HC Deb 30 March 1999 vol 328 cc875-82

'.—(1) After section 124(1) of the Employment Rights Act 1996 (limit of compensatory award etc) there shall be inserted— (1A) Subsection (1) shall not apply to compensation awarded, or a compensatory award made, to a person in a case where he is regarded as unfairly dismissed by virtue of section 100, 103A, 105(3) or 105(6A).

(2) Section 127B of that Act (power to specify method of calculation of compensation where dismissal a result of protected disclosure) shall cease to have effect.'.—[Mr. Byers.]

Brought up, and read the First time.

4.26 pm
The Secretary of State for Trade and Industry (Mr. Stephen Byers)

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

Madam Speaker

With this, it will be convenient to discuss Government amendments Nos. 166 and 65.

Mr. Byers

Most Members will be aware that one of the proposals contained in the Bill is to raise to £50,000 the level of compensation for unfair dismissal. The Government have given careful consideration to the level of compensation for those people who are covered by the provisions of the Public Interest Disclosure Act 1998. At present, no compensation levels have been laid down in respect of that Act. We believe that the time is right to protect whistleblowers by announcing the level of compensation to which they will be entitled and by indicating when we intend to introduce and make effective the provisions in the Act.

New clause 11 provides that the compensation for people covered by the Public Interest Disclosure Act will be unlimited. We believe that the £50,000 limit that will apply in other cases of unfair dismissal will be inappropriate for those individuals coming within the remit of the Public Interest Disclosure Act. The Act was broadly welcomed on both sides of the House. I am delighted that the hon. Member for Aldridge-Brownhills (Mr. Shepherd), who was responsible for introducing an earlier measure on that subject, is in the Chamber.

It is appropriate to delimit the level of compensation to which an individual is entitled. However, we believe that we can go further than that. Another group of individuals can be subject to victimisation and discrimination in the workplace: those who have responsibility for health and safety matters. We have been giving detailed consideration to the level of compensation that should be awarded to individuals who take action on health and safety grounds and, as a result, are unfairly dismissed by their employer. Such individuals should not be restricted to the £50,000 limit on compensation that would normally apply. I am therefore pleased to inform the House that new clause 11 will ensure that those individuals will also be entitled to unlimited compensation should they be unfairly dismissed.

Mr. John Bercow (Buckingham)

I understand the rationale behind the proposed new clause. However, given that it could affect businesses operating in the private sector, including small businesses, what account will be taken of the circumstances of those businesses? Such businesses could be forced under, if the new clause is rigorously enforced without regard to their circumstances.

4.30 pm
Mr. Byers

The hon. Gentleman leads me to the next group of amendments, when we shall discuss the position of small businesses. It is important that the House sends out a clear message to those who are employed in a responsible position and who make a disclosure in the public interest, and to those who ensure that organisations comply with health and safety requirements. There is a common interest and I hope that the House will agree that our approach, whereby unfair dismissal compensation is increased to £50,000 other than in two exceptional sets of circumstances—those individuals covered by the Public Interest Disclosure Act and those who deal with health and safety matters—in which compensation will be unlimited, is the right one. The real objective must be to create the climate in which health and safety issues are addressed properly in the workplace and individuals can ensure that there is proper disclosure where that is appropriate.

Mr. Ian Stewart (Eccles)

Does my right hon. Friend agree that the new provision will deter employers who should know better from paying less attention than they should to serious issues of health and safety at work?

Mr. Byers

My hon. Friend is absolutely right. There is a litany of cases in which people were unable to expose wrongdoing at their place of work with tragic consequences. I have examples of cases that would have been covered both by the Public Interest Disclosure Act and the unlimited compensation that we intend to offer. Let us take the case of Bristol Royal infirmary, in which a responsible whistleblower, Stephen Bolsin, raised concerns about the deaths of babies at that hospital. Those concerns were not properly addressed and we know the tragic consequences. There is now a Government inquiry looking into the details of that case.

In the case of the Clapham rail crash, it was known that loose wiring was a risk to the travelling public, but staff were reluctant to speak out, resulting in tragic and unnecessary loss of human life. Health and safety issues arose in the Piper Alpha oil rig disaster. The Cullen inquiry reported that: workers did not want to put their continued employment in jeopardy through raising a safety issue which might embarrass management.

