Grand Committee Report of 14 March 2002

Official Report of the Grand Committee on the Employment Bill
Thursday, 14th March 2002.
The Committee met at four of the clock.
[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]
The Deputy Chairman of Committees (Lord Brougham and Vaux): I would like to remind the Committee of the instructions that were read out yesterday; namely, that there shall be no Divisions in the Grand Committee; Divisions will have to wait until Report stage. If there is a Division in the Chamber, I shall ask the noble Lord who is speaking to desist and carry on after we resume the Committee after a 10 minute break.
Clause 22 [Employment tribunals]:
Baroness Miller of Hendonmoved Amendment No. 62:
Page 32, line 12, at end insert—
"( ) The regulations as to cost and expenses made hereunder shall include provision so as to ensure that—

(a) at the conclusion of a case before an employment tribunal—

(i) an applicant (if the tribunal has granted no part of that person's application) shall be required to demonstrate to the satisfaction of the tribunal that he has received advice from a person whom the tribunal considers to be competent to give such advice to the effect that the applicant's case has a reasonable prospect of success; and

(ii) a respondent (if the tribunal has refused no part of the applicant's application) shall be required to demonstrate to the satisfaction of the tribunal that he has received advice from a person whom the tribunal considers to be competent to give such advice to the effect that no part of the application has any reasonable prospect of success;

(b) if a tribunal is not satisfied that the conditions set out in paragraph (a) (i) and (ii), as the case may be, have been complied with, it shall award costs against the applicant or respondent respectively."

The noble Baroness said: Amendment No. 62 has a simple purpose. It relates to an applicant who has had no part of his application granted by the tribunal, and to a respondent where the applicant has been wholly successful. In other words, it is even handed as between applicants and respondents. It applies when an applicant has wholly failed in his case and when a respondent has wholly failed in his defence. In either of those cases, the unsuccessful party is required to demonstrate that he acted on the basis of competent advice, had a case with a reasonable chance of success or a defence with a reasonable chance of success. If the wholly unsuccessful party cannot prove that he or she brought or defended the case in good faith, the tribunal must award costs against them.
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This provision will deter applicants with hopeless cases from starting a claim in the expectation of getting something for its nuisance value or inconveniencing an employer. It will also deter the employer who defends a case out of vindictiveness when he has no real defence, or who tries to intimidate the claimant through the use of his greater resources. This provision is far milder in its effect than the situation in the civil court where, except in the most special cases, the costs always follow the event. In other words, in the civil court the loser pays the winner's costs. Under my provision the loser will not pay the winner's costs unless the tribunal is absolutely convinced that the case was not brought in good faith. I beg to move.
Baroness Turner of Camden: I am very surprised that this amendment is before the Committee this afternoon. I have not had the privilege of serving on an ET myself but I had the experience, as a very young trade union official, of representing trade union members. How on earth the tribunal is expected to demonstrate competence, I have no idea. I used to be fairly successful but occasionally cases fall apart at the hearing, perhaps because one has not been properly informed before the case started. It is not an indication of competence or otherwise if you have had one or two cases that you have lost. Frankly, how on earth the tribunal is expected to come to a view about competence, I do not understand. Maybe it would he a good idea if the Government were to appoint my noble friend Lord Wedderburn of Charlton to set an examination in employment law. After all, he knows more about it than anyone else. One could have a pass or a fail for one's knowledge of employment tribunal procedures and law. Otherwise, I really have no idea how one assesses competence, and I do not believe this is a good idea at all.
Lord Wedderburn of Charlton: I would not pass an exam. My noble friend must take this amendment more seriously. It was, after all, moved by the noble Baroness, Lady Miller of Hendon, on behalf of a party that aims to be the government of this country. Presumably the amendment is the result of deep thought on the part of the noble Baroness and her advisers. I always take very seriously her proposals for a central policy on the question of costs.
I remind Members of the Committee of our debate yesterday. There is of course enormous pressure to increase costs, especially costs on applicants, which, as the noble Baroness, Lady Miller of Hendon, made clear, is the primary reason for stopping applicants from bringing these terrible cases, however reasonable the case may be. Of course, the tribunal will award costs against them if the adviser is incompetent in the tribunal's view. Perhaps the noble Baroness would tell us whether that is not the case. The tribunal would have to keep a list of benchmarks of competence. No doubt it would not have to pass an examination on labour law at the London School of Economics, but one wonders whether a third class in a resit would do.
The noble Baroness must have some idea of the competence that she would demand. Would mere qualification as a legal representative or trade union

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representative be enough? Of course, trade union representatives handle—often very competently handle—a vast number of such cases. They must be competent and the lay party who suffers the costs if it turns out that he has an adviser who is not competent; moreover, he must also have a reasonable prospect of success.
I flag up at this point the fact that a very important question is involved. How far will the future law of this country cause the tribunal to intervene with regard to arguable cases, which are not manifestly impossible and should not be struck out, and which should make the tribunal try the case in advance to decide whether it has a reasonable prospect of success?
I share my noble friend's astonishment that such an amendment to the Bill was tabled by the Official Opposition.
Baroness Miller of Hendon: The first thing I say to the noble Lord, Lord Wedderburn of Charlton, is that he has not understood what I have said. He suggested that all this was to deal with the applicant to the tribunal and make him deal with costs. I stress again the relevant provision, which is that it relates to an applicant who had no part of his application granted by the tribunal and also to a respondent if the applicant had been wholly successful. In other words, the arrangement is absolutely even-handed between applicant and respondents.
I appreciate that the noble Lord, Lord Wedderburn of Charlton, has a different point of view from my own. However, what he says he says in good faith, and so do I. When I say that the arrangement is even-handed on the two sides, I would like him—please—to accept that; he should not refer to half of what I have said, which I believe is very unfortunate.
Lord McCarthy: The point is that whoever the amendment leans on, who is going to feel responsibility and liability? What we are saying is that such an amendment is much more coercive and much more of a disincentive to a poor little applicant than it is to most respondents.
Baroness Miller of Hendon: I do not accept that. Also, I have to say, and I will say again, that we are talking about a case in which the applicant has had no part of his application granted by the tribunal. The tribunal had already come to a conclusion and has not given way on any part. That means, of course, that in that case the respondent was successful. On the other hand, if the applicant is told that he is absolutely right, the respondent will have been absolutely unsuccessful; that was the point that I was making. I understand that noble Lords may want to interpret that in a different way. All I am saying is that I think that they should take into account what I say, and not what they think I might have said.
Baroness Turner of Camden: Before the noble Baroness sits down, the point that I was making was the difficulty of assessing competence. How on earth does one do that?
Baroness Miller of Hendon: I understand the noble Baroness, which is why I did not include her in those two remarks. She made a completely different point. She was talking about the competence. However, if the tribunal has already made a decision, presumably it took that matter into account—the competence of the case and the advice—otherwise it would not have come to the conclusion that it did. I think that is a fair point for us to consider in deciding whether the wording is right or the wording is not right, but not on whether I was being even-handed, which indeed I was.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): I agree that in many cases it would indeed be sensible for either party to have sought advice before embarking on a course of litigation or defending a complaint. But I think it would be quite wrong to place a requirement on parties to seek advice in every case from a source identified as competent by the tribunal, as the noble Baroness's amendment proposes.
Parties to employment tribunals are free to choose their own representatives or to represent themselves and to conduct their own cases if they so wish. In fact, in a majority of cases parties do seek advice in some form or another at some stage of the case, but the freedom to conduct one's own case is an important principle in employment tribunals and one which I do not believe should be undermined in any way.
The tribunal rules are framed to deal with the specific nature of employment tribunals. They are aimed at maintaining a system which is accessible. As far as possible procedures are simple and steer clear of legalism. The rules recognise that in some cases it may not be necessary or possible to engage representation.
Requiring parties to seek advice in every case or face costs is over-prescriptive. Tribunals already have powers to ensure proper case management and to tackle abuses of the system. I am not minded to fetter their discretion as the noble Baroness proposes. On a technical note, I am concerned that this amendment would require parties to disclose their legal advice to the tribunal, which would go against the principles of professional privilege.
In many cases it will be desirable to take advice. Changes to employment legislation, together with case law and the impact of European-derived rights, has meant that tribunals have inevitably become more complex and legalistic, but this is not true of every case. In a straightforward non-payment of wages case, for example, it may be possible to establish from the available literature that there is a basis for taking a complaint to an employment tribunal.
And what would happen, for example, if the deadline for making a complaint was drawing near and an applicant was unable to arrange a consultation with his local advice centre? Should he be automatically penalised for lodging an application? We know that resources are stretched in free advice centres and it can be difficult to get an appointment.
Furthermore, there are already a range of provisions for tackling weak cases, which will be strengthened by the Bill. The tribunal may, at the request of either party

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or of its own volition, call a pre-hearing review to consider whether an application or defence has no reasonable prospect of success. If it considers that the case is weak it may order the party to pay a deposit as a condition for continuing with the case, and it may issue a cost warning. We also intend to provide a power for tribunals to strike out an application or defence after a pre-hearing review if it considers that it has no reasonable prospect of success. We shall discuss that in more detail later when we come to Clause 28.
The tribunal also has a duty to consider an award of costs where it believes that the grounds for making a costs award are made out. In doing so the tribunal will consider all the circumstances of a case, and that might include whether a party has sought advice or ignored repeated advice to abandon a case.
In conclusion, I believe that taken together the provisions for tackling weak cases and defences under the present rules and in the Bill give tribunals a sufficient range of powers without being unduly prescriptive, and while maintaining the accessibility of employment tribunals. I therefore oppose this amendment, not least of all to avoid the possibility of exams being set by the noble Lord, Lord Wedderburn, on employment law.
4.15 p.m.
Baroness Gardner of Parkes: I want to take up what the Minister said about competence. In my experience and the experience of a number of others, people thought they were being represented by a competent person but that person was not competent. If they either represented themselves or they were represented by a friend the case often went perfectly well and the tribunal bent over backwards to help such people. If they were legally represented, the case also went quite well. However, from the moment one files one's case, it becomes public knowledge and there are firms who tout for business immediately. They produce unqualified people to help but very often the chairman will say, "This person is worse than no-one. He is absolutely destroying the applicant's case". Therefore, competence is important.
This does not concern my Opposition colleagues so much, because if one is a member of a trade union, one usually has good representation. However, if one is not and if, say, in my profession of dentistry one had to defend a case, one would presume that anyone making an approach was a reliable party and was somehow authorised, informed or well able to act. We saw so many cases ruined by people who were incompetent and those people were touting for business. I wonder what the Minister believes can or will be done about that in the Bill?
Lord Davies of Coity: Perhaps I may enter into the question of competence. My noble friend asked the noble Baroness, Lady Miller, representing the Opposition, how one measures competence. The noble Baroness made reference to trade union representation, legal representation and representation by a friend. However, there are other categories where competence seems not to be displayed. The question is: how does one possibly make a judgment on this?
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I have sat for 11 years on the employment appeals tribunal and have seen all kinds of representation, whether by individuals, whether by legal representation, or representation by a friend or by somebody else. The fact is that it must be extremely difficult, if not impossible, to determine whether such people are competent or not. One yardstick would be: if you lose, you are considered incompetent; if you win, you are competent. So it strikes me as an extremely difficult concept with which to grapple particularly in an objective manner.
Lord Sainsbury of Turville: The noble Baroness, Lady Gardner, raised a point, but it is not one that is totally relevant to the amendment. The amendment requires people to have advice from a competent person, which raises the question of what a competent person is, and that is one of the major reasons against it. The point she raises is one about deterring people who are not competent but who are trying to take this work. Employment consultants would be subject to wasted costs orders against them under the provisions of the Bill where they behave unreasonably in these circumstances. Therefore, to that extent it would be covered by the Bill, but it is a different point from the amendment which requires people to have competent advisers.
Baroness Gardner of Parkes: I am grateful to the Minister for that comment and, of course, the courts would find against them. However, I am concerned about the poor applicant who believes himself to be in good, safe hands but who, instead, has fallen into a trap. I appreciate that it is not entirely relevant to the amendment but, nevertheless, I would be grateful if the Minister would take the point on board.
Baroness Miller of Hendon: I listened carefully to what my noble friend said about the difficulty of assessing competence and what happens when one does not have competence. As the noble Baroness said, it was quite easy to see in certain cases where someone was totally incompetent, though perhaps it was not quite so easy to see when they were competent. I have listened carefully also to what the Minister has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendonmoved Amendment No. 63:
Page 32, line 14, at end insert ", in circumstances where the High Court would be entitled to make a 'wasted costs order' pursuant to Rule 48.7 of the Civil Procedure Rules 1998, or any statutory modification or re-enactment thereof, for the time being in force"
The noble Baroness said: I want to speak to Amendments Nos. 63, 65, 67, 69, 76, 77 and 78. First, I want to speak to Amendments Nos. 63 and 78, as they are identical amendments to Clauses 22 and 23. Clause 22 relates to employment tribunals and Clause 23 relates to employment appeals tribunals. Both clauses amend the Employment Tribunals Act 1996. In both of the new clauses it is sought to give the employment tribunal—or the employment appeals tribunal—the power to disallow all or part of the costs

