HC Deb 30 March 1999 vol 328 cc920-30

  1. '.—(1) The Secretary of State may prepare, with the assistance of the Advisory Conciliation and Arbitration Service and after consultation with representatives of employers and employees, a Code or Codes of Good Employment Practice.
  2. (2) Adherence to such a Code or Codes may be relied on as a defence to any proceedings before an employment tribunal by any employer who can demonstrate that his actions and procedures in connection with employment were reasonable in relation to the circumstances of his business, including its scale, turnover and labour force.
  3. (3) No Code shall be issued under subsection (1) unless a draft of it has been laid before, and approved by a Resolution of, each House of Parliament.'.—[Mr. Boswell.]

Brought up, and read the First time.

Mr. Boswell

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss Government amendment No. 57.

Mr. Boswell

I declare an interest in respect of a number of amendments and new clauses that I have tabled. I do so as the employer of one full-time employee, and the occasional employer of others. I do so as a purely precautionary measure, because it is clear that almost any of the new clauses and amendments could bear on my position as an employer. I hasten to say that I have not been commissioned or encouraged by outside interests to table any amendments or initiate any debates. It is wise that everyone should know where we stand, and I may be able to draw briefly on my experience.

The new clause and Government amendment No. 57 clearly have a certain affinity, in that they relate to codes of practice for employment. My right hon. Friend the Member for Wokingham (Mr. Redwood) has said that there were no extensive Government contributions to the Committee. That is true in relation to Government Back Benchers; although, to be fair, some—including some present in the Chamber—made interesting and constructive, albeit brief, contributions.

Some effort was made by Ministers to answer the points that we made, although that was a little uneven, depending on the complexity of the points. I am awaiting some answers, including a definitive answer to the 13 points that I raised on a Government amendment.

I feel myself to be in the position of the lamp to which the moth is attached. Every time I table an amendment or new clause, lo and behold, a Government amendment attaches itself by a process of osmosis or suggestion. I can see nothing difficult about Government amendment No. 57. Unless the Secretary of State succeeds in putting me off my stroke in his explanation of it, it seems to me that it has two great and welcome merits. First, it is shorter than the text that it proposes to replace. Secondly, it appears to introduce an affirmative rather than a negative procedure.

The idea in the code may have been instrumental to the idea that came to me in relation to the new clause. The code of practice that is set out in clause 19—with supplementary material in clause 20—concerns part-time work. This subject will repay further study before it comes into force, as I can see problems ahead. Just as in the debates on the minimum wage proposals on the subject of au pairs, we keep finding additional problems of one kind or another that must be resolved.

In terms of part-time work, a clear agenda is afoot. The TUC document on preparations for the euro states: European collective bargaining is already under way. Two framework agreements have been signed on parental leave and part-time work. Clause 19 suggests that one of the materials to appear in the code should be any matter dealt with in the framework agreement on part-time work". What might be termed the euro-industrial relations agenda is buzzing away merrily.

Such documents are not my usual nightly reading, but the other day I was reading representations from the Fire Brigades Union which analysed the position of retained firepersons. They are treated differently in a number of ways—in Committee, we referred to the training requirements of part-time work as additional costs of recruitment or retention—but they are paid a great deal less. If the Secretary of State persists with his equalisation in relation to part-time work, he may find that his right hon. Friend the Home Secretary comes back to him to ask what he is doing to fire service finances.

New clause 3 is complementary to the approach set out with such eloquence by my right hon. Friend the Member for Wokingham, and other hon. Friends, in the previous debate. It rehearses some of the problems that affect real-world employers, such as me. New Labour might take comfort from the fact that the new clause is grounded in the drive towards the statement that all parties are in favour of consensus and partnership. I thought that my right hon. Friend the Member for Wokingham rather brilliantly exposed some of the equivocations in that statement.

I do not find it easy to understand the concept of compulsory partnership. I believe that a partnership is one freely made by persons for their mutual advantage, rather than one imposed by an external force—the Government, or regulation—which seems to make people, as my late father always used to say, "good by Act of Parliament". It is much better, where possible, to seek agreement. In fairness, some Government Back Benchers have made those points also.