Mr. Richard Shepherd (Aldridge-Brownhills)

I hesitate to say this, because it is slightly ungenerous, but all those cases were cited by hon. Members on both sides of the House to push the Government towards the principle of uncapped compensation; at the time, the Government were not having any of it. Although I welcome the introduction of these provisions, the Secretary of State should not attempt to claim credit by giving examples that were previously advanced and rejected by the Government.

Mr. Byers

I am trying to make the point that we recognise that. In response to the intervention my hon. Friend the Member for Eccles (Mr. Stewart), I am describing events that occurred because the provisions that are now being introduced were not in place. That is why I am pleased to be introducing a measure that will ensure that compensation is uncapped—a measure for which the hon. Member for Aldridge-Brownhills has argued for many years. I compliment the hon. Gentleman on his efforts to ensure that the Public Interest Disclosure Act reached the statute book. He campaigned strongly for that legislation for many years, often in opposition to the view of the previous Conservative Government. He stuck to his principles and the Act reflects his endeavours, and the provisions being passed this afternoon are the final element in establishing an effective and proper compensation regime.

There are many cases in which public interest was important, and the House must send out a clear message underlining how seriously we regard that issue. To say that compensation will be unlimited is the best possible demonstration of the importance we attach to that matter. An even better outcome would be that we succeed in fostering a climate of openness and transparency in which individuals in the workplace do not feel that they will be victimised if they draw attention to wrongdoing or to a work practice that might compromise health and safety. That is what we should aim for, and I hope that businesses, including small business, will adopt best practice to ensure that the measures we are introducing today will never need to be used, because the climate has been created that precludes the occurrence of such wrongdoing.

Mr. Bercow

I am sorry to trouble the Secretary of State again, but an important principle is at stake. In other Government legislation emanating from his Department, Ministers have recognised the difference between small and large companies—for example, the Competition Act 1998 makes provision for fines that depend upon turnover. Therefore, will the right hon. Gentleman at least concede the argument for taking specific account of the circumstances of small businesses in implementing the new clause? That is not an unreasonable proposition, and it certainly does not seek to detract from the force or the logic of his argument.

Mr. Byers

I assumed that the hon. Gentleman was more knowledgable than he actually is about the method of dealing with such matters. I hope that my response will be informative and helpful.

Any tribunal can take account of the size of an organisation or company in deciding whether an approach has been fair and reasonable in particular circumstances. I am pleased to put that on the record. If a small business does not have the amount of back-up that is available to a larger company, the tribunal can take that factor into account in deciding the appropriate level of compensation to apply. I hope that I have assisted the hon. Gentleman.

I believe that extending this provision to those involved in health and safety matters sends an important message. The Health and Safety Executive produced clear evidence to show that, when a proper consultation mechanism was in place to address health and safety matters, the number of accidents in the workplace decreased by 50 per cent. A real benefit can materialise for effective health and safety measures. I do not believe that many cases will reach the tribunal stage—at least, I hope not—but it is appropriate that the House gives clear notice today of its priorities.

Amendment No. 166 would limit the amount of compensation to be paid. Hon. Members will know that clause 12 provides that an individual may complain to a tribunal that his or her employer has failed to comply with the provisions of clause 11, which entitles an individual to be accompanied at a grievance or disciplinary hearing. There is no limit on the award that can be made, and it is right to take this opportunity to clarify the position.

We intend to link the amount with the upper limit on a week's pay, which is currently specified in section 227(1) of the Employment Rights Act 1996. At present, it decrees the maximum amount as £220 a week, which will be index linked in the future. We propose that there should be two weeks at £220 a week, providing a maximum amount of compensation of £440—I hope that my mathematics have not let me down on this occasion. That is the maximum amount provided under the amendment.

We feel that it is right to clarify the position, and we believe that that strikes a just and reasonable balance. I hope that the House can agree to new clause 11 and amendments Nos. 65 and 166.

Mr. Tim Boswell (Daventry)

I welcome the Secretary of State to the Dispatch Box for the Report stage. We understand that other obligations make it difficult for him to appear before Committees, although it is not unknown for Secretaries of State to do so. His presence in the Chamber gives me an opportunity to say on behalf of the official Opposition that we are sorry that the Minister of State, the right hon. Member for Makerfield (Mr. McCartney), is still unwell. We understand the circumstances and we do not wish to press him to return. We simply record that we are missing him and his lively contributions to our discussions. While I am handing out the bouquets, I must say that I am pleased to see the Minister for Small Firms, Trade and Industry in the Chamber. He did very well in Committee in trying to respond at short notice to at least some of our concerns. Bearing in mind that we have much business ahead of us, I now address new clause 11.