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of a representative of a party; to order that representative to meet all or part of the costs and expenses of any party; and to order a representative of a party to pay the Secretary of State any part of the allowances payable by her under Sections 5(2) and 5(3). In each case, the grounds for such an order are,
"by reason of the representative's conduct of the proceedings".
The Government have paid lip service to the concept of improving access to justice before tribunals. Yet this draconian power, as it is currently drafted, can have the effect only of intimidating representatives from appearing before or assisting parties to proceedings. I do not refer only to the representatives of employers because the provisions apply also to representatives of a claimant. I do not refer only to professional representatives, such as solicitors or barristers, because the provisions apply equally to trade union representatives and even to work colleagues who may be more articulate than the claimant and who may volunteer to assist.
Nowhere in the Bill does it lay down what criteria the tribunals will follow in imposing the penalties on the representatives of the parties. For example, the tribunal might rule that one's client had such an obviously hopeless case that one should not have allowed him to bring it. Or, having brought it, one should not have allowed him to continue with it after one had heard the evidence against one. Or the tribunal might rule that it was wrong for one to try to impugn the evidence of witness X, whom others found to be entirely credible. In other words, the Bill as drafted would give the tribunal the right to usurp the functions and discretion accorded to advocates in regular courts—the normal things that they would have. They might even make an order under the power because the representative had been less than deferential, or perhaps had even been rude to the tribunal.
It is paradoxical that, so long as a claimant acts in person without a representative, that claimant, who may bring an absolutely hopeless or even vindictive case in the hope that his employer will pay something—as I mentioned earlier, he may do so because of the nuisance value—will not suffer any financial penalty under this section. The same consideration applies to an employer who defends an equally hopeless case and rakes up unfounded allegations against the claimant. That is not acceptable, and it will not be acceptable for the Minister to tell us that the criteria will be laid down by the regulations.
As I said at Second Reading, it is unusual for the High Court and a district court to make what are called "wasted costs orders" against the lawyers acting for a party on account of some misconduct or breach of the rules, or inordinate delay in the conduct of the proceedings. However, the rules enabling the court to do so are clearly laid down in civil practice rules. There are cases on the record that show how and when that sort of penalty has been exacted.
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I mean no disrespect to tribunals. I have listened to Members of the Committee today and know that many of them sit frequently or have sat on tribunals and have great expertise. It cannot be right, however, that they should operate differently from our judges. It cannot be right that they may apply different criteria or standards from those that are applicable in ordinary civil litigation. The effect of the amendment is to make the rules about penalising the representative identical to those rules that would be applicable to civil ligitants.
The Minister for Employment Relations and the Regions discussed a slightly different aspect of this issue in Committee in the other place. He said that he knew how the civil courts operate and that that is the proper benchmark for them to use. On the issue of charges, with which we shall deal later, he said that he wished to mirror the civil courts and that it would be strange to introduce a system for employment tribunals that was different from that in the civil courts.
I certainly agree with the Minister. There is no reason why different rules and standards should apply in different forums; that is between the tribunals and the civil courts. There is also no reason why there should be a risk of different tribunals sitting in different places and applying different rules and standards. There is thus no reason why the Minister, in setting the tribunal regulations, should draft anything different from the tried and tested Civil Procedure Rules. His own words that I have just quoted support that.
My amendment simply incorporates the Civil Procedure Rules, and, by implication, the cases decided in applying them, to the procedures of the tribunals. In my opinion the deterrent effect of the provision as it is at present is to diminish a party's right to a fair trial represented by independent counsel of his choice. As such, it could be illegal under the European Convention on Human Rights. My amendment will help the Government repair the defect.
I would now like to turn to the three identical Amendments Nos. 65, 67 and 69 in this group. These qualify the provisions whereby the tribunal can, in effect, penalise the party's representative in respect of some misconduct in the proceedings. It is not clear whether that right to inflict such a penalty applies to any representative or only to a paid representative. This ambiguity arises because paragraph (1A)(a) refers to the costs or expenses of a representative. Therefore, we clearly have a paid representative, and it is possible that due to the normal rules of legal construction that could—I do not know sufficient about that—spill over into the subsequent paragraphs. Whether it does or not, the addition of the nine words included in the amendments does no harm to the clause, but removes one possible area of doubt and argument.
Amendment No. 76 requires a tribunal, which refuses to allow a successful party its costs or expenses, to explain why. It seems to be the accepted norm that costs and expenses will be awarded, so any departure from that should be explained to the person involved.

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In the district courts, the High Court, and the criminal courts, judges are expected to give reasons for their decisions, and there is absolutely no reason why the tribunal should not do the same. If that gives rise to more appeals, so be it. If they have to explain themselves, then tribunals will be less prone to make arbitrary decisions. Delivering reasoned judgment is part of the process of letting justice be seen to be done.
Lastly in this group, I would like to speak to Amendment No. 77. The amendment deals with the award of costs in the case of an appeal to the appeals tribunal. It is different in tenor to my Amendment No. 62 where I propose that a wholly unsuccessful party must pay the other party's costs if he or she cannot demonstrate that they have received competent advice. I would like to have taken that particular paragraph out of this speech so that we do not rediscuss the matter of what constitutes a viable case. In other words, as I said when I spoke to an earlier amendment, the loser has to convince the tribunal that the claim or defence was not just a time-waster.
When we come to an appeal, different considerations apply. One of the parties has already lost in the employment tribunal, and that should give them reason to pause just to consider whether in fact they were perhaps wrong. The other party, the respondent to the appeal, has already won once, and that should encourage him to think that perhaps he was in fact right. There can, therefore, be no grounds for ruling that the winner, who is dragged willy-nilly before the appeals tribunal, is simply acting contumaciously by losing the appeal. On the other hand, justice demands that both sides, including the former loser, should be treated equally as regards costs by the appeals tribunal.
The wording of the Bill is extremely weak. It simply provides that appeals tribunal rules may make provision for the payment of costs and expenses. On the other hand, they may not. The contents of the rules are extremely vague. They could provide an unequal liability for costs, as between an unsuccessful employer appellant and an unsuccessful employee appellant. What I propose in this amendment is that the loser of the appeal should automatically be liable for costs and expenses, except—and this is most important—where the tribunal considers it would be totally unjust for that to occur. That is a very wide exception and a wide discretion for the appeals tribunal. It could, for example, exercise that for a variety of reasons: after all, somebody has to lose. It could be exercised because the unsuccessful party had a very arguable case—and I stress the words "very arguable case"—because a novel point of law and procedure was involved. It may even be exercised because the winning party's case, although successful, had no moral merit whatever; or because the winning parties conducted the case in some unsatisfactory way, including adding to the costs or the time the case took.
Once again, I acknowledge that this amendment may act as a deterrent to one or other party to appeal or to oppose an appeal. Again, however, I remind the Committee that costs almost inevitably follow the event in civil litigation before the civil courts. Cases
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brought to the employment tribunal or appeals tribunal are just that—civil litigation. There is no justification for different principles to apply merely because, to assist parties, the procedure is less formal and, hopefully, more speedy. In the United States of America, an unsuccessful party does not pay costs, which I believe is one reason there is so much purely speculative litigation. The number of cases before our tribunals is, as has often been said, increasing rapidly—a point that was mentioned in the consultation paper. It cannot be because there is more injustice to employees around, or one would hope that is not the case. It is because, with the vast amounts that tribunals are now able to award, and sometimes do, in what many consider to be over-the-top rulings, there is the temptation to launch entirely speculative proceedings in the hope of gaining the equivalent of a small lottery win.
I hope to comfort the noble Lords, Lord Wedderburn and Lord McCarthy. I certainly do not believe that we should deprive anybody of the right to their day in court, or publicly to air a grievance or even to expose an injustice. However, there is a maxim in bookmaking circles that should be followed: you should not make a bet that you cannot lose. Especially before an appellate court, both parties—not just the appellant—should consider the implications of pursuing or defending the appeal. I beg to move.
4.30 p.m.
Lord Davies of Coity: I clearly understand what the noble Baroness, Lady Miller, is saying in respect of not making fish of one and fowl of another and making sure that litigants in person may be subjected to the same level of expenses as a representative would he in terms of costs. That is an extremely clinical approach, which on the face of it would seem correct. However, we need to recognise that when industrial tribunals were set up the intention was—as indeed the noble Baroness said—for them to be reasonably informal. As a result of, particularly employers, using legal expertise, authorities have been built up over the years. Following that, the procedures have certainly become more formal.
There would seem to be merit in imposing costs upon representatives who bring vexatious or unreasonable cases to a tribunal when perhaps they could have deterred or encouraged the litigant they represent, the applicant, from not taking a case because it was not sound. That is on the one hand. However, on the other, a litigant—an applicant who has been unfairly dismissed and who is unfamiliar with legal representation and with the legal requirements—might bring a case before a tribunal, perhaps mistakenly but certainly not vexatiously. It then seems somewhat harsh to treat that person in the same way as one would treat someone who is legally qualified, who recognises the law, is experienced in the field of industrial relations and brings the case in the knowledge that it is perhaps not a proper case to bring.
The legislation reflects a little of that—a little understanding and a little tolerance. To that extent, although it may require some adjustment, it should

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still distinguish cases which are brought with legal support, if it is discovered that a case should not have been brought, and it should not compare a litigant in person—that is, an applicant who is quite ignorant of the circumstances and who might have been wrong but not necessarily vexatious.
Lord Wedderburn of Charlton: My noble friend is surely right when he says that there is an enormous distinction between what the present rules deal with—namely, cases which are brought on a basis which is vexatious, misconceived or conducted wholly unreasonably—and cases referred to by the noble Baroness. I have some sympathy with her in relation to Rule 48.7 of the High Court's Civil Procedure Rules, which we shall deal with in a later amendment.
As to the vast number of cases where claims which are quite improper are pressed, to repeat what was said yesterday, last year out of 130,000 cases brought by applicants to tribunals, only 247 were found to be vexatious or misconceived to the extent that costs should have been awarded. Not all of those were applicants, but let us not worry about that, even if they all were.
Where is the research which shows this vast hinterland of cases to which the noble Baroness addresses herself? Where is the work that has been done since Professor Linda Dickens' book in the late 1980s on those who were dismissed and brought cases to the industrial tribunals? There is no mention in that work of all those cases. What is the justification in inquiries? I am sure that I must have missed some great work that has been carried out to back the Conservative Party's view that it is necessary to attack those in the tribunal. Where is the research to show that all the appeals that are taken to the employment appeals tribunal are perhaps wrongly misconceived in some way, beyond the couple of hundred cases of last year?
If we are to discuss propositions to increase costs, which is what this matter is all about, I should tell the Committee that there is enormous pressure from groups of employers—I stress, not all employers but groups of employers, especially the Federation of Small Businesses and, to some extent, wings of the CBI—to increase the incidence of costs.
The noble Baroness speaks of costs following the event in the ordinary court. It is true that that occurs—at least at the discretion of the court, which can intervene. However, costs do not follow the event in civilised labour tribunals. Does the noble Baroness know of any jurisdiction of labour tribunals where anything like the rule that costs follow the event is applied? If she does not, and if there is no research, then we can look forward to the noble Baroness withdrawing the amendment.
Baroness Gardner of Parkes: I support my noble friend in seeking to obtain, through Amendment No. 65, compensation for preparation time. Yesterday I drew attention to the extensive amount of staff time and trouble which we expended in a case brought by an
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employee of a charity. The case was eventually thrown out. The time spent was charitable time—we did not employ anyone to undertake the work. Therefore, I believe that Amendment No. 65, in the name of the noble Baroness, which states that if this amount is to be paid to someone for preparation time, is different from the example given by the noble Lord, Lord Wedderburn, which was a cost after the event. Considering time that it takes to prepare one's case, particularly if pressing for details from the other side which do not come and which hold one up again and again, it can be quite an expensive business, whether or not one is employed to deal with the case. That was not the case as regards the charity I mentioned, but often the person undertaking the case would have to give up perhaps remunerative time. Therefore, I think the noble Baroness is right in Amendment No. 65, which would include people whether they were remunerated or not.
It may be that the Minister says the amendment is not necessary because it might be that whether one is remunerated or not one could make a claim. However, as regards new Section 13A in the Bill, I am not clear whether if you were unremunerated you could claim for that preparation time. If the Minister can tell me that it would be included in any event, the amendment of the noble Baroness is unnecessary, but I would at least like that on record in Hansard. If he cannot tell me that, I think there is a case for including the provision. In cases in which costs are to be awarded, whether or not the person is charging for his services, he should be compensated either for the loss of time in his business or his own personal time, or whatever it is.
Lord Wedderburn of Charlton: If the noble Baroness will excuse me, may I ask which amendment she is discussing?
Baroness Gardner of Parkes: Amendment No. 65, which is about compensation for preparation time.
Lord Wedderburn of Charlton: It is not about preparation time.
Baroness Gardner of Parkes: Yes it is. I do not know what the noble Lord, Lord Wedderburn is looking at, but Amendment No. 65 states:
"Page 32, line 17, at end insert 'whether or not the representative charges for his services"".
I think this is the only moment to speak to that point because it is grouped with Amendment No. 63.
Lord Gladwin of Clee: Yesterday I got into some difficulty and my noble friend said I was confused. On Amendment No. 61, I was told that we were not on (1A) but on (1)(a) and so I sank down giving way. I think now may be the opportunity, because we are on (1A), to ask the question I was seeking to ask yesterday. We were discussing an amendment which would put on the face of the Bill those criteria which are set out in regulations as to when costs are awarded, usually called vexatious and conceived.