As a result of the progressive changes in trade union legislation and the change in culture effected by my noble Friend Baroness Thatcher and my right hon. Friend the Member for Huntingdon (Mr. Major), there has been a significant shift in attitude or, more fairly, a confirmation of the more positive attitudes in the trade union side of industry. There are many on all sides who want partnership, consensus and constructive working together.

I am prepared to concede, as I have readily done in Committee, that there are from time to time bad employers and bad employment practices, which I would not condone. In all such matters, the issue is how much legislative intervention is appropriate to deal with the ills from which we may or may not suffer—and, as my right hon. Friend the Member for Wokingham eloquently said, whether the cure is worse than the perceived disease.

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It is no good our seeking to iron out every last infelicity in industrial relations by imposing yet another tissue of regulation, which increases businesses' costs and destroys their ability to run themselves effectively and to employ labour.

In his telling interventions at the beginning of the Bill's Committee stage, before he was taken ill, the Minister of State, the right hon. Member for Makerfield (Mr. McCartney), agreed with me when I made the fairly blunt point that if there is no job there will be no employment rights either. One comes logically before the other.

It is in that context that we offer the idea of codes of good employment practice. The suggestion—the Secretary of State may take this either as a compliment or as an attempt to wheedle—is grounded in what the right hon. Gentleman proposes in clause 19 in connection with part-time work. After consultation with the representatives of employers and employees, a code or codes of practice should be prepared with the assistance of the Advisory, Conciliation and Arbitration Service, which I hold in considerable regard.

The code or codes should embrace matters of good employment practice. They could be freestanding; there may be no need to legislate for them or to tie them to other legislative requirements. We had constructive debates in Committee about the fact that ACAS and both sides of industry, through the TUC, the CBI and others, such as the Engineering Employers Federation, can seek to achieve good standards of employment practice, and to improve those standards where possible. I hope that that is not an issue between the parties.

The distinctive feature of the codes that I propose is the way in which they may bite in connection with other employment rights, or with the way in which matters are dispatched at an employment tribunal.

We had a dry run for this debate in the exchanges at the beginning of our debate on new clause 11, relating to the removal of the limit on special damages. In response to my hon. Friend the Member for Buckingham (Mr. Bercow), the Secretary of State rightly said that an employment tribunal would be able to take into account many circumstances.

By definition—I am sure that if I did not say this, the hon. Member for Eccles (Mr. Stewart) would remind me of it—a tribunal seeks to deal with matters involving failure or delinquency. If an employer behaves reasonably and in accordance with agreements he is not, in principle, likely to end up before a tribunal.

I understand that, and it is a fair point to make, but there are still some concerns, which can be illustrated in several ways and which underlay many of the contributions made by my hon. Friends in the debate on clause 1. Their experience, which I share, enables them to see the practical problems that small employers face.

In the nature of things—at least until the Bill takes effect—small employers are unlikely to be able to employ human relations specialists, or specialists of any kind. Small employers are multi-functional. They may be sole proprietors with one or two employees, but they still have to understand the law. There can be few people who are such paragons that they combine the ability to run a farm or small engineering or service business properly with the ability to be fully conversant with the provisions of the working time directive, the minimum wage regulations and the new regulations that will follow when the Bill becomes an Act.

The Secretary of State may rightly say that small businesses have access to employers' organisations and trade associations that may be able to steer them through. In my experience, for example, the National Farmers Union issues guidance to its members. I see the Secretary of State nodding; no doubt that response was in his mind.

The question is whether that guidance is sufficient to enable employers to comply with the regulations. In principle, they should be able to comply, but concerns arise in two respects. The first affects "genuine" employers. The House will know what I mean when I use that term—people who try to behave respectably and treat their employees decently, and to comply with the law as precisely as they can.

Even with such people, difficulties can occur. The Government's track record of having to amend their legislation, and their advice on the working time directive and the minimum wage regulations, as they go along, shows us that it would be a paragon indeed who did not occasionally slip up.

