time in a company, as any transfer from that company to another company would be covered by the regulations, but clause 82 and the proposals in the Lords amendments have caused considerable concern. The central issue involves employment rights such as conditions, redundancy rights, and even concessionary travel—another issue addressed by the Minister in Committee—which constitute an individual's property and employment rights.

I think that the Minister hopes that he can make it clear, through the amendment, that those people who may be caught between one situation and another will now be identified as working with one employee—

Mr. Freeman

Employer.

Mr. Prescott

One employer. I thank the Minister.

In the process of their changing—for whatever reason —from one company to another, an employee's conditions of employment can be changed, which is what is suggested in the amendment. Where such changes take place, compensation will be paid. In that situation, I presume that it will be paid by the taxpayer.

10 pm

There is a fear—I believe that it has some substance —in relation to people who may be transferred from one company to another in the reorganisation of the industry prior to privatisation clearly being transferred from one undertaking to another. It may well be a judgment that that undertaking—track authority, say—decides that it wants to keep only X per cent. of the employees, or wants them to go to another company. If the worker does not accept that, he would receive compensation under the Bill.

Where Gatwick drivers did not want to spend 100 per cent. of their time driving the Gatwick route, which is one of the cases at the moment where the first shadow franchise is in operation, the drivers on those trains were entitled to move anywhere in the system. However, I presume that the shadow company can now say to an employee, "You will have to work for us 100 per cent." If that employee does not want to, disagreement can be registered between the employee and employer. If the employee is not prepared to accept the new conditions of employment—as that is what they represent—he is entitled to receive compensation, to seek employment elsewhere or to go to arbitration if there is disagreement as to the extent of the compensation. Those complexities come directly out of the reorganisation and they threaten the certainties of people's employment rights.

There is another matter that causes some concern, and on which I want to question the Minister. Concern has been expressed that the Government may have the possibility of causing reorganisation and changes in conditions of employment prior to privatisation. That is an act of transfer that will not necessarily guarantee compensation. Some railway employees feel that that is the intention of the reorganisation. Will the Minister reassure us that any changes or reorganisation which take place prior to the privatisation will be covered entirely by the regulations, and guarantee employees their rights, as was intended in clause 82?

I believe that clause 82 is being removed and replaced with an amendment under TUPE which has no statutory guarantee in the Bill. The scope is being widened to cover other groups of people who would not have been covered by clause 82. Will the Minister say whether in that matter, which is highly technical but has considerable consequences for employees, he considers that shadow companies will seek to reorganise the labour force—reduce it if necessary, or get rid of workers—ready for what might be considered to be a move away from full-time to part-time labour by the new company?

Finally, does the Minister have any estimate of what the compensation is likely to cost the taxpayer? I recall one other taxpayer's guarantee in the reorganisation contained in the Dock Work Act 1989. The Government's estimate at the time was something like £20 million, but it turned out to be about £200 million—all to return the docks to another kind of casual labour, which we are beginning to see develop in the docks.

Mr. Freeman

The hon. Member for Kingston upon Hull, East (Mr. Prescott) asked me four questions. The hon. gentleman is right to say that in Committee the law had not clearly resolved the problem of distinguishing between commercial and non-commercial undertakings that were being transferred. But we now have the Trade Union Reform and Employment Rights Act 1993, section 33 of which resolves that issue. I can therefore assure the hon. Gentleman that clause 137(6) of the Railways Bill now applies TUPE. It applies the new provisions in the 1993 Act and there should be no cause for any concern or ambiguity.

On the hon. Gentleman's second point on concessionary travel, my hon. Friend the Minister for Transport in London would have said had we discussed it, and on numerous other occasions has given assurances, that we regard the concessionary travel arrangements as covered by TUPE, so they cannot be abridged. The responsibility of employers to maintain the concessionary travel arrangements is clear under the law. The franchising director has the power to enable that duty on the part of employers to become effective, and he will do that through the train companies that will operate.

Mr. Prescott

Does that mean that the employer will have to buy those concessionary passes? For example, when Sealink was privatised, there was a concessionary fare right and Sealink had to buy that right from British Rail to provide the concessionary passes to the people. If the franchising director has the power of enforcement, will it be a condition of the franchise that those concessionary passes are purchased and that, if they are not, the employees can take action against the franchisee as being in breach of the franchise agreement?

Mr. Freeman

The arrangement proposed is that the railway companies, on behalf of their employees, will make a payment to the franchising director, and that companies carrying the employees of other companies will reflect the cost of doing that in their franchise bids for subsidy. We will be happy to set that out more fully at the appropriate time, but I can assure the House that there is no intention to make any significant change. I do not foresee any change in the concessionary travel arrangements.

Mr. Wilson

The change that has been effected by the removal of clause 82 is not technical but substantive. The main difference is that, if TUPE was positively written into the Bill, TUPE would apply—end of story. However, where TUPE is not specifically written into the Bill, every case will be considered on its merits. The basis of TUPE is that every case is different. That is what the case law shows. Every successor employer who seeks to demonstrate that TUPE does not apply will be able to turn that into a legal marathon in order to do so. Therefore, rather than TUPE having a clear-cut application in every case, it will be up to the employees to prove that TUPE applies in any specific case.

Mr. Freeman

I do not believe that that is a fair representation of the position. Clause 137 clearly shows that the provisions of TUPE shall apply in the changes that will affect the railway industry. As to how each individual is affected and how he might make claims, I am sure that the hon. Gentleman is right. That is the process of the law. But I am certain that, because we have put the application of TUPE on the face of the Bill, that will remove any doubt.

The third question put by the hon. Member for Kingston upon Hull, East was whether there would be any effect on national terms conditions of employment. I am happy to give him an unqualified assurance that there will be no such effect in terms of the provisions of amendment No. 253 which foreshadows the introduction of a new clause as a result of the assignment, which I hope will be voluntary, of individuals to one particular undertaking within British Rail where they work for two or more.

The hon. Gentleman then asked about shadow franchises and whether they would be a mechanism for getting rid of staff. No, this is a genuine attempt to clarify the full-time employment of individuals so that the provisions of TUPE can apply.

If there are continuing concerns on the part of the unions, to which I have already written twice and with which I have had two meetings, I should be happy to have further meetings or correspondence, and perhaps the hon. Gentleman will encourage them to write to me. I hope that, with those remarks, the House will see fit to approve the Lords amendment.

Question put and agreed to.

Subsequent Lords amendments agreed to.