COMPROMISE AGREEMENTS (Hansard, 8 July 2002)

§ Alan Johnson
I beg to move, That this House agrees with the Lords in the said amendment.

§ Mr. Deputy Speaker
With this we may discuss Lords amendments Nos. 88 to 90 and 92 to 95.

§ Alan Johnson
The lead amendment will delete clause 39, which is on the expansion of the scope of 645 compromise agreements. Grouped with it are a number of consequential amendments that undo various repeals and revocations that we would have had to make through schedule 8 had the clause remained in the Bill.
Clause 39 was debated in great detail in Committee in the other place in March, and some serious concerns were raised about potentially damaging effects. The Government promised to consider those arguments, which we duly did. On 30 April, in answer to a question from Lord McCarthy, my noble Friend Lord Sainsbury announced that the Government had decided to delete the clause. That was done on Report in the House of Lords. We explained in that debate that we did not necessarily agree with all the legal arguments advanced by Lord Wedderburn about the meaning of the case law, and especially with his interpretation of the recent BCCI v. Ali case in regard to the scope of compromise agreements.
In a sense, it is a question of risk assessment. In our view, Lord Wedderburn rather overstated the risk that widening the compromise agreements might enable employers to draw up general waivers preventing their employees from ever enforcing their employment rights. We continue to think that that would have been invalid and illegal even if clause 39 had remained. However, we acknowledge the risk, and any risk of such an undesirable outcome is unacceptable. It is undeniable that recent case law has created uncertainty.
Even more important, we recognise the risk that, even though such an agreement would in our view be invalid, a small minority of employers might none the less attempt to persuade their employees to sign one. If that happened, the fact that its legal validity was highly questionable would not alter the fact that, having signed the agreement, an employee would be most unlikely ever to go to a tribunal because he would believe that he no longer had the right to do so.
As we have now made clear on several occasions, the Government are adamant that no employee should be deterred in that way. That was not what clause 39 was about. Its aim was simply to address the concerns of a number of employment lawyers that the scope of compromise agreements was unnecessarily restrictive and that it should be widened to match the scope of settlements conciliated at ACAS. That is a reasonable enough aim, and one with which we agree—but not at the risk of jeopardising employees' rights.
We considered amending the clause in a way that addressed all the concerns while retaining the original policy objective. In our judgment, there was no legally watertight way of doing that without also having to tinker with the scope of ACAS-conciliated settlements—the so-called COT 3 agreements. COT 3s have worked very well for several years and we had no wish to change their legal scope. We therefore concluded that we should delete the clause completely.
I hope that the House will agree to Lords amendment No. 56 and to the others grouped with it.

§ Mr. Hammond
I have no quarrel with the substance of what is being done, but it is worth the House taking a moment to consider how near we came to what might have been a legislative disaster. Clause 39 was not debated in Standing Committee in the Commons, because of the operation of a timetable. That meant that the Bill went to the Lords without the clause having been 646 discussed in the minute detail that it was in the other place. By the Minister's own admission, Government legislation went through the House of Commons essentially on the nod. Fortunately, the intervention of Lord Wedderburn in the other place drew to the Government's attention what the Minister acknowledges are possible dangers with the clause.
I have nothing to say about the substance of the issue. I am prepared to defer to Lord Wedderburn's analysis and to assume that the Government, having had the problem drawn to their attention, have considered the matter carefully and decided, on the balance of potential harm, that it is better to delete the clause. However, I ask the House to consider what would have happened had the regime of rigorous timetabling that now dominates and controls all proceedings in this place already been extended to the other place. The House of Lords frequently annoys the Government's business managers by voting when they would like it not to vote and, occasionally, by winning Divisions that they did not sanction it to win. Sadly, except on Fridays, this place seldom does that.
I hope that, in announcing the Government's decision to remove clause 39, the Minister acknowledges the vital role that the other place often, sadly, has to perform on its own because we do not have the opportunity to do our job properly under the timetabling regime. Having recognised that vital role, I hope that the Minister will at least place on the record his determination never to support any attempt to curtail debate in the other place.