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This clause talks about the representative. What I am unclear about is what the representative does. The clause deals with the conduct. Do we assume that if his conduct is vexatious and so forth as listed in the regulations, costs can apply? Or are we going to have a separate set of regulations that do not apply to the party, as is the case at the moment, but apply to the representative of the party?
The noble Baroness, Lady Miller, gave examples of cases which were fine and in which if the applicant had been left to his own devices he would probably have won. But his representative screwed it up—if I may use unparliamentary language—in the end the tribunal was faced with a difficulty. The applicant may win but the case may have been pursued vexatiously.
The question I am posing is: do we determine whether the representative is blameworthy by reference to the criteria that are set out for the party, or are we going to have another set of regulations which apply to representatives? I am not very clear at the moment.
Lord McCarthy: But it may not!
Lord Davies of Coity: It may not.
Lord McCarthy: This is critical. We have been remiss in failing to table an amendment which deals with the matter. All the Government say is "conduct". Is it vexatious conduct or some other kind of conduct? I would have thought that an incompetent brief—the kind of brief that appears in "Rumpole of the Bailey" but never faces Rumpole—is not incompetent because he is vexatious but incompetent because he does not know the law, because he is half drunk or something of that kind. Therefore, it is important that the Government tell us what the Dickens they mean.
Baroness Miller of Hendon: Before the Minister replies, I want to thank my noble friend for her support. The point I wish to make is that this would intimidate people who might be there to help an applicant or a defendant, either the employee or the employer. The position is not quite so difficult when we talk about the paid representative, whether he be the barrister, solicitor or whoever. I do not know whether the measure applies to an unpaid representative, someone who is a friend, someone who is articulate, but I made the point about subsections (1A) and (1)(a). I do not know enough about the law to understand whether because the first part deals with payment the rest of the section does. It is ambiguous and dangerous, which is why I tabled these amendments. I notice that the Minister has been given a note, so perhaps we may find a definitive answer to this vexatious problem.
Baroness Gardner of Parkes: The grouping is unfortunate in that I can understand why the noble Lord, Lord Wedderburn, did not know what I was talking about with Amendment No. 65. It is different from Amendment No. 63. This group is large and covers a number of entirely different matters, so it might have been better had it been grouped differently.
4.45 p.m.
Lord Sainsbury of Turville: I want to speak to Amendments Nos. 63, 65, 67, 69, 76, 77 and 78. Amendment No. 63 seeks to limit the power to authorise employment tribunals to make wasted costs orders to the circumstances in which the civil courts may make such orders, as set out in the Civil Procedure Rule 48.7.
I appreciate the intentions to ensure that the principles which operate in the civil courts apply equally to the tribunals but I do not believe that this amendment is the best means of achieving a clear and sensible set of rules for the exercise of tribunals' powers in respect of wasted costs.
Employment tribunals are different from the civil courts and, while there are many similarities, I do not think it is wise to make employment tribunal procedures subject to the procedures of the civil courts. It is not a practical way of legislating on employment tribunals, because it ties the tribunals to the Civil Procedures Rules and thereby any future changes to those rules, without the consideration of whether they are suited to the specific nature of employment tribunals.
However, the Civil Procedure Rules set out important principles on how wasted costs orders operate in the civil courts and the tribunals will be subject to similar principles. It is our intention to set these out in the tribunal regulations on which there will be full public consultation. But, let me put on record how we envisage that the wasted costs provisions will apply.
Civil Procedure Rule 48.7 sets down two requirements on the court: when the court is considering making a wasted order, it requires that the court must give the representative a reasonable opportunity to attend the hearing to give reasons why no order should be made; and, secondly, that the court must specify the amount to be disallowed or paid.
It also has three powers: that the court may direct that notice of a wasted costs application or order be given to the representative's client; that the court may direct an inquiry into the matter by a costs judge or district judge; and that it may refer the whole question to a costs judge or district judge.
This rule is supported by a practice direction which sets out general procedure and guidance on such matters as when to make applications, when it will be appropriate for the court to make orders and how the court should approach the question. It specifies that a wasted costs order is appropriate only where a representative has acted improperly, unreasonably or negligently, and where his conduct has resulted in unnecessary costs to a party and compensation for those costs is just in all the circumstances.
Under current employment tribunal rules, costs may be awarded where a party, or a party's representative, has conducted the proceedings vexatiously, abusively, disruptively or otherwise unreasonably. At present, where a representative has misconducted the proceedings, employment tribunals have the power to award costs only against the party

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which he or she represents. It makes sense that where a representative has behaved badly, it is the representative who should shoulder the responsibility for any costs which his client or the other side incurs as a result. In line with provisions in the courts, the Bill will enable the rules to allow the tribunal to order that a representative meets any party's costs where he or she has misconducted the case.
Additionally, as in the civil courts, the Bill provides for the tribunal to disallow any of the representative's cost to his own client. Wasted costs orders, therefore, will be able to protect the client of unscrupulous or unprofessional practitioners as well as the other party to the action. However, we intend to limit wasted costs orders to representatives who act with a profit motive in order to ensure that those who provide advice and assistance on a not-for-profit basis are not deterred from doing so by the possibility of wasted costs orders.
We intend that the circumstances in which wasted costs may be made will be as described above; that is, where a case has been conducted vexatiously, abusively, disruptively or otherwise unreasonably. These circumstances are similar to those in which wasted costs orders may be made in the civil courts; that is, where there has been an improper, unreasonable or negligent act or omission by a representative. However, we think it better to retain the language with which employment tribunals are familiar.
For the avoidance of doubt, we do not intend to allow tribunals to penalise representatives simply because they have taken on a case which has no reasonable prospect of success. For that reason, Clause 22 refers only to the representative's conduct of the proceedings. We recognise that parties may insist on cases being litigated, despite receiving advice that that is unwise, and that representatives may not be in a position to refuse to represent a client.
The Civil Procedure Rules provide that the court must give the representative the opportunity to attend the hearing about the proposed order and to put his or her case. Tribunal rules will do the same. We have given a commitment to include a provision in the tribunal regulations that a wasted costs order may not be made by the tribunal unless the representative has been afforded an opportunity to put his or her case to the tribunal on any such award.
Finally, the tribunal already has a power to refer costs awards to the county courts for a detailed assessment. The power to refer wasted costs awards to the courts for a detailed assessment is expressly provided for in Clause 22.
As I said, the key principles which apply in the civil courts will also apply to employment tribunals. These points, and any others which we consider necessary, will be covered in the supporting regulations. Our differences lie not with the principles which the amendment seeks to establish but rather with the means by which it seeks to establish them.
Lord McCarthy: Before the Minister continues, perhaps I may try to clarify the matter. He
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refers to "negligently", "abusively", "vexatiously", "unscrupulously" and "unreasonably". Each of those equals misconduct. Further, he states that the representative will be allowed to make the case that he was not negligent or abusive, and so on, to the tribunal. Why cannot that be placed on the face of the Bill?
Lord Sainsbury of Turville: These cases require the flexibility of the regulations. They do not concern essential issues of principle which should be in primary legislation. That is the argument.
I turn now to Amendment No. 65. We do not intend the provisions on wasted costs to apply to representatives who are not acting in pursuit of profit, such as trade union representatives, or those working for voluntary or not-for-profit organisations. This is the basis on which we consulted, and on which we have committed to implementing the provisions on wasted costs.
The amendment seeks to prevent the provisions on wasted costs distinguishing between a large multinational legal firm and a small voluntary advice centre or a local trade union official. I cannot agree that we should adopt such a blanket approach to all representatives.
I acknowledge that poor conduct may come from all types of representative, but I believe we must look to the nature of employment tribunals, their users and their representatives and adopt an approach which reflects this.
People who come to tribunals are those who have lost their jobs, who are seeking to recover unpaid wages, or redundancy pay. Around 25 per cent of applicants are out of work. Only 19 per cent of applicants come from management, and only 13 per cent are professionals. It follows, therefore, that many applicants are likely to be of limited means. The employment tribunal rules recognise this by providing that parties may be represented by anyone they choose. Legal representation is not a requirement in tribunals and neither is it the norm. As I have said, nearly 70 per cent of applicants rely on voluntary or not-for-profit advice bodies or trade unions for assistance. Membership organisations may also be a valuable source of advice for small firms.
The resources of organisations which gain financially from the provision of their services and those which do not are simply not comparable. Applying wasted costs to the not-for-profit sector could discourage voluntary advisers from offering their services, or mean that an order against an individual impacts on an organisation's ability to provide its services.
Baroness Gardner of Parkes: Could the Minister give way? I understood that Amendment No. 67 applied to new Section 13A on the face of the Bill. Surely this compensation will be paid only if the person is found to be in the wrong. If that is the case, I do not understand why this difference should be made. From the way the Minister talks, it seems as though everyone will be awarded costs against them all the

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time, but this is not the normal procedure in tribunals; it is only when there is some exceptional reason for thinking that costs should be awarded.
In that case, I still do not understand why either a trade union or a voluntary organisation or friend should not be compensated for time for preparation. Either the case should have been thrown out at a pre-hearing stage, and not commenced, or, if was decided that the case was worthy of hearing, compensation or payment should not have been made to anyone.
Lord Sainsbury of Turville: I am not certain that we are talking about the same part of the Bill.
Baroness Gardner of Parkes: It is the part the Minister is talking about now.
Lord Sainsbury of Turville: This is about wasted costs orders.
Baroness Gardner of Parkes: But the Minister then said he would speak to Amendment No. 65.
Lord Sainsbury of Turville: That is what I am speaking to. It is about wasted costs orders, and the question here, which I was trying to address, was whether it was fair to treat people from non-profit organisations in the same way as one treats legal professionals. I am absolutely clear.
Baroness Gardner of Parkes: I apologise, I have misread the amendment. I thought it related to line 32.
Lord Sainsbury of Turville: I am grateful for that clarification; I thought we were talking about something different.
Accessibility is an essential feature of the employment tribunal system and one which we are committed to preserving. On the one hand, we must have in place provisions for dealing with unreasonable behaviour, but at the same time, we must take great care not to damage the support systems for those of limited means or in financial hardship.
The definition of who is, or who is not, covered by the provisions on wasted costs will need to be worked out very carefully in the regulations. We will also consult carefully with legal organisations and those who work closely with tribunal users to ensure that we get the definition right. There will, of course, be full public consultation on the regulations.
As the point has been made a number of times, costs awards are rare, and we would expect costs awards against representatives to be few and far between. However, I believe that while we must have provisions in place to enable tribunals to deal with the occasional cases, we must take great care not to take away the safety net for those who rely on the voluntary and nonprofit sectors for assistance in preparation for, and representation at, employment tribunals. That is why I oppose the amendment.
Turning to Amendment No. 67, this amendment is very similar to the one which we have discussed, and it follows that I would also oppose that. The same applies to Amendment No.69.
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As regards Amendment No. 76, the employment tribunal procedure regulations provide broadly that costs orders can be requested by either party, or made by the tribunal of its own volition, where in the opinion of the tribunal a party, or a representative, has behaved unreasonably in some way, or the case was misconceived. The amendment proposes a specific requirement on tribunals to give reasons why an award for costs has not been made. The regulations set out the circumstances in which a costs order can he made, and where a party has requested such an order the tribunal is necessarily required to examine the case, or the behaviour of the party in question, and consider whether or not an award is justified.
In practice, this generally takes place at the hearing, or at a separate costs hearing, where both parties and their representatives would be present. The outcome of tribunal decisions are recorded and sent to the parties, so in general tribunals give their reasons for awarding, or not awarding, costs. One of the changes made to the tribunal rules last year was to impose a duty on tribunals to consider making an award of costs where they consider that any of the grounds for making a costs award are made out. This means that even in the absence of a request from one of the parties, tribunals will generally give reasons for not making an award where they find there are circumstances which might justify such an order.
Turning now to Amendment No. 77, costs awards may be made in the employment appeals tribunal where proceedings are unnecessary, improper, vexatious, or where there has been unreasonable delay, or unreasonable conduct, in bringing or conducting the proceedings. These circumstances are very similar in the employment tribunals.
This amendment proposes a general costs recovery regime in the employment appeals tribunal, whereby the loser pays the winner's costs, except in cases where this would be unjust.
However, the message from tribunal users is that they do not want general costs recovery. It would act as a barrier to justice to applicants in particular, and would undermine the principles on which tribunals are founded. Applying a general costs regime to the employment appeals tribunal would have the same effect.
Let us consider the nature of employment tribunals and their users. They are people who have lost their jobs, who have been denied wages, or whose employment is threatened because of discrimination in the workplace. We also know that small firms make up a disproportionate share of cases. Consequently, in many cases they are people of limited means.
Employment appeals tribunal users are, of course, the same as those for employment tribunals, and I cannot see that it would be fairer to impose costs recovery in respect of appeals than it would be for bringing or defending tribunal cases. These are people for whom the prospect of costs recovery would be a serious deterrent, both to bringing a case, and to appealing a case.