I shall not advise my hon. Friends to oppose the new clause, but we remain gravely concerned about circumstances relating to the Bill's formulation and presentation. The new clause has been thrown at us, and if I may be at all critical, I point out that given that it alludes to previous legislation and that its words do not leap off the page coherently, it would have been helpful if the Secretary of State had had the time, which he clearly did not, to share with Opposition spokesmen the import of the proposals that he was intending to put to the House. However, he has explained the new clause and we do not find it objectionable in principle.

I shall deal first with amendment No. 166, because amendment No. 65 is merely a repealing amendment. Amendment No. 166 relates to the maximum level of compensation. I chose not to move an amendment on that in Committee to facilitate proceedings. I was concerned, however, about the other end of the compensation scale and whether it is necessary to pay compensation at all if no loss has occurred. The Government have acknowledged that there should be a reasonable limit on compensation in proceedings relating to clause 12. We accept that.

On the more important issue of public interest relating to the new clause, the Secretary of State made a persuasive case, but I have a question and a couple of comments. As I understand the Secretary of State, the circumstances under that new clause are confined to matters of public disclosure or health and safety disclosure and do not apply to other compensation or special awards relating to, for example, trade union participation or otherwise. We had an interesting debate in Committee, in which I made the point that one of the possible side effects of the Government's proposals for special awards would be to reduce the level of compensation in particular cases. That remains the case under these proposals, apart from the two specific provisions.

On the substance of the matter, the Secretary of State responded, second time around, to the concerns about small businesses expressed by my hon. Friend the Member for Buckingham (Mr. Bercow), which I intended to voice myself. It is, perhaps, significant that the examples that the Secretary of State cited to the House were disasters which should never have happened involving large corporations. Although such companies might not welcome an unlimited claim for damages, they certainly would not find it difficult to pay a damages claim limited to £40,000 or £50,000 and they might be able to stand the rap for a fairly substantial fine. That would be much more difficult for a small concern.

The Secretary of State has confirmed that it will be within the power and competence of a tribunal to take into account all the circumstances of the case, including the degree of culpability and the resources of the firm—in other words, whether it will be bust by an unlimited award. I imagine, as the Secretary of State hopes, that that is not likely to happen frequently.

Another point that needs to be clarified is proportionality. In any case, the tribunal will consider the proportionality of the circumstances and will not automatically be required to set a compensatory award above, for example, what would be the limit for other cases of unfair dismissal. It would have regard to the circumstances, how bad the offence was and how much the metaphorical whistle had to be blown. Will the Secretary of State confirm that in his response to the debate?

This matter has concerned many hon. Members and some of us have personal concerns on health and safety. Given the context in which the public interest legislation has been proposed and accepted, we accept the Secretary of State's presentation, and look forward to any further comments by hon. Members.

4.45 pm
Mr. John Healey (Wentworth)

I begin by declaring an interest—an active though not registerable one. I was a trustee—I am still a member of the council of management—of the charity Public Concern at Work, which, along with the hon. Member for Aldridge-Brownhills (Mr. Shepherd), did so much to get the Public Interest Disclosure Act 1998 on the statute book.

I welcome the new clause very strongly, as I know does Public Concern at Work. The proposal to remove the limit on compensation payments for whistleblowers was widely and strongly welcomed and backed by a range of consultees, including the CBI, the Trades Union Congress and a number of key professional groups.

It takes special courage and a special person to blow the whistle on malpractice in the workplace. They often suffer loss of a job, an income and career prospects—not to mention isolation, pressure and sometimes intimidation, especially in the early stages of making such a move. The cases of Maxwell, Barlow Clowes, the Bank of Credit and Commerce International and a host of lower profile and smaller examples of whistleblowing underline the need for people to be able to report malpractice with confidence. Any cap on compensation would have limited the effectiveness of the Public Interest Disclosure Act to do the job that we need it to do.

The new clause means that middle managers in industry, doctors in the national health service and even civil servants in Whitehall will be properly protected if they raise and pursue their concerns responsibly. To that extent, the new clause sends out strong encouragement to those who might be considering blowing the whistle on malpractice where they work. I welcome the same provision for health and safety representatives, which simply underlines the importance of health and safety in the workplace.