§ Mr. Lloyd
I understand the hon. Gentleman's point, but he might want to reflect on a couple of things, one of which is the role of Opposition and Labour Back Benchers in ensuring that time allocated in a timetable motion is used to concentrate on the most important aspects of a Bill. If there is a failure, it is a collective one for which the Opposition themselves have to take some responsibility. One way to avoid the problem is to consider seriously pre-scrutiny of legislation. I know that discussion of that would take us wide of the amendments and I do not want to detain the House on such matters, but the hon. Gentlemen should consider whether pre-scrutiny would have helped the House enormously on clause 39.

§ Mr. Hammond
I do not accept the premise of the hon. Gentleman's first point. By and large, the Committee managed its time well. Very few clauses were not discussed as a result of the guillotine. The fault and responsibility must lie with those who needlessly impose a guillotine on a Bill's consideration in Committee.
I am interested in the hon. Gentleman's comments on pre-legislative scrutiny. I intend to watch with great interest the Government's response to the communications Bill, which is undergoing pre-legislative scrutiny. Their response to the previous Bill that went through pre-legislative scrutiny was not to change it, notwithstanding the Committee's hard work. I hope that the Government will respond constructively to the recommendations this time. However, I am surprised that I have managed to say so much on that subject, Mr. Deputy Speaker, and I shall not try your patience further.
I look forward to what the Minister has to say about what was a narrow escape. I hope that he will give credit where it is due to our noble Friends collectively—Lord 647 Wedderburn of course sits on the Labour Benche—for rescuing the Government from what could have been a serious embarrassment.

§ Mr. Prisk
I share my hon. Friend's surprise at the pattern of events. In all the consultation and during the Bill's proceedings in this House, clause 39 did not divide opinion, although unfortunately we did not have much time to discuss it. Its sudden last-minute removal suggests either a fundamental flaw that was overlooked or that some undue pressure, to which I hope the Minister did not succumb, was brought to bear.
I have a couple of points to raise. The Government's original case for clause 39 was that it would create consistency with ACAS's conciliation process. Indeed, the Government's explanatory note states: The Government's objective in making this change is to ensure that compromise agreements are as effective and as wide in extent as ACAS conciliated settlements. There was a clear intent to bring the two together. The clause's deletion suggests that one part of the Bill is going in a different direction from the rest of it. I hope that the Minister will clarify that.
My second point relates to the benefit that many business representatives thought would arise. The clause provided closure because it meant that there would be a complete settlement. For example, had a severance package been settled for a redundancy, the clause would have allowed it to hold and it could not have been challenged subsequently. It appears that, out of the blue, unexpected case law has railroaded the clause to one side. Why has the Minister decided not to amend the clause? Is it because it is unamendable, or at least unamendable in the time remaining? Do the Government intend to reintroduce the substance of the clause at a later stage? It would help us all to hear answers to those questions.

§ Mr. Lloyd
I congratulate the Government on listening to our noble Friend Lord Wedderburn. Clearly there was sufficient uncertainty, as hon. Members on both sides of the House accept, and it would have been imprudent to proceed with the clause. My hon. Friend was right to remove it. Sometimes it is better to be kind to a Minister, and we should recognise that he reached the right conclusion as a result of intense debate in the House of Lords. We will improve the Bill by accepting the amendment, and he deserves credit for his approach.

§ Alan Johnson
The hon. Member for Runnymede and Weybridge (Mr. Hammond) has had a bee in his bonnet about the timetable from day one. The timetable is not a matter for me, but if we had had all the time that he wanted—we did manage to fit in a few extra Committee sittings—I doubt whether hon. Members would have focused on clause 39 to the extent that he suggests.

§ Mr. Hammond
As the Minister mentions the extra sittings, the House should know that the Government introduced a major new clause. Two eminently well qualified and experienced employment lawyers—one Liberal Member and one Labour Member—served on the 648 Committee. I do not share the Minister's doubts about whether one of them would have picked up the problem with clause 39.