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Turning finally to Amendment No. 78, we have already examined the question of how wasted costs orders should operate in relation to Clause 22. I have set out the principles which will apply to the exercise of those powers in employment tribunals, and I have explained why I believe that it is not appropriate for employment tribunals to be bound by the rules and procedures of the civil courts.
The same arguments apply to the employment appeals tribunal. The employment appeals tribunal is, of course, a superior court of record and there are necessarily some differences between it and the employment tribunals. However, it is important that the employment appeals tribunal and employment tribunals work closely together and where practicable the principles and procedures should be closely aligned.
We envisage that the wasted costs provisions in the employment appeals tribunal will operate in a very similar way to those of employment tribunals. Likewise, there will be full consultation on the employment appeals tribunal rules, which will be drawn up the Lord Chancellor alongside the employment tribunal regulations. For the same reasons I have set out in respect of Clause 22, and with the same assurances as to the content of the regulations, I would ask the noble Baroness, Lady Miller of Hendon, to withdraw the amendment.
5 p.m.
Lord Wedderburn of Charlton: Perhaps I may say to my noble friend the Minister before he sits down that while he has given a detailed explanation of the Government's position, I am sure he will understand the importance of the extension of the costs regime. It is extremely important that representatives—that includes legal representatives and others—and their clients maintain confidence in the way in which this is done.
As I understood him, and he will correct me if I am wrong, his general case was that, whilst he could not accept this particular amendment, the regulations would adopt the general approach of the High Court Civil Procedure Rules and, in particular, Rule 48.7, which deals with that. The noble Lord then proceeded to elaborate to the extent of saying that, amongst the headings, was to be found "unreasonable conduct" or "negligent conduct".
In the Civil Procedure Rules, one finds that there are perhaps greater limitations in the many cases that have applied these notions than my noble friend suggested. I hesitate to cite all the cases but I will cite the summary of them in the current edition of Civil Procedure Rules itself. It states:
"'Unreasonable' aptly describes conduct which is vexatious, or designed to harass the other side, rather than advance the resolution of the case."
It made no difference if the conduct was the product of excessive zeal and a not-improper motive. It continues:
"Negligence should be understood in an untechnical way to denote failure to act with competence reasonably expected of ordinary members of the legal profession."
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We can suppose that that related to a legal representative.
In adopting that approach, the court firmly "discountenanced" any suggestion that an application for a wasted costs order needed to prove under the negligence head anything less than would have to be proved in an action of negligence.
Finally, the rules state:
"A personal representative",
that is, an executor or trustee of an estate, for example,
"was not to be held to have acted improperly and unreasonably or negligently simply because he acted for a party who pursued a claim or defence that was plainly doomed to fail."
The legal representative would advise the client of the perceived weakness of the case and of the risk of failure, but the clients were free to reject advice and insist that cases be litigated. It was rarely, if ever, safe for a court to assume that a hopeless case was being litigated on the advice of the lawyers involved. Their role was to present the case and it was for the judge and not the lawyers to judge it.
I hesitate to quote further from the rules but there is much more. Can we have an assurance that the regulations will be drafted with an eye not merely on the general headings to which my noble friend the Minister referred, but also on the interpretation that the courts have put on them—I refer to the summaries? Can we also have the assurance that they will not be interpreted more narrowly than the High Court rules in the Civil Procedure Rules?
Lord Sainsbury of Turville: I thank the noble Lord for that clarification. We will certainly bear that point in mind when drafting the regulations.
Baroness Miller of Hendon: I thank the Minister for his long and detailed answer, which I will read very carefully. It seemed to cover most of my concerns.
I was very grateful to the noble Lord, Lord Wedderburn, for his intervention because there was a lack of clarity on that point. I am not sure that the Minister's response has got us much further; he said, "We will bear that in mind". I am not sure what it means to say, "We will bear that in mind when we come to draft the regulations". It does not mean, "Yes, that will be in the regulations". However, I do not think that one would stand up at this stage and say, "No, it will not be in the regulations". The Minister put the matter in a new way. We will look with some interest to see what happens. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camdenmoved Amendment No. 64:
Page 32, line 16, after "it" insert "who usually makes or who may make, or whose firm or organisation may make, a charge for his services,"
The noble Baroness said: The Minister has said on a number of occasions that the Bill is not intended to prevent people from going to tribunals; the intention is to ensure that there are internal procedures in place so that more issues can be settled within the workplace.

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Of course, we all agree with that. However, there are passages in the Bill that could give the contrary impression—it contains measures that could act as a deterrent—and the prospect of incurring costs is one such item. Powers are given to ETs to make awards. We shall come to that later, but the proposal is unprecedented.
We have been assured by the Minister this afternoon that the intention is not that costs should be levelled against non-profit-making organisations—trade unions, citizens advice bureaux and similar organisations. I welcome that but I cannot actually see the relevant provision in the Bill. Instead, we have the provisions allowing the ET to award costs. The amendment that we are proposing to Clause 22 would give the ET the power to introduce regulations,
"to disallow all or part of the costs or expenses of a representative of a party to proceedings before it by reason of that representative's conduct of the proceedings".
Our proposal is to insert, after the word "it",
"who usually makes or who may make or whose firm or organisation may make a charge for services".
In other words, we want written into the Bill the provision that the requirement will apply in the case of an organisation that charges for services—in other words, paid representatives—but that automatically would obviously not include non-profit-making organisations such as trade unions, citizens advice bureaux and so on. We think that this should somehow or other be written into the Bill. Why do we say that? For the simple reason that if it gets around that costs can be incurred one way or another, that would act as a deterrent to applicants. I and, I am sure, my noble friends have received a briefing from NACAB, which suggested that already its clients are often put off because they believe that costs could be incurred if it pursued the case. Therefore, if they do not have advice, quite often a good case is not pursued. We think that that would not be a very good idea—indeed, it is contrary to what we believe is the Government's intention.
I was very pleased to hear what the Minister said, in relation to the preceding amendment, on the issue of non-profit-making organisations not being charged. He also reasserted that ETs are intended to be accessible, and they might not be quite so accessible if costs were likely to be incurred by non-profit-making organisations. That is very true but we think that that should be spelt out somewhere or other in the Bill. We believe that the amendment would assist with that because it states that costs can be charged to paid representatives, but it uses a definition that means that other organisations would not be included. I beg to move.
Lord Davies of Coity: I rise to give a measure of support to the amendment of my noble friend, Lady Turner. In fact, I do not think I could do better than the Minister's reasonable and sensible attack on Amendment No. 65, presented by the noble Baroness, Lady Miller, concerning whether or not a representative may charge for his services. As my noble friend Lady Turner has already said, the
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Minister clearly stated that we do not want to deter or penalise the activities of trades unions or charitable organisations in making representations. We thoroughly and completely agree with that. That is why the amendment tabled by the noble Baroness, Lady Turner of Camden, should be given serious consideration.
I want to go a little further. Not only is this a question of protecting trades unions and charitable organisations—organisations which do not charge for their services—it may also be a deterrent for organisations which simply take up cases on the basis that they will be paid for doing so. That is not a criticism of solicitors, counsel or barristers, but over the years I have seen a growth of what are sometimes called "industrial relations consultants", or "industrial relations services", which are more than prepared to take cases—sometimes on behalf of an applicant and sometimes on behalf of an employer. Their sole interest is that they will be paid for it. Whether it is a worthy or legitimate case does not much matter; nor does it matter whether they win or lose. They get paid for it.
If the amendment is agreed, it not only protects the litigant in person and those represented by people who do not charge for services; on many occasions it may well cause the organisations which represent both applicants and employers, simply because they will be paid, to think twice. If they lose on a bad case, they may well have to pay the costs that are incurred.
5.15 p.m.
Lord Bassam of Brighton: The amendment seeks to set out on the face of the Bill which types of representatives will be covered by the provisions on wasted costs orders. All the speakers who have contributed to debate on the amendment have raised valuable points and, in real terms, there is not much between us. Our case is that these matters are better dealt with in regulations, and we debated that point earlier this afternoon.
The regulations will provide that wasted costs orders will apply to representatives who are acting for profit, including solicitors, barristers and employment advisers. Wasted costs will not apply to organisations which act on a voluntary or not-for-profit basis, such as trades unions, law centres and citizens advice bureaux. We all agree that those services provide valuable support for applicants and that they should not in any way be discouraged from doing what is an important job.
The other important point here is that there is greater flexibility in the regulations. Our regulations will be able to go further than the amendment because the amendment seeks to limit the power to make rules on wasted costs to representatives who make a charge for their services. That could capture trades unions or other organisations which charge indirectly for their services through membership fees.
The regulations will make a distinction between representatives on the basis of whether they are acting for profit or whether they are paid. As Members of the

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Committee will remember, this was the basis of the consultation in Routes to Resolution and the basis on which we gave a commitment to take forward this provision in the Government's response.
The proper place for the definition of who is covered by wasted costs orders is not on the face of the Bill. Detailed consultation will be the key to getting this matter right. We also need to bear in mind that funding arrangements change and develop over time. Therefore, some flexibility will be required to keep pace with the changes in order to ensure that the wasted costs rules remain true to our intentions. We must also ensure that we do not need to return for additional legislation but instead can deal with the matter by way of regulation.
Amendment No. 66 relates to another amendment which seeks to define in the Bill the types of representative who will be subject to wasted costs orders. Amendment No. 68 similarly arises from the two amendments which precede it.
Amendment No. 79, which relates to Clause 23, makes the same provisions for wasted costs in the employment appeal tribunals. It is our intention that, where possible, the EAT regulations will reflect those in the employment tribunals.
We are not aware of any reasons why the wasted costs provisions in the EAT should be any different from those in the employment tribunals, including in respect of the types of representative who may attract a wasted costs order. Our intention is that they will operate in the same way. There will be a full opportunity to examine this issue further in the consultation on the regulations which, as I am sure the Committee would expect, will be extensive. All I can say about Amendment No. 80 is that it seems to us to be consequential on Amendment No. 79. I hope that explanation, and those which the noble Lord, Lord Sainsbury of Turville, gave on earlier amendments, reassure Members of the Committee who are concerned about this issue. I hope that the amendment will be withdrawn.
Lord Wedderburn of Charlton: Before my noble friend departs from the matter, I am sure he will understand that what is being done here, as in so many places, is that we are being asked to pass a pig in a poke. We are asked to pass the Bill on the basis that we do not quite know what it means but we are told it will mean something different from how it reads because there are going to be regulations. The Government cannot accept the amendment because, as I understand it, that might mean that a trade union would be included in the measure if it made a profit. The services for which members pay, it is said, amount to payment for representation in the tribunal. Members' subscriptions pay for a vast number of services from the union; they are not specifically for representation. One would have thought that the union was not to be included in the words moved by my noble friend, of a body which,
"usually makes or who may make, or whose firm or organisation may make, a charge for his services."
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If the test is going to be profit, the Government know what they are going to put in these regulations because my noble friend the Minister said so.
Could we then have a formulation now so that we can understand what we are going to debate on Report? I refer to the matter of wasted costs and the extension of wasted costs, not just to the tribunal but also to the appeal tribunal, where I venture to suggest it might cause a certain amount of alarm amongst some members. This matter will not go away and the Law Society has raised other points, to which the Government must know the answer. They will not put it in the Bill because, as we are now quite clear, this Bill is couched in stone. There is not much point in these Committee proceedings, though we will continue with them. Nobody is going to consider an amendment because nothing in the Bill can be changed.
The Law Society has raised another matter, to which my noble friend must have the answer. To summarise what the Law Society has said in its brief: there is a problem with contingency fees. If the case is lost, the Law Society's view is the representative has not charged for his or her services and therefore has not made a profit. The Law Society suggests that instead of prescriptive regulations that could be circumvented, tribunals should have a broad discretion in this matter. From what my noble friend said, the Government have presumably rejected that view. If the tribunal is not to have a discretion they must know what they are going to do about contingency fees, so could he tell us?
Lord Bassam of Brighton: I understand on that last point that the contingency fees are included in the wasted costs order.
I want to deal with one or two other points made by the noble Lord. We are in some danger here of trying to be over prescriptive in the legislation. These are matters which have quite properly been dealt with in secondary legislation for many years. Noble Lords who are arguing the point probably know that better than I, because they have been advising on that legislation for many years. The other important thing is that we need to ensure that we get the detail of this right, which is why we want to consult further, particularly with the judiciary as well as with the Law Society and other organisations which work closely with tribunal users. We want that full public consultation.
Perhaps I may make a further point. The amendment as it currently stands covers organisations which charge for their services. This could include trades unions which charge membership fees. That is not our intention and it is not what we seek to do. We want to exclude trades unions from wasted costs orders. We argue that setting out the detail in the regulations would be a better way of dealing with this matter, rather than on the face of the Bill in primary legislation, where matters tend to be fixed in stone.
Lord Wedderburn of Charlton: So that there should be no misunderstanding about this, my noble friend is saying that he will not take away the amendment and