I had thought that my right hon. Friend the Secretary of State was poised to make an announcement on the commencement of the Public Interest Disclosure Act. It is important that an announcement be made in good time—at least a couple of months before we propose that the PIDA comes into force—not least to give diligent employers time to put in place proper internal procedures. I hope that my right hon. Friend might later today be able to announce in the House when the Act will commence. I leave him with this thought: the Act was enacted on 2 July 1998. Would it not be fitting if we marked its first anniversary with commencement?

Mr. Shepherd

My thunder has been stolen by the hon. Member for Wentworth (Mr. Healey), because he made the points that I would also make. I pay great tribute to the Minister of State, Department of Trade and Industry, the right hon. Member for Makerfield (Mr. McCartney), who throughout discussions on the Public Interest Disclosure Bill was a Trojan worker for a sense of justice in this very important area.

As the hon. Member for Wentworth said, it is extremely difficult for honourable people to surrender what might be their family's income by disclosing something for which the Act offers protection: a disclosure that is in the public interest. The public interest is the wider interest of us all, as a society.

It is right that the Government were very nervous about extending compensation along the lines of that available for race or sexual incidents. I am very pleased that, on reflection, they have taken on board the work of the charity behind much of the campaign. The Solicitor-General was also a trustee of that charity. A wide body of opinion had formed behind the campaign. At any time, my Front-Bench team could have stopped the Public Interest Disclosure Bill becoming law. I therefore pay tribute to them, too.

We are seized of the notion that certain wrongs have happened about which people knew. Barlow Clowes is a very good example; we know of Maxwell, too. Many such instances may be going on even now, concerning which highly paid people in the City or elsewhere will not surrender their jobs for fear that they will never be employed again. The measure will therefore give the tribunal the opportunity to judge what is appropriate when an employer has so wilfully disregarded the law in terms of compliance with that Act. I give a cheer for that and I welcome what the Government and the Secretary of State are doing.

On the commencement date, it is nearly a year since the PIDA was enacted. The hon. Member for Wentworth made a valiant point: companies must be in a position to prepare themselves and to ensure that their systems for coping with such circumstances are set up properly. We are into a new world, I hope, where our country will be the better, for when individuals know of wrongdoing that has implications, they will know that our law will support them in the quest for justice.

Mr. Michael Fabricant (Lichfield)

I raise this point as a point of order, because it is not strictly connected with the Bill. Will the Secretary of State make a statement, given the announcement by Professor Joachim Milberg, the chairman and chief executive of BMW, on the slow pace of negotiations with the UK Government over"—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I really cannot see that that has any place in the proceedings at present. It is certainly not a point of order for the Chair. There has been no notification of a request for a Government statement on that matter. We are dealing with the Employment Relations Bill.

Mr. Fabricant

The Secretary of State might like to comment.

Mr. Deputy Speaker

Order. I hope that the Secretary of State will resist the temptation. We are discussing the Employment Relations Bill.

Mr. Byers

I shall, as always, try to keep in order, Mr. Deputy Speaker, and thank you for your clear guidance.

A number of issues were raised during the debate and I welcome the tenor of the remarks that have been made. As several hon. Members have said, the PIDA had all-party support in the House, which is why we were able to get it on the statute book last year. Hon. Members have asked about commencement. The Government's objective is for the Act to commence in the very near future. I want to work towards the Act being in operation, with appropriate notification to employers, to meet the anniversary of its enactment. That is a good target to set ourselves. Now that I have said that, hon. Members will want to keep me to it; I shall be pleased to be kept to my task of achieving that particular objective.

The hon. Member for Daventry (Mr. Boswell) is absolutely right that the proposals in new clause 11 are restricted to examples covered by the PIDA and to issues related to health and safety matters, and do not go beyond that. I hope that that reassurance is helpful. On the point made by the hon. Member for Buckingham (Mr. Bercow) and reinforced from his Front Bench, tribunals will be able to take into account the circumstances of a particular employer, including its size, in deciding whether it has acted reasonably or unreasonably, and thus whether the dismissal is fair or not.

The important aspect is that compensation must be suitable to the particular circumstances, a point that was raised from the Opposition Front Bench. Whistleblowers must have unlimited compensation because they are often in positions of great responsibility and at the higher end of the salary range. So going beyond the cap of £50,000 would be appropriate.

I confirm for the hon. Member for Daventry that there is no question of exemplary damages being applicable. The measure will give the tribunal the opportunity to award beyond £50,000, if that is appropriate in the particular circumstances of the case before it.

I hope that I have been able to address hon. Members' concerns and that we can agree to new clause 11 and the consequential amendments.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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