§ Alan Johnson
I am trying hard to pay a compliment to the hon. Gentleman. All Committee members, including the hon. Member for North Norfolk (Norman Lamb), did their job properly. Scrutiny has been mentioned. I think that clause 39 was the only provision on which there was unanimous agreement in the consultation. We agreed that it was a small, sensible tidying-up measure. It allowed compromise agreements, which happen rarely and require the endorsement of, for example, a trade union official or solicitor, to bring a dispute to a conclusion. Such decisions would not go through conciliation, ACAS arbitration or an employment tribunal.
Lawyers explained that it was crazy that such decisions did not have the same scope as ACAS-conciliated settlements. It is a minor point. Opposition Members may not have debated that clause, but they would have read it. The hon. Member for North Norfolk and my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) were keen on reading every esoteric part of every clause, for which I give them due credit, and I doubt whether they turned a hair when they read clause 39.
We should pay tribute to Lords Wedderburn and McCarthy. Hon. Members may remember that the matter was portrayed, not by them but by a journalist, as part of a covert agenda by the Government to get employees to sign away their right to go back to an employment tribunal in any future case. When the press reacts like that to a clause whose ramifications seem to us so minimal, we need to consider carefully whether to withdraw it on the basis that it is more trouble than it is worth or to amend it. It is not a central element of the Bill, and no party ever suggested that it was.

§ Norman Lamb (North Norfolk)
I join the Minister in paying tribute to Lord Wedderburn for identifying the disaster that could have occurred if the provision had been accepted. Clearly, it could have led to many employees losing basic rights under pressure from their employers, so it is right that it has been deleted. However, the Minister was wrong to say that compromise agreements are rarely used. In fact, they are frequently used, and were being used every week in our office to conclude agreements. These days, they are a common way of settling a case.
As the Minister rightly said, the sensible purpose behind the clause was to bring compromise agreements into line with ACAS agreements. Does he intend to return to the issue to address the concerns that led to the clause being included in the first place, or will he simply leave the law as it stands?

§ Alan Johnson
The hon. Member for Hertford and Stortford (Mr. Prisk) asked whether we considered alternative amendments, and we did. It was too great a risk to leave the Bill as it was, and the amendments would have resulted in a cure that was worse than the disease. If we amended the Bill to deal with ACAS-conciliated settlements and left the so-called COT 3 agreements as they were, there would have been a feeling that the latter did not provide the same protection, so we would have had to amend them. Given that the provision is not central 649 to the aims of hon. Members on either side of the House, we ask the House to support the amendment to delete clause 39 in its entirety.
We are consulting ACAS about what we can do to redress the situation. I accept what the hon. Member for North Norfolk said about compromise agreements being more frequent than I had thought, although that is not a big deal. They will remain as they are, and we will encourage their use. All that is missing is this minor but sensible tidying up to give them exactly the same status as ACAS-conciliated settlements.
We should not talk about close shaves but commend the Houses of Parliament for having done their job of scrutiny. The Law Lords have a particular locus in dealing with such issues, and the points made by Lords Wedderburn and McCarthy related to a recent case, BCCI v. Ali. We should not suggest that the fact that the clause passed through the Committee was in any way indicative of a lack of scrutiny in this House.

§ Mr. Hammond
The hon. Member for North Norfolk (Norman Lamb) asked the Minister whether the Government will return to compromise agreements. It became apparent, as the Minister acknowledged, that the Minister may have been misinformed about the extent to which they are used. It is slightly alarming that the Government are legislating without being aware of the basic facts. Can the hon. Gentleman's Department collect data about the number of compromise agreements being reached, because it is difficult to see how, without it, the Government can make an informed decision about what needs to be done?

§ Alan Johnson
Hon. Members should not take that error as any reflection on my Department; it was my error. I did not read my brief correctly and mixed up one aspect of employment law with another. I am sure that we do know the number of compromise agreements, and I shall write to the hon. Gentleman and let him know what it is.