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find better wording—he objects to the wording—and consider an amendment of the Bill. Is he resolutely and absolutely saying that the Bill cannot be amended?
Lord Bassam of Brighton: I shall not do that. I have made clear, as my noble friend Lord Sainsbury made clear earlier, that we want to have very detailed consultation on this issue so that we get the detail right. We do not want to make the kind of mistakes that can often take lime to unravel when you have to put them back into primary legislation.
Lord Davies of Coity: I want to clear up a little confusion regarding a comment made by the Minister. On this question of charges, it is generally understood that legal representation, or industrial relations representation by consultants, incurs a charge. Whether it is an hourly charge, a daily charge, or a charge for taking the case, it is a charge. I am not quite sure how it will be possible, if this amendment is accepted, to embrace trades union representation within it, because no charge is made. It is true that trades unions have money and that they may engage barristers but the fact is that trades union contributions are a collective exercise. The actual litigant, the applicant, the trades union member who receives the representation, is not charged for anything. I am therefore not quite sure how, if this amendment is accepted, it could possibly embrace a trades union.
Lord Bassam of Brighton: That may well be the case, but the noble Lord makes the point for us. If we try to set this out on the face of the Bill, the danger is that we will not get it as we should. That is why we require the opportunity to have the detail set out in regulations, so that in the circumstances that the noble Lord describes, trades unions are not inveigled into this on the question of fees and charges.
Lord Gladwin of Clee: I have a feeling that, as happens down the other end of the corridor on a number of occasions, and quite understandably, we will he told that the amendments that we are pursuing, and the spirit behind them, would be better covered in regulations. I am reminded by my noble friend beside me that that is not a new phenomenon. What concerns me is that I am not quite sure what the process will be. Are we being told that with this amendment, for example, and some of the others that have my name attached to them, there will be consultation between the Government and the parties? Or will there be consultation between the Government and the parties and public disclosure? I am not quite sure how humble Peers who are interested in this Bill will see the proposals of the Government on these issues. I am quite happy for the parties to be consulted, but I want to be consulted too. I want to know what is happening. Could my noble friend give some clarification on this?
Lord Bassam of Brighton: My understanding is that when Routes to Resolution was circulated, that constituted full public consultation. It is envisaged that a similar exercise will no doubt be undertaken when the draft details of the regulations are put
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forward. There is absolutely no problem with the noble Lord being consulted as well. In a sense, these amendments will inform some of the thinking behind the draft regulations. I am sure that the points that have valuably been raised in this debate will be taken on board by those who are responsible for drafting.
Lord Gladwin of Clee: It may be called "Routes to Resolution: Part 2" or "Son of Routes to Resolution".
Lord Bassam of Brighton: There will be full public consultation. I cannot be clearer than that.
Lord McCarthy: One cannot say, "Full public consultation" because the demon takes so many forms. Routes to Resolution was not published in the normal way for a White Paper. I would not say it was hugger-mugger but it was semi-hugger-mugger. The response to Routes to Resolution leaked out round the corner. One does not publish regulations in the Printed Paper Office so that we can go and get them. That is not the way that things happen. Every time that this is done, it is done in a slightly different and slightly more restricted way. Unless there is a list of people who are going to get the paper, one will simply be told, "You might find it if you hunt about on the Internet".
Lord Bassam of Brighton: I am not sure that this argument can be won. I suspect that we are getting at the root of the noble Lord's suspicions about the process. I can only put on the record our continued commitment to full public consultation, and I am sure that all those organisations that were part of the consultation process for Routes to Resolution will have ample opportunity to respond to the draft regulations when they are published. No doubt the noble Lord will contribute to that consultation process and we will benefit from it.
5.30 p.m.
Baroness Miller of Hendon: At this late stage—after nine minutes—I would like to mention a small technical point. The noble Baroness, Lady Turner, spoke to her Amendment No. 64 some time ago. I am well aware that Amendment No. 64 and Amendment No. 79 cover the same points, and that Amendments Nos. 66, 68 and 80 equally cover other points. From a purely technical point of view, I did not hear her mention any of the other amendments.
Baroness Turner of Camden: I spoke to them all
Baroness Miller of Hendon: I thank the noble Baroness for clarifying that. I wanted to make sure that it appeared in Hansard that we got through those nine minutes quite well.
I do not know whether the Minister made a mistake or whether the problem arose as a result of the acoustics in this Room, which I thought mere quite good, but I thought that he said that the legislation was too prescriptive, but he probably meant to say that the amendments were too prescriptive. I assume that that was a mistake. It may be inappropriate for me, sitting

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on the opposition side, to alert the Minister to that, but I have not said anything for a while and I thought that I would say something helpful.
We are at one with the noble Lord, Lord Wedderburn, on a point that he made. I do not think there will be many opportunities during the course of the Bill at which we are at one. The noble Lord does not really agree with the position that we are coming from, and that is fair enough. This is a difficult Bill that involves complex issues. We hear all the time about the regulations. The noble Lord mentioned a pig in the poke or something of that ilk. We should not do this kind of thing.
It is an enormous pity that we spend time looking at the complex matters in the Bill but, at the end of the day, we do not know what will happen. The Bill will probably have been agreed to before we have even had sight of the regulations, which should come in due course. That is an enormous pity. I intervene at this point to make that clear in Hansard.
Baroness Turner of Camden: I thank my noble friends who have supported the amendments. To some extent, I agree with the noble Baroness, Lady Miller—this is a complex Bill, and it is a great pity that we do not have an opportunity to discuss the Government's intentions. At the moment, we simply do not know how it will operate in practice, and it is how it will operate in practice that matters to the individuals concerned, many of whom are vulnerable individuals. I have always believed that it is the job of politicians, in so far as we are able, to try to protect the rights of vulnerable people. People who are unemployed and those who are seeking to get rights at an ET are in that category.
My main point was that some aspects of the Bill may be regarded as deterrents. One deterrent involves the issue of costs. That point has been made to me strongly by my union and other unions and by NACAB, which believes that, if it is believed that costs can be incurred by people who are going to tribunals, that can be a major deterrent. I welcome the Government's intention that non-profit-making organisations, which include trade unions, NACAB, citizens advice bureaux and various self-help organisations, will not be charged in any way and will not incur costs for attempting to help people before tribunals. However, I believe that there is a strong case for having something to that effect on the face of the Bill, and to have an indication that paid representatives will probably face costs in a way that unpaid ones will not. That is what the amendment was about. I am sorry that this has not attracted the support from the Government that I hoped it would attract.
We shall have to look carefully at Hansard before Report stage. If the amendment's wording did not attract much support from the Government, perhaps we can think of something else. We shall certainly wish to return to this matter on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 65 to 69 not moved.]
Lord McCarthymoved Amendment No. 70:
Page 32, line 25, after "may" insert "after consultation with the President of the Employment Tribunals (England and Wales) and the President of Employment Tribunals (Scotland)."
The noble Lord said: Someone said that we were at one a little while ago. We should also be at one on this amendment. The noble Lord, Lord Bassam, said that the Government are keen on public consultation. That is the answer to all these regulations—they will be consulted on, I suggest, in a variety of ways. Therefore, our amendments contain a variety of means of consultation because we take the view that if one is going to get consultation these days, one must be precise about who will be consulted and when they will be consulted.
Clause 22 is a very important clause and we have spent a great deal of time on it. It will add new costs, expenses and imposts, and it will do so according to complicated criteria rooted in notions such as abuse, vexatiousness, negligence and so on, all of which are buried away in legal documents. As the noble Lord, Lord Wedderburn, said, they are interpreted by cases. All of that will be put together in regulations.
We say that, before these regulations are presented to Parliament in a form in which Parliament can simply vote in favour or against them but not amend them in any way, there should be consultation with the President of employment tribunals of England and Wales and the president of the employment tribunal of Scotland. One of those gentlemen has expressed firm beliefs, convictions and criticisms of this clause and other clauses but another has not. Those gentlemen preside over the tribunal system and they have enormous experience of the working of the tribunal system. When such significant changes are being presented, surely we should he able to accept an amendment of this kind even if the Bill is cast in rough stone. I beg to move.
Lord Davies of Coity: I shall have to be persuaded to accept the amendment moved by my noble friend Lord McCarthy. He may be able to answer the concern I am going to express.
I understand where he is coming from with regard to the possibility of consultation and introducing that consultation with the president of tribunals. However, if I read Clause 22(1)(1A)(c) correctly, it says:
"Employment tribunal procedure regulations may include provision for authorising an employment tribunal … (c) to order a representative of a party to proceedings before it to meet all or part of any allowances payable by the Secretary of State under section 5(2)(c) or (3) by reason of the representative's conduct of the proceedings."
The emphasis here, as I understand it, is conduct of a representative at an employment tribunal. It seems to me that only the tribunal can make an assessment of that representative's conduct and will have to take a decision on that basis. Taking consultation elsewhere