The general conduct of a business, and the bona fides with which it is carried on, must be—at least, should be—a relevant factor in any deliberations that take place before a tribunal hearing a claim for, say, unfair dismissal. In principle, a tribunal ought already to be able to take that into account. However, the fear remains in employers' minds that they may slip up on a technicality—that something may go slightly wrong and trigger a course of action leading to undesirable and expensive consequences.

The second concern is connected with the first. Even if a business is conducted to the highest possible standards, it may from time to time have a difficult employee who does not always behave reasonably—although I am not saying that simply because someone is unreasonable he has no employment rights. Even an employer who wishes to conduct his business to the highest possible standards may fall foul of a tribunal—not necessarily in substance, because he may win his case eventually, but because of the sheer hassle of having to engage lawyers and explain actions that were probably not written down formally, because they never had been before. For small businesses that may have a seasonal turnover or other complications, life is too short for all that.

The employer may lose or win, but whatever happens, the costs will have been incurred and the hassle endured. Those considerations operate as a considerable disincentive to people in small businesses who are considering whether to make the "step change" decision to move from self-employment to taking on one or two people and becoming an employer. That is a shame, because so many small businesses have been fruitful in creating employment when larger businesses have been shedding labour.

Small business people may say, "It isn't worth the candle; I'm not going to become an employer and risk all that." That is the context in which we propose our new clause, the operative part of which is subsection (2): Adherence to such a Code or Codes may be relied on as a defence to any proceedings before an employment tribunal by any employer who can demonstrate that his actions and procedures in connection with employment were reasonable in relation to the circumstances of his business, including its scale, turnover and labour force. We do not expect to impose significant changes of practice on Sainsbury's, ICI or other major household names, yet those businesses may not be creating the employment opportunities that they created in the past when they grew from small to very large businesses. However, the codes are primarily related to new businesses, or those struggling to keep going which have one or two employees. There is no reason why good practice should not be codified for all businesses, but there may be cases in which an employer can say, "I did my best under the circumstances. You can look back at my track record to see that I tried to do a good and honest job, which I hoped conformed to the code. Clearly, a lot of flesh remains to be put on the bones, but the Secretary of State laid down the skeleton with his code of good practice for part-time employment, and he would do well to consider our idea. We all want good practice and good relations in the workplace, but they may be better secured by our approach than by a narrow, regulation-driven philosophy. Essentially, good industrial relations should be forged in the workplace, not brought out by contentious litigation.

Mr. Jonathan Sayeed (Mid-Bedfordshire)

My hon. Friend the Member for Daventry (Mr. Boswell) presented his proposals with characteristic modesty. As one who has worked in companies that varied from having 19,000 employees down to 25, I can assure the Secretary of State that one sometimes comes across an awkward employee. One tries to reason with him or to help him, but if he continues to be awkward, one must get rid of him.

Some employees have milked the system—particularly the employment tribunals—time and again, and it sometimes takes time to find that out. No sensible employer wants bad working practices. A good product requires a contented work force.

Legislation is an extremely crude instrument. It cannot deal with all the different types of companies, whether they are services or industrial firms. It cannot deal with companies of different size and ethos. It can, however, impose onerous regulations and rules on companies that cost money and, consequently, jobs.

In law in general, acting in a reasonable manner is a satisfactory defence, and it would be sensible to translate that principle into employment law. First, that would overcome the crudity of exercising the law alone. Secondly, it would provide flexibility to deal with different types and sizes of company. Thirdly, it would provide a defence against a bloody-minded or awkward employee who has to be got rid of.

I can tell the House how much it costs to get rid of an awkward employee. The minimum is likely to be between £12,000 and £15,000. Preparing the case will take at least two days of senior management time. For two more days—often longer—senior managers will have to leave the workplace to present the case.

Mr. Boswell

Does my hon. Friend agree that the normal and rational reaction of a management faced with that kind of cost is to settle out of court for almost any lower sum?

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Mr. Sayeed

My hon. Friend has shot my fox. In addition to preparation time, the business may require to hire legal counsel. An appearance in person is also required. I have asked the Secretary of State whether it would be possible for small businesses to put their cases to tribunals in writing, but he said no. I have seen the problems from the employers' side. With a minimum cost of £12,000 to £15,000, one realises that one has a better job to do—actually running the company. Often, therefore, the employer gives in and pays up.