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seems somewhat remote in as much as somebody who was not there did not witness the conduct and was not able to assess the conduct to help in making that decision.
If I have misunderstood the point, that is fine, but the amendment says quite clearly add at the end of 25 "after consultation".
Lord McCarthy: I am afraid the noble Lord, Lord Davies of Coity, has misunderstood me. We are talking about consultation on the regulations. We are not saying that Judge Prophet should be there in the tribunal, and say "I don't like that very much". After all, dozens of tribunals are conducted every day. We are saying that when the draft regulations put Clause 22 into effect they should be sent to the presidents of the tribunals for their comments.
Lord Wedderburn of Charlton: My noble friend Lord McCarthy is right. My noble friend Lord Davies of Coity said that we might ponder on it, but he directed the point to line 24 and we are on line 25.
There is a particular point which I hope to put as delicately as possible about consultation with the presidents of the tribunals in England and Wales and in Scotland. My honourable friend in another place, Mr Johnson, distributed to a large number of your Lordships a copy of a letter which he wrote to the president in England and Wales in response to some views which the president had expressed on the Bill. He said that the president had turned down an offer of discussion with him at particular times, and chose not to respond to the public consultation.
I have it on the authority of the president for England and Wales, who has shown me his reply to the Minister, to say that he fully partook of consultations and that he did not see the Minister, Mr Johnson, but he had a long session at his request instead with the Secretary of State herself.
Perhaps that is enough on an unfortunate passage which the president assures me he brought to an end and wishes to hear no more of. However, the Minister will surely understand that those in charge of the judiciary of the tribunals do not feel particularly comfortable about the attitude of ministers in the light of that history and indeed, other matters. Therefore, it is of the greatest importance that confidence in the relationship between Ministers and the presidents of the tribunals—and also, I suspect, the appeal tribunal—should be restored and increased.
Opposition to this amendment will be understood to be a quite extraordinary concept. It will signify that there should not be consultation with the presidents in England, Wales and Scotland. In the past, there has been consultation, and the presidents of both jurisdictions have done their best to maintain consultation. Moreover, since a doubt has been raised about who should be consulting whom, on this occasion it would do no harm at all for the Government to put aside their stonemasons' implements, put aside the graven image that this Bill is rapidly becoming, and at least say that they will take away the amendment and consider it.
5.45 p.m.
Lord McIntosh of Haringey: I want to say two things about the context of the amendment before going on to the detail.
First, as I said when we began debate on Clause 22, subsection (1B), to which the amendment refers, is unchanged from previous legislation. There is nothing new in it whatever. Secondly, although this has not been referred to at all thus far in the discussion, subsection (1B) is not about awarding costs; it is about taxing costs—that is, the amount of costs. There are established rules for the taxing of costs and subsection (1B) repeats the current provision, which allows the rules to provide for taxing or otherwise settling of costs or expenses.
The rules provide for three ways in which the costs may be assessed. First, a tribunal may refer costs awards to the county courts for a detailed assessment. In Scotland they may be taxed by reference to a part of the sheriff court table of fees. Secondly, it may order parties to agree a settlement on the amount of costs which are payable. Thirdly, it may itself decide the amount up to a limit of £10,000. Thus, there are well established procedures for the taxing of costs and we do not propose to make any change in the rules. We have made no change to the primary legislation and we do not propose to make any change to the secondary legislation.
However, we intend to consult on changes to the regulations which arise from the Bill with both the tribunal judiciary and tribunal users. We have worked closely with the tribunal judiciary on previous changes affecting the tribunal rules and we shall do so again. If we are being asked for an assurance that we shall consult the presidents on the regulations arising from Clause 22, I can certainly give that assurance. The amendment would achieve no more than what happens at present and I do not believe it to be necessary.
I do not want to rise to the stonemason argument. I said at Second Reading that we would listen carefully to any argument that the Bill introduces harriers to access to the tribunals. This provision does not erect any barriers to access to the tribunals; it does not in any way devalue the work of the tribunals; and it does not in any way achieve any supposed objective in reducing the number of cases going before the tribunals. The issue before us is simply whether the details of consultation should be on the face of the Bill or in regulations. As a matter of simple practicality, we shall stick to our last and stick to the principle that there will be a distinction between primary and secondary legislation. On that point, we have been supported by the Delegated Powers and Regulatory Reform Committee. On that issue, we shall not move.
Lord McCarthy: That is rather stony-faced, is it not? I do not argue with people about what appears in Hansard; I go and look it up. But I do not believe that that is all that the Minister said. He said that he would listen to those things and study the amendments that we put down which he thought were designed to restrict access. If we put down amendments which

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were not designed to prevent the restriction of access, if we put down amendments, say, to facilitate consultation, he would block his ears. I do not believe so.
Lord Sainsbury of Turville: No—
Lord McCarthy: That is what the Minister has just said. Let Hansard speak for us. I believe the Minister gave an offer to listen to virtually everything we said. He did not give an undertaking to do anything about it, but he gave an undertaking to listen to everything we said, and he did not qualify it in any way.
On reading the amendments, Members of the Committee probably know it is one of a series of attempts to broaden the scope of consultation; and to broaden the scope of consultation not by taking away the assurances of the Government—we take them away—but also by having something on the face of the Bill. It is an attempt also to try to put something slightly less into regulations, and something slightly more into the statute itself.
I hear what the Minister says. I hear that the Minister is not moving. I know that at this point we have to withdraw the amendment, and that I do.
Amendment, by leave, withdrawn.
Baroness Miller of Hendonmoved Amendment No. 71:
Page 32, line 29, at end insert—
"(1C) Employment tribunal procedure regulations shall (except as provided in subsection (1D)) require an applicant on the lodgement of a claim to pay a deposit to the tribunal of such sum as the Secretary of State may from time to time by order prescribe (not being less than £100).
(1D) The regulations may provide for exemptions for payment in whole or in part by persons in receipt of such benefits as the Secretary of State may from time to time prescribe, and the Secretary of State may revocably delegate a discretionary power to the Secretary of Employment Tribunals to exempt individual applicants from the payment of all or any part of the deposit on compassionate grounds or on the grounds of exceptional hardship.
(1E) Such deposit shall be refundable or forfeited in whole or in part at the discretion of the tribunal after considering the reasonableness of the applicant's case and the manner of its conduct.
(1F) The tribunal may order the refund of all or any portion of the deposit notwithstanding that the claim is dismissed by them in whole or in part.
(1G) Any part of a deposit forfeited under this clause shall be paid into the Consolidated Fund."
The noble Baroness said: In moving Amendment No. 71, I would like to say at the outset that I understand from several things that the noble Lord, Lord Wedderburn of Charlton, said yesterday, and indeed in passing today, that he will not like this amendment at all. The only thing that I would say before I launch into an explanation of my amendment is that I very much hope that the noble Lord, Lord Wedderburn of Charlton, and indeed perhaps the noble Lord, Lord McCarthy, and anyone else who feels similarly minded, that I am moving this
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amendment from my perspective in good faith. I will accept whatever the noble Lords opposite say and feel in exactly the same way.
I appreciate that there are certain parts of the Bill that we both see differently, and I understand the experience which the noble Lords opposite bring. I have, I suppose, from an entirely different point of view. Having said that, it is a probing amendment in so far as I am very interested in hearing what the Minister has to say about their views and feelings on this subject.
In July 2001, the Government published a consultation paper in which they said:
"The Government believes it is reasonable for applicants to pay some of the costs of bringing a case … The civil courts impose charges at various stages through the system. There are equally various stages throughout the life of an employment tribunal case where charges could be levied … A successful applicant would recover the charge as an addition to the award".
The consultation paper went on to propose an alternative; either a "hearing deposit" or,
"whether to charge for applications to the Employment Appeals Tribunal".
I am sorry to burden Members of the Committee with a further quotation from that same discussion paper, but it makes my case far better than I could. The Government stated:
"Charging would inevitably impact on the behaviour of the parties. It would encourage potential users to reflect seriously whether to take their case to tribunal or whether to seek to resolve the dispute in the workplace".
I believe that it would. Apart from concentrating the mind of the parties it will in addition to the compulsory conciliation procedure being introduced by this Bill inhibit the launching of frivolous and vexatious claims.
I entirely accept that there is no purpose whatever in the Government publishing discussion papers merely in the hope of having their preconceived views endorsed. Equally, it would make a mockery of the consultation process if the Government were to ignore the representations they have received as a result of their consultation paper.
In this case, the Government's response to the consultation took the view, that:
"there was a substantial opposition to the proposal to introduce a charging regime".
That was the view of two-thirds of those who had commented on the consultation paper.
I do not know who was consulted but the validity of this piece of research is totally flawed by the fact that although the closing date for response to the consultation was 8th October, the Government, in the person of the Secretary of State, announced early in September that they were withdrawing the proposals to charge. That was done before the end of the consultation.
The significance of the date of the Government's premature shutting off of the consultation is that—and I know that Members of the Committee opposite

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will know that this is a fact—it occurred at the time of the Trades Unions Council's annual meeting. As the Guardian so rightly stated on 5th September:
"Tony Blair has sanctioned his first political retreat since the election by bowing to union opposition to impose charges on applicants to Employment Tribunals … the issue was threatening to engulf Mr Blair and Ms Hewitt who are due to speak to the TUC conference in Brighton next week".
I shall look forward to the Minister's explanation of the real reason why the Government dropped the charging proposal. It will be very interesting to know. In any case, perhaps I may say that my amendment totally bypasses the question of a charging regime. All it calls for is a one-off fee for launching an application to the tribunal, identical to what the Government stated in the consultation paper they were considering in relation to the appeals tribunal.
In anticipation of the inevitable response that it might inhibit potential poor claimants, perhaps I may point out that any litigant before the civil court has to pay a filing fee on launching a claim.
Furthermore, my amendment has been drafted carefully—I will not say elegantly, having learnt a lesson yesterday from the noble Lord, Lord Wedderburn—to include a number of essential safeguards for any claimant.
First, the Secretary of State will fix the amount of a deposit which, in the words of the consultation paper, is not excessive. I had supposed initially that it would be a fairly nominal £100. I accept that, whether that is a nominal sum is certainly dependent on the potential applicant's means. Let us not forget that there have been well-publicised tribunal cases with disgruntled employees who were earning five and six figures salaries, complaining about constructive dismissal, sexual discrimination and so on.
Secondly, the amendment provides for the Secretary of State to grant exception to benefit recipients plus—and this is an important point—for individuals to be granted exemption on a case-by-case basis on compassionate or hardship grounds. Thus, anyone who would be inhibited by the fee would certainly not have to pay it.
Thirdly, the deposit is refundable at the tribunal's discretion, even if the applicant loses.
The object of this amendment is, frankly, just to discourage a vexatious or vindictive claimant with no real case. Ii is intended to discourage a claimant who realises that he or she does not have a case, but thinks that the employer might think it worth doing something to stop the trouble. In the words of the Government's own consultation paper, it would,
"encourage potential users to consider whether to take their case to a tribunal or whether to seek to resolve the complaint within the workplace.
I started by saying that this was a probing amendment, in the sense that I would very much like to have the Government's thinking on this. In the amendment I have tried—and I hope I have succeeded in the drafting—to ensure that it should not be a cause
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of inhibiting someone who ought to be able to go to a tribunal, but who does not have the means for this nominal fee that I have spoken of. I beg to move.
Lord McCarthy: I want to say three things to the noble Baroness. The first is on her point about it all being done at the TUC. Maybe it was. There are some people who are consulted by the Government all the time. The TUC is consulted most of the time. The CBI is never out of the place. There are some people who just get consulted—they consult the doctors when they are putting in medical laws. There are some people whose interests are so central and who are so influential and important that they are consulted all the time. They see drafts of legislation long before simple, under-handed, "small" people—people like you and I—ever see them. That is no doubt what happened in this case, but you cannot get all worked up about it because, of course, the Conservative government did it when they were in power. All governments consult critical groups.
6 p.m.
Baroness Miller of Hendon: I have n o objection at all to any consultation with anybody. The point I was making was that the consultation was meant to end on 8th October. Surprisingly, it was all of a sudden cut short and announced in September, just at the time of the TUC conference, that they were abandoning that proposal. That was the point I was making, purely on the consultation.
Lord McCarthy: I am trying to explain why it happened. The consultation on Routes to Resolution concerns the whole of the Bill. It mentions everything in the Bill. It is for anybody who wants it. I was foolish enough to write in and I got there before 8th October.
The noble Baroness is perfectly right. It was no good writing anything about the matters in her amendment because that had been decided, but there were many other things still to be decided, and other people could consult on that if they wished. It is no good getting cross because all governments do this, because some things are fixed in advance with interested parties. That is life. That is the first point.
The second point is that this proposal that is being put forward is not novel. The noble Lord, Lord Young of Graffham, in 1986, as a Conservative Minister, proposed exactly the same thing, and he has told us that he was discouraged, partly because he decided it was unfair. He said that poor people could not afford it and it would discourage the kind of litigant that needed to be encouraged. After all, 80 per cent of litigants do not have a trades union, they have no support; all they have is the CAB, if they can go there. He was persuaded, perhaps by his officials, that the measure would be unfair. When he went into the facts in order to make it work, or to make it less unfair, he might have thought it would be a good idea to provide a means-tested allowance. Figures were produced to show what it would cost to collect the money in question and to show that it was not administratively worthwhile. He therefore decided not to do that. I dare

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say that for exactly the same reasons the civil servants dug up the same file and gave it to the relevant Ministers, who read it and said, "Oh yes, I see". So it all went out.
Lord Wedderburn of Charlton: My noble friend appreciates that in the eyes of the noble Baroness the matter is much more sinister because in 1986 the TUC produced powerful arguments to persuade the noble Lord, Lord Young of Graffham, to rescind his proposals.
Lord McCarthy: That is all perfectly true and they were put away in the file.
The third point is that the noble Baroness commented a great deal—and I am forced to say this—on vexatious claims. She invents new amendments to cut back the flow of vexatious claims. The one thing we can say—even SETA, dear old SETA 1998—is that there are virtually no vexatious claims. According to the tribunals, 0.4 per cent of hearings are based on vexatious claims. If the noble Baroness wants to do all this to get rid of this infinitesimal number of vexatious claims, she will have to get a new word.
Baroness Gardner of Parkes: One aspect of this that has not been mentioned—and I would like to know whether the Minister has any statistics on it—is that of people who file a case and fail to turn up. I have very frequently sat there with all the hours that were allotted for a case, and five people appearing to fight the case, only to find the applicant did not come. He thought it was not worth his while or he had another job, or there was some other reason why he did not turn up. I certainly believe that there is a deterrent element in the £100. I do not consider that the amount is very great and most people could borrow it, although there may genuinely be some people who cannot.
Yesterday, when I went to Camelot, they told me that one of the first lottery winners could only get a lift as far as Watford and had to walk from Watford to the Camelot office in order to claim his winnings. So there are people who genuinely cannot afford this sum and perhaps cannot borrow it from anyone else, but I feel that they are covered by the other categories in here. It is a serious matter to waste a tribunal's time. It may have half a day or even a whole day allocated for a case and then finds it cannot proceed with that case and does not have another to replace it in some instances. I would be grateful if the Minister could tell us how regularly that happens.
Lord Davies of Coity: If I may start on that point, in my experience it is not only applicants who have a monopoly on not turning up. Employers on occasions are not represented at tribunals and there is a considerable record of cases being adjudicated on by a tribunal on the basis of one or the other of the parties not turning up. So it is a one-sided decision and sometimes that has been appealed against. Such cases have come before me on occasions, and there is nothing I can do about it, as it is in the discretion of the tribunal to act in accordance with the rules.
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This is a heavy-handed amendment, wanting applicants to put down a deposit. It will deter many poor applicants from making a claim in the first place, even though their application may be well and truly just.
It is my belief that there is already provision—and the Minister may wish to confirm this—within the existing rules for employment tribunals whereby in some cases better and further particulars are sought. They are then offered a preliminary hearing and a tribunal might very well say to an applicant, "This case does not appear to be sound and, if you are to progress it, we will take it but you must lodge a deposit". That provision, as I understand it, already exists in the tribunal rules.
Baroness Turner of Camden: I also raise the point with the noble Baroness that she says in the second paragraph of her amendment,
"and the Secretary of State may revocably delegate a discretionary power to the Secretary of Employment Tribunals to exempt individual applicants from the payment of all or any part of the deposit on compassionate grounds or on the grounds of exceptional hardship."
How would that "exceptional hardship" be decided upon? Would the individual have to submit to some sort of means test?
Baroness Miller of Hendon: In my speech on the very point that the noble Baroness has raised, I said that it would be up to the tribunal to decide to waive it if they thought that it was necessary to waive it, and they would have to work out their own rules. It is not a question of a means test, as the noble Baroness puts it. I was trying to suggest that, if there are people who could not pay the £100 fee, there might he some way of considering how they may be helped.
I started by saying this is a probing amendment. I am interested to know what the Government feel about the matter and why they dropped it. In another place, they said that of the people with whom they consulted there was a preponderance of those who did not want it and so it was dropped.
I would say to noble Lords opposite that I do not know about matters that are fixed beforehand and whether the consultation was a "fix". They were as surprised as I was that that was the case. However, it seems extraordinary to me that the consultation document was issued in July and there was a final day for that consultation, which was 8th October. So, at most, we are talking about a three-month consultation. However, a few days before on 5th September, by the time of the TUC conference, it was announced that the decision had already been made. There were still over four weeks to go for people to say what their views were but the Government decided to drop it.
I do not know whether that is the normal way of things. Members of the Committee opposite have said that they would be surprised even to comment on it. It seems extraordinary that in a three-month consultation with something like five weeks left to go and people might still be wanting to send in their views

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on that particular point—and that was one of the most contentious points—all of a sudden a decision can be made. If that is the case, there is no point at all in having consultations with dates fixed.
This is quite a serious matter because ultimately, I would assume that the Government knew, when they issued the consultation document, that the Trades Union Conference would be on 5th September. I find the whole thing turns out to be something of a sham. Having said that, I was interested to know what the Government were going to offer as their reason for changing it. I heard the noble Lord say that this was something that the noble Lord, Lord Young of Graffham, had raised in 1985 to 1986 and he believed that the officials just dug it out of somewhere and put it in front of the Minister. He said that it was a good idea and they would have a three-month consultation—
Lord McCarthy: No. I did not say that!
Baroness Miller of Hendon: No. I am saying that! The noble Lord, Lord Wedderburn, said that he assumed that the officials had perhaps brought it up again and thought it was a good idea. The rest is my interpretation. So what happens thereafter is that a consultation document arrives. Three months is given for it. The Government must have known in advance that if there were objections from the TUC they would probably drop. Members of the Committee opposite have said that these things are often decided—and I would not have known it—way before the consultation document. They know what is going to go in. It seems rather a farce, therefore, even to have the consultation document.
I would be grateful to hear from the Minister his exact views on the whole matter—when it was decided to do it and why it was decided to cut short a three-month consultation after five weeks.
Baroness O'Cathain: Just on a point about consultation documents and whether or not they have any legal force at all: I have been involved with consultation documents for many years and if the plug had been pulled on a consultation document before I had submitted my remarks, I would have been very angry indeed. As a matter of interest, do consultation documents have any validity or are they just bits of fluff? Can they actually say that they are going to allow three months to consult then after 10 days say that the consultation is over? It brings us all into disrepute.
Lord McCarthy: The noble Baroness knows better than anyone else in this House that the CBI got its bit in and it is reflected in the Bill.
Lord McIntosh of Haringey: I do not know whether I have any role in this? I thought the debate was going rather well. There are two issues to be addressed; first, the history and, secondly, the substance. The history is relatively straightforward and the noble Baroness, Lady Miller, is right about the timing. Consultation is not a legal document. There is nothing which says that you cannot bring consultation to an end early, if you wish, or extend it, although in fact we did not do either.
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In fact, it became clear very early on—and Ministers saw the early responses—that there was a very substantial response to this consultation and substantial opposition to the proposal to introduce a charging regime. Over 70 per cent of those who commented, including some employers, opposed it. That included organisations with most experience of dealing with applicants, which included for example the National Association of Citizens Advice Bureaux, which said:
"The Citizens Advice Bureaux Service strongly opposes this proposal. Even with the sort of discretionary exemptions proposed in Routes to Resolution, the proposed fees would inevitably act to deter would-be applicants with well-founded cases".
That, as far as I am concerned, is quite powerful evidence. That was available and it is true that Ministers took an early view and announced it to the TUC Congress in September. In fact, the final analysis of the consultation after 8th October carne to very much the same conclusions as those drawn earlier.
I turn now to the substance of the amendment. The deposit system which is proposed is simply charging by another name. If a substantial number of applicants would have difficulty in paying an upfront charge, they would have difficulty in paying a deposit. The noble Baroness, Lady Miller, talked about discouraging vexatious applicants, but throughout the Bill there are various procedures for discouraging vexatious applicants. The fundamental point was rightly raised by the noble Lord, Lord McCarthy, who said they are insignificant in number—the figure was 247 out of 130,000, which includes the people who do not turn up. I say to the noble Baroness, Lady Gardner, that this really is not a serious problem in numerical terms.
The noble Baroness, Lady Miller, has built into the amendment a provision for exempting applicants who are in receipt of specified benefits or suffering exceptional hardship. If we take the two most common complaints—unfair dismissal and unlawful deduction of wages complaints—it is clear that because of the nature of employment tribunals many applicants will be covered by these exemptions. It is not just wrong in the sense that it would deter people from going to tribunals, but it is also misconceived in the effect that the noble Baroness, Lady Miller, would wish it to have. It would place an administrative burden on the tribunal system which would mean that they would have to consider the merits of each case and the circumstances of each applicant.
My noble friend Lord Davies was quite right in reminding us that there is already a system for weeding out cases which have no prospect of success, through the pre-hearing review. A tribunal may request a deposit as a condition of proceeding with the case. Those are satisfactory answers on the substance.
6.15 p.m.
Baroness Miller of Hendon: Before the Minister sits down, he has given a very clear answer as to why the Government changed their mind, but he has not answered what I asked at the beginning: what was the

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Government's thinking in bringing this forward? If it is so unnecessary, or if there are so few vexatious claims, or if there are other ways of dealing with them, what was the Government's motivation to put down such a clause in the consultation paper?
Lord McIntosh of Haringey: If you consult people, you consult them on a range of options, even if you have a very clear idea about what some of them might mean—otherwise consultation is meaningless. You do not just put forward the ideas that are strongly in your mind, but you put forward a range of ideas reflecting the range of views out there in the world. This had been proposed and indeed it was one of the things that the noble Lord, Lord Young, proposed in 1986. It is proper that it should be within the spectrum of consultation.
Baroness Miller of Hendon: I will accept what the Minister says but I thought that the words, so strongly put in the consultation document suggesting that this was a way forward, were good enough for me to quote in my amendment. I did not think I could word it better. In the consultation paper, the Government showed an enormous enthusiasm for something that was just one side of the battle—it could be yes or it could be no. I find it quite an extraordinary answer.
Lord McIntosh of Haringey: I do not know how I am supposed to respond to that. Is one supposed to put forward the proposals that are towards the edge of the spectrum, in a deliberately discouraging way? It does not make any sense.
Baroness Miller of Hendon: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Wedderburn of Charltonmoved Amendment No. 72:
Page 32, line 29, at end insert—
"( ) The regulations shall provide that before a tribunal makes an order within subsection (1A)(a) or (b), it shall afford the representative a reasonable opportunity to give reasons why it should not make the order."
The noble Lord said: This amendment has been touched upon in substance by what has passed already today. It concerns wasted costs orders and it concerns a matter of natural justice.
Wasted costs orders, we are told, will be approached on the same basis as the rules in the High Court. Therefore, one turns to Rule 48.7 of the Rules of the Supreme Court, made under the Supreme Court Act 1981, which was added to by the Courts and Legal Services Act 1990.
Under that Act, there is a very clear rule, which is printed as Rule 48.7(2) of the White Book, or Rules of the Supreme Court. I quote as follows:
"The court must give the legal representative a reasonable opportunity to attend a hearing to give reasons why it should not make such an order".
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That is an order to disallow the costs or expenses of the representative. In other words, it is precisely the territory which is covered by Clause 22(1A)(a) or (b). We have a precise parallel with the area, and a precise parallel as to what the rule should be. Indeed, the Explanatory Notes to the Bill say that it is intended that regulations will include safeguards to allow the representative the opportunity to put his or her case on any proposed award of wasted costs. I know that we shall be told that that will be made clear in the regulations.
With regard to that particular point, it is our submission that regulations are not enough, if for no other reason than regulations will no doubt be able to be changed by a future Secretary of State. We do not believe that this rule should be open to change. We are discussing cases in which a representative of a party has wasted costs awarded against him. We have touched on the grounds for such an award. They are rather more limited than the Minister seemed to appreciate, but they concern a person being negligent or acting improperly, vexatiously or unreasonably. I include, in particular, legal representatives, and that has not escaped the notice of the Law Society and other bodies concerned with the profession.
Such accusations are serious and, as a matter of natural justice, a representative of a party against whom wasted costs are threatened must have the opportunity to reply. He should not simply have an opportunity to reply based on regulations which can then take that opportunity away, but an opportunity to reply based on legislation. If a government then want to take away that fair opportunity to be heard, they must explain to Parliament the reason for doing so.
I know that we have touched on the problem of regulations in previous debates on the Bill, but this is a specific point. I hesitate—I shall explain why—to raise too strongly Article 6 of the European Convention on Human Rights, which is now a precept that we must follow by reason of the Human Rights Act. The obvious point is that people against whom a case is made should pay for wasted costs because they have acted improperly in their professional work. They should be afforded a full and fair hearing on that matter. Obeying the injunction upon counsel and anybody else to cite cases which may seem to be against that submission, I refer to the case that is mentioned in the White Book, the Rules of the Supreme Court, which is cited as The Queen v. The United Kingdom, case 10615 of 1983. I quote what the White Book summarises as the effect of that European judgment:
"The making of a wasted costs order does not breach the European Convention on Human Rights nor does it raise an issue under the European Convention of Human Rights Article VI paragraph 1."
That decision in 1983, and a reference to it now, however, includes the fact that our procedure resolutely states on the basis of statute that there will be an opportunity for the legal representative to answer the charge that he has acted so improperly that a wasted costs order must be made. In my submission, it would be profoundly resented by all of those who act

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as representatives of parties in the employment tribunals—and, indeed, in the appeals tribunal, too—if statute did not make it clear that Parliament accepted that an accusation of improper conduct that gave rise to a wasted costs order should not be enshrined in statute in the form that the representative had the right of natural justice to be heard on that matter before any order is made.
It is totally inadequate to say that such a right—based, I submit, on Article 6 of the convention—is merely to be dealt with in regulations that can be here today and gone tomorrow. I trust that the Ministers will accept that this at least is something that they should take away and look at with approval. They should accept that our statute law should enshrine such basic principles so that we can all have confidence in the way that the law will be administered. I beg to move.
Lord McIntosh of Haringey: As is so often the case in these Committee, there are two separate issues here—although in this case there are probably three separate issues. The first issue is the substance of the amendment itself and the second is the issue of whether the substance should be in primary or secondary legislation. The third issue is that of compliance with the European Convention on Human Rights.
Let me start with the issue of substance. We are wholeheartedly in agreement with the substance of this amendment. It is a valuable safeguard that representatives should not be on the receiving end of a wasted costs order without having an opportunity to put their case to the tribunal. We fully intend to give representatives such a right when we draw up the regulations on wasted costs. I do not think that there is anything between us on that.
I turn to the issue of whether that should be in primary or secondary legislation. There is an analogy with the civil courts, where wasted costs orders are already provided for. Representatives have a right to put forward their arguments about why a wasted costs order should not be made against them.
In the civil courts—this is also our proposal—that right is set out in secondary legislation. We will have regard for the established principles and practice of the civil courts in drawing up the regulations on wasted costs for employment tribunals, where they are appropriate. There is no difficulty about that. As the noble Lord, Lord Wedderburn of Charlton, rightly said, that is already referred to in the Explanatory Notes.
The third issue is about whether the right for representatives to put their case on a wasted costs order is protected by the European Convention on Human Rights. The Joint Committee on Human Rights has expressed its satisfaction with the Bill's compliance, including the provision that this should be an amendment—that is referred to in the Explanatory Notes. It is therefore satisfied that it is sufficient for compliance that the provisions should be in the regulations.
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We are not sure whether the right of representation is necessary for compliance with the Human Rights Act. That is arguable either way. However, because we are going to give representatives the right, the question does not arise. In any case, if a question of giving assurances to Parliament is involved, it has for some time now been the practice of this Government, and will continue to be the practice of this Government—indeed, it will continue to be required to be t he practice of this Government—to give an assurance on each occasion when secondary legislation comes before Parliament, and an assurance that the provision is in compliance with the European Convention on Human Rights.
6.30 p.m.
Lord Wedderburn of Charlton: I am grateful to my noble friend. However, one very important aspect is not made clear by his careful explanation. The Rules of the Supreme Court in the White Book are not able to be changed merely by some regulation that emanates from a Secretary of State. At least, it is my understanding that this is a matter that the judges would pass on in their counsel. Is the Minister giving us an assurance that when that regulation is made it will provide specially, and specifically, that the assent of presidents of the tribunals or of senior judges of the appeal tribunal and others will be needed if any change—or at least any change that is less favourable to the representative—will in future be made?
If that is not so, it is difficult to perceive how this provision, which would relate merely to a regulation that could be changed, was fully in conformity with the spirit—and, indeed, the letter—of Article 6. I have to admit I have not seen on paper the arguments of the Joint Committee on Human Rights. However, why it should be satisfied with the idea of not putting that in the Bill mystifies me.
Will the regulations have the sacrosanct character of the Rules of the Supreme Court in the White Book? That is my central point. Will they be unalterable except with the agreement of the judicial authorities who administer the tribunals and the appeals tribunal?
Lord McIntosh of Haringey: I am not certain that the White Book is any more sacrosanct than a regulation. If the judiciary can change it, the judiciary can change it. What we are saying is that it will be in regulation, which would have to have the approval of Parliament. In coming before Parliament, it would have to include an assurance that it was in conformity with the European Convention on Human Rights.
The noble Lord was worried about whether there should be consultation with the presidents of the tribunals before any change was made. That is worth thinking about and I will certainly think about it between now and Report.
Lord Wedderburn of Charlton: I am grateful for that chink in the stone, and I appreciate fully what my noble friend said on this matter on behalf of the Government. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chairman of Committees (Lord Tordoff): In calling Amendment No. 73, I have to inform the Committee that, if it were to be agreed, it would pre-empt Amendments Nos. 74, 75 and 76.
Lord Wedderburn of Charltonmoved Amendment No. 73:
Page 32, line 30, leave out subsection (2).
The noble Lord said: Amendment No. 73 is grouped with Amendment No. 74. It may be appropriate if I explain why I wish to address Amendment No. 74 before Amendment No. 73.
Amendment No. 73 would leave out Clause 22(2), which inserts a new section concerning preparation time into the Employment Tribunals Act 1996. I shall explain in a moment why we would prefer to leave it out—we are not alone in thinking that it should be left out. The amendment to that new section proposed in Amendment No. 74 would confine the power to award preparation time costs, as I shall call them, to cases where costs are awardable at present—namely, as the amendment states,
"where in the opinion of the tribunal that party has in bringing the proceedings, or that party or the party's representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or in the bringing or conducting of the proceedings the party has been misconceived."
It is undoubtedly my fault that the word "by" has been omitted. I shall offer it in manuscript if I have the opportunity to do so.
The trouble with new Section 13A proposed for the Employment Tribunals Act 1996 is three-fold. It is confusing, as the Explanatory Notes show; its content is unreasonable; and its effects would be quite unfair. I invite noble Lords to look at new Section 13A on page 32. It states:
"Employment tribunal procedure regulations may include provision for authorising an employment tribunal to order a party to proceedings before it to make a payment to any other party in respect of the time spent by that other party in preparing his case."
We shall come to the question of who is "another party" in a later amendment.
I turn to the term "a payment". The Explanatory Notes begin by calling it "compensation"—that is the heading. But they go on to say that it will be awarded in a case where costs could be avoided. Therefore, Amendment No. 74 takes up that offer—perhaps by now Members of the Committee will be wearied by this—but states that it should be set out on the face of the Bill. This is such an important point that manifestly it should he on the face of the Bill because this is an entirely new jurisdiction. Indeed, the Law Society points out that this is a jurisdiction which goes far beyond the civil law in any other court to award a payment for preparation time—not legal costs, not any other heading of known costs but preparation time. The Law Society points out that the concept goes beyond what applies in the civil courts. When one reads the proceedings in another place, it is sometimes difficult to know what the Government's view is on that. There were suggestions—I put it no higher—that this is just in accordance with ordinary county court or
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High Court procedure. That is not the view that the profession takes and is certainly not the view that I would submit to the Committee.
The Minister in another place spoke of the need to help an applicant who had no help at all in filling out the form, sitting at the breakfast table. We will hear more about the forms later because they will get more complicated. I have little sympathy with that but that is not the problem, as the Law Society has pointed out. The Law Society and others have said that preparation time awards will of course impact upon applicants proportionately far more because respondents will say that they are entitled to a payment for their preparation time. That is what the Bill says.
The Explanatory Notes go on to say that the respondent will not have to prove how much preparation time was spent on the case. I said at Second Reading that there is a certain tremor of trepidation about how much will be charged for the noble Lord, Lord Simpson, at Marconi to deal with a case coming across his desk in 10 minutes. There is a maximum of £10,000 but a number of applicants will feel threatened by the risk of preparation time payments—not costs.
Lord McIntosh of Haringey: The noble Lord, Lord Simpson, is an applicant, not an employer!
Lord Wedderburn of Charlton: My noble friend knows all about that. I am an amateur in such matters. I noticed in today's newspapers mention of the noble Lord, Lord Browne; perhaps that would be a better example. The point is that I, as an applicant going to a tribunal, will be faced with a Bill that says regulations are going to be made whereby the other party can demand the payment for the time he spent in preparing their case. As the Law Society says,
"Although this provision is couched in language that applies equally to both parties, it is likely to impact disproportionately on applicants. In almost every case, an applicant will be exposed to the risk of a greater costs award than the respondent".
With great respect to the Law Society, at least it deals with the matter as though it were a matter of costs. But of course it is not expressed as costs, although it would be if Amendment No. 74 were accepted. Even if it were restricted to cases where the other party has acted vexatiously, this is subfusc costs expressed as a payment. This is part of the pressure. It is no good Ministers telling me that there is no pressure. Are they prepared to say what the CBI wants? Are they prepared to say what advice they have from the National Federation of Small Businesses, or from the Institute of Directors, or indeed the Chambers of Commerce on the question of costs? Will they tell us what has really been said about costs? Everybody in the business knows that there is enormous pressure to get more payments out of applicants. This special sui generis payment is a species of subfusc costs advanced under arguments which are hopelessly unreasonable.
The case for preparation time is such that the Law Society proposed that Clause 22(2) should be deleted. I therefore advance it on behalf of the arguments advanced by the Law Society. It is no good telling me

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that this is some curious academic or political concept that has been dreamed up in the middle of the night. The author of this notion must have had a nightmare to have put forward such an extraordinary idea.
Why is it disguised as a mere payment, and a payment which is not even going to be measured by the loss which has been suffered, because the Explanatory Notes make it clear that the regulations will say not that there should be any assessment of loss? On the contrary, they state:
"It is not intended that the parties should have to prove how much time they have spent preparing for a case, but that the tribunal should make an assessment based on guidelines to be set out in the Employment Tribunal Rules of Procedure".
So it is not just a payment, it is an arbitrary payment. It is not what the party has actually lost in preparing the case but according to the rules dreamed up by the Secretary of State a priori. It is nothing to do with what has really happened, merely the penalty on the applicant, as the Law Society says, because it will apply to applicants disproportionately.
6.45 p.m.
Baroness O'Cathain: I have just been looking at the Explanatory Notes because the noble Lord quoted part of them at paragraph 63. It states:
"power by regulations to authorise tribunals to order that one party make a payment to the other in respect of the time spent by that other party in preparing his or her case".
Therefore they would surely have to produce evidence about the time spent.
Lord Wedderburn of Charlton: With great respect to the noble Baroness, I hope I quoted and read accurately, but in case I did not I shall read again what the Explanatory Notes state. Paragraph 63 states:
"It is not intended that the parties should have to prove how much time they have spent preparing for a case"—
I interpose that I am interested in what will really happen. They continue:
"but that the tribunal should make an assessment based on guidelines to be set out in the Employment Tribunal Rules of Procedure".
If the noble Baroness is confused by the Explanatory Notes, then to some extent so am I because I cannot see any justification in that rule of thumb just to give money to someone on the basis of an a priori set of rules drawn up by the Secretary of State. The noble Baroness really must try and suspend disbelief.
It is not a case of assuming that money should necessarily be demanded from the applicant—there is no presumption that that should be so. This subsection is a new type of penalty. It is not put forward as costs, although Amendment No. 74 would demand that it be limited to costs—and that should be on the face of the Bill if anything should.
It is not demanded as compensation—I have hesitated to raise that but I will mention it. There has been a big argument in Committee in another place about whether there is a possibility of double recovery. It did not seem to me that the arguments advanced were necessarily knocked down, although they had
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some substance. I put aside the point of double recovery, that the party who is claiming for preparation compensation—if it is compensation—could possibly get double recovery in some way as an applicant. I did not think they were very strong.
Although it is headed "Compensation" in the Explanatory Notes, it does not involve real compensation. Although it is said to operate where costs are awarded, it does not involve real costs; it involves the payment for preparation and lime. Ii is a new species of civil penalty. On that basis, I submit that it is wholly unreasonable to introduce a general proposition of the kind that Clause 22(2) advances, in particular because it is not limited in the Bill to cases in which costs can be awarded. Even if it were so limited, it is for the reasons given by the Law Society an unfair and disproportionate provision which would, as they say, take the practice in employment tribunals for calculating costs awarded beyond that of the civil courts. We are not even talking about being parallel in costs with the civil courts; we are talking about going beyond the civil courts, which do not include non-legal costs in their awards.
I tabled a Question on 9th January which I will read to Members of the Committee. I asked Her Majesty's Government,
"whether any awards of costs have been made in the last five years in respect of time spent by a party in preparing his or her case—

(a) where the party was legally represented; or,

(b) where the party was not so represented,

in any of the following—

(i) planning inquiries;

(ii) tribunals; and

(iii) courts;

and, if so, on what principles and authority these awards were made and what was the range of amounts involved in such awards".
I give away no secrets; when I was asked what on earth my Question was about, I advised those who inquired that they were about page 32, lines 30 to 35 of the Employment Bill.
I have not had a reply to my Question. If the Minister has a reply this evening, I shall be interested to hear it. I suspect that the answer is that no such awards are made in courts or tribunals. Among those whom I have consulted are experts on costs. They intimated to me that sometimes in a planning inquiry there could be such an award for preparation time. However, when I asked to see the legal basis for such an award, I did not get further than being told that that was done on normal legal principles. I know of no such principle; I know of no such practice. The Law Society is surely right that this goes far beyond normal legal practice and the best thing to do with Clause 22(2) is to remove it from the Bill. I beg to move.
Baroness Gardner of Parkes: I do not intend to speak at length to this amendment because the Minister heard me speak on it earlier in relation to Amendment No. 65. I oppose the amendment and would like it left in the Bill as it stands.

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I was concerned to see in the Explanatory Notes—this may apply only to the earlier part—