That encourages the awkward employee. I have come across multiple-claim employees who make a nice little living by doing just enough to ensure that they are entitled to take an employer to tribunal for unfair dismissal or whatever, whereupon they rake it in.

Mr. Ian Stewart

The hon. Gentleman paints a picture of an aberrant worker who puts in multiple claims. Is he aware, from all his experience, that there is a two-year time limit on making a claim for unfair dismissal to an industrial tribunal? Is he aware that the average award amounts to hundreds of pounds, not thousands?

Mr. Sayeed

I agree. I do not say that the problem I have outlined is common or normal. Most employees work hard, want their companies to do well and want themselves to do well as a result. The Bill seeks to reduce the time limit referred to by the hon. Gentleman from two years to one.

I recall the case of an employee who had had maternity leave and sick leave and a whole variety of other things, in a very small company in which her job was so critical that another person had to be hired to do it. The employee could not physically manage a return to the specific job and would not do any other job. She claimed unfair dismissal. I do not say that that case is normal. The point is that there are sometimes abuses of the system. Companies should have a defence of acting reasonably.

Mr. Stewart

The hon. Gentleman makes a case for a new provision, but, under existing provisions, an industrial tribunal may hold a pre-hearing assessment to consider several criteria, one of which is whether there is any merit in the case or whether it is frivolous or vexatious.

Mr. Sayeed

The hon. Gentleman makes a perfectly fair point. However, before an employer gets that far, he must have done all the preparation and spent a considerable amount of management time gathering the documents and evidence together. The smaller the company, the more important the manager is to it.

I do not suggest that abuse is widespread. I do not suggest that most employees are on the fiddle: they are not. However, two things are required. First, a defence must be provided, and that can be done by creating a code of practice acceptable to and understood by employees and management. The second point, on which I am on all fours with my hon. Friend the Member for Daventry, is that there should be a code or codes. We will need codes, because they will have to cover different types and sizes of companies that operate in different ways. Once those codes are agreed, they can be adapted over time.

New clause 3 would be a valuable addition to the Bill. The House should not make unnecessary laws, because they are held in contempt and constitute a legislative and financial burden on companies that have to implement them. I endorse the points made by my hon. Friend the Member for Daventry and I hope that the Secretary of State will implement them.

Mr. Ian Bruce

It is always nice to support the Government in some small way, and I welcome the fact that Government amendment No. 57 will introduce the positive resolution procedure for the regulations proposed under the Bill. However, my understanding is that a single regulation or number of regulations made under the Bill would be discussed for only an hour and a half, and that is not enough for regulations of such complexity. I appreciate that that is not necessarily a point for the Minister, but perhaps the House authorities could address the time that is allowed to consider detailed regulations. I am concerned that the Government cannot properly do their job if they produce an unamendable regulation with only an hour and a half for discussion. Colleagues sometimes want to get away as quickly as possible and the House often does not scrutinise such regulations properly.

The Opposition would prefer not to have the regulations, because we would not wish to be so prescriptive. I pray in aid of new clause 3 the excellent speech in Committee by the Minister for Small Firms, Trade and Industry, in which he rightly pointed to the good sense of adopting codes of practice, as opposed to the letter of the law. The problem that arises when tribunals are asked to judge issues against the strict law is that the situation becomes legalistic, not one in which both sides address what is reasonable. Both the employer and employee have to be reasonable. The Opposition do not condone bad business practice or bad practices by employees: we simply say that the best solution is often to use a code of practice, so that if a small business is taken to a tribunal, it can claim that it acted reasonably and be judged on that basis.

The Minister for Small Firms—who is unpaid and likes me to remind the House of that, so that someone will hear and ensure that he is eventually paid for his excellent work—made a very good speech about age discrimination and the difficulty that one has in nailing down any discrimination in a strict law. I shall paraphrase parts of his speech. He said that the Government were taking a measured approach and intended to use the lessons learned from the initiatives to form future plans. He said that we needed to change the attitudes of employers and that the results of consultation published last year pointed to a non-statutory code of practice as the best way to encourage this process of change. He added that if we did not change the culture, we would not solve the problems. What good common sense from the Minister! It was almost his last speech in Committee and he was beginning to understand what the Conservatives were saying. Unfortunately, the Liberal Democrats were not saying the same things, because they wanted even more regulation.

The Minister continued by saying that the code would bring real benefits in promoting good recruitment and employment practices. That is a sensible approach. The Government went further and said that they would monitor this code's effectiveness, but that they would not evaluate it until February 2001. It will be too late for them to legislate by then and they have, therefore, made it certain that legislation on age discrimination has been kicked into the long grass.

New clause 3 reminds the Government that codes of practice and reasonableness are the way forward. The Conservative party has a proud record. For years, Governments of all colours tried to solve the problem of strikes. I remember the wonderful document, "In Place of Strife" produced by Barbara Castle, now Lady Castle. That became a reality under Conservative legislation. We are proud of that record and willing to pass it on, as part of our golden legacy, to the Labour Government. They have said the right things when talking to business audiences, but unfortunately, the Bill does not deliver. New clause 3 would give the Government a chance to add reasonableness to the Bill and it would be better for it.

Mr. Byers

As Opposition Members have pointed out, Government amendment No. 57 requires the Government to subject the code of practice on part-time work to the affirmative resolution procedure. I understand that it fulfils a commitment given in Committee and I am pleased to honour it this evening. I shall, however, ask the House to resist new clause 3. In so doing, I should add that there is not much that divides the comments made by the hon. Member for Daventry (Mr. Boswell) and the approach that the Government intend to take to the issue.

The debate about regulation versus codes of good practice reflects the points made in discussion of new clauses 1 and 2. The Government are considering carefully in which areas a code would be more appropriate than the introduction of a raft of regulations. Many of the comments by Opposition Members were well made and, when we talk about reducing the burden of regulation on business, it may be that the adoption of codes will be a better approach, especially if those codes are discussed and the business community—and employee representatives—are consulted. We can then bring the proposals before the House and discuss them, even if only for an hour and a half—I understand the reservations that have been expressed on that point. That would represent a new approach and an attempt to create a consensus on these important issues.

Mr. Bruce

I have tried to demonstrate the Conservative Government's experience of such legislation and I urge the Secretary of State to be very careful. Two of his colleagues have already fallen foul of the employment law, although I am sure that they have dealt with the situation honourably. The hon. Member for Corby (Mr. Hope) will have to appear in front of a tribunal and the Lord Chancellor has lost before a tribunal. I am sure that both of them have a reasonable case, but they have had to go to the trouble and expense of trying to defend themselves, their honour and their political reputations.

Mr. Byers

The hon. Gentleman makes a case for the issues to be dealt with by codes rather than by detailed regulation. Our difficulty with new clause 3 is that it would give an umbrella right to the Secretary of State to introduce codes wherever he or she felt that that was appropriate. The Government prefer a more targeted approach. We acknowledge that codes will be more appropriate in some cases, but a power already exists, under sections 199 and 203 of the Trade Union and Labour Relations (Consolidation) Act 1992, that enables the Advisory, Conciliation and Arbitration Service or the Secretary of State to issue codes of practice containing practical guidance for the purpose of promoting the improvement of industrial relations, much as the hon. Member for Daventry suggested.

Such codes must first be published in draft for consultation, after which they may be modified before being submitted to Parliament for approval by affirmative resolution of both Houses. Where we consider it necessary, we will use the powers to issue codes of practice on certain aspects of this Bill. I have already said that we intend to do so in relation to part-time work. We feel that that would be welcome.

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We also intend to draw up a code on grievance and disciplinary procedures to complement the Bill's provisions, especially in relation to the right to be accompanied at grievance and disciplinary proceedings. Some hon. Members may have thought that we would introduce a raft of regulations to do that. We feel that a code would be more appropriate.

We will also produce a code of practice on access to the work force in relation to our proposals on statutory trade union recognition. Again, we feel that that area is far better dealt with by code than detailed regulation. The important thing to remember, as with all statutory industrial relations codes, is that the new codes will make recommendations on good practice and prescribe the law to which they relate. Most importantly, they can be taken into account by tribunals and courts, particularly when they have to decide whether the behaviour of either party, the employer or the employee, is reasonable in the circumstances.

Mr. Sayeed

The Secretary of State has said that the codes "can" be taken into account. Could he be more robust and say "should"? When a company has demonstrated that it acted reasonably, the ability to take that into account is important.

Mr. Byers

Tribunals generally take codes into account. That is why the codes are there.

I hope that the hon. Member for Daventry will seek leave to withdraw new clause 3, but, if the measure is pushed to a Division, I ask the House to resist it because it could make all tribunal rights subject to a code of practice as it would introduce an overriding power. I have reservations about that which reflect our previous debate. The new clause could introduce a raft of quasi-regulation in the form of codes. It could be very wide-ranging. There is a strong argument for being focused about the areas that we subject to code of practice procedures.

I fear that if there are minor transgressions by either party, the code of practice under the new clause could be used against their interests. An employee or employer who failed to comply with the code's details could be in some difficulty. The better approach is to have a focused code of good practice which will come before the House to be debated and consulted upon. We can then move forward and hon. Members will know exactly which codes we intend to introduce, rather than going down the route of prescriptive regulation.

As we look forward to creating a climate in which regulation is not automatically the first option for Ministers, I hope that they will consider codes of practice as a better avenue down which to go. We shall then be able to make progress using the powers that we already have under the Trade Union and Labour Relations (Consolidation) Act 1992 rather than the wider-ranging powers that new clause 3 would give the Secretary of State. For those reasons, I hope that the House will accept Government amendment No. 57 and that the hon. Member for Daventry will seek leave to withdraw his new clause in the light of my comments.

Mr. Boswell

This has been an unusually thoughtful and fruitful debate. I am grateful to my hon. Friend the Member for Mid-Bedfordshire (Mr. Sayeed), who did well to remind the House of the practical problems of employers in compiling and defending cases at employment tribunals. The considerable costs may lead them to make decisions that are not in their best interests, or that they might have chosen not to make, but found to be the least bad alternative in the circumstances. It is important to put that on record to give the lie to the assumption that things are always all right under the umbrella of reasonableness at employment tribunals. As the Secretary of State intuited, the difficulty is that once regulation is in place, it can be something of an unguided missile. It is not always possible to produce a result that is felt to be just while being legally coherent.

I am grateful to my hon. Friend the Member for South Dorset (Mr. Bruce) for his remarks and for reminding us of the comments of the Minister for Small Firms, Trade and Industry in Committee on what is rapidly becoming in this respect—perhaps we should pass on hastily—something of a consensus about the approach. That characterised the Secretary of State's response to my suggestions. He might even have mentioned that the Trade Union and Labour Relations (Consolidation) Act dates from 1992 and reflects the wisdom of his Conservative predecessors and, in fairness, the considerable custom and practice that has built up around ACAS and its ability to advise on such matters.

It was refreshing to hear a widening in the Secretary of State's remarks of the concept, in clause 19, of the part-time work code to other areas, including grievance and disciplinary procedures and access to the work force. I had not wholly anticipated those points, not least because they are not set out in the Bill, whereas the code in clause 19 is explicit. Those announcements were welcome, as was his general approach. I understand what he was driving at. Targeting is interesting, and we might debate it in the context of social security legislation, but not tonight. The exact balance of rights and responsibilities that can be carried by codes or by other means is difficult to follow.

I see the hon. Member for Wentworth (Mr. Healey) across the Chamber. We are all striving to find ways, as he did with his Employment Rights (Dispute Resolution) Bill last year, of alternative dispute resolution. We do not want disputes to go to the wall if it is possible to avoid that by good practice and common sense. I recognise the interest of all parties, including the trade unions, in that matter. Let us work on the presumption that the Secretary of State is driving in the right direction. We need to see more; we will need to see the codes. It would help him if, instead of having them thrown at us in the confrontational atmosphere of a 90-minute debate, we could have a pre-draft hearing, or a look at a draft, so that we could talk about it and see whether we could contribute ideas, as I am sure that my hon. Friends would wish. I do not ask him to respond to that now. On that note of qualified consensus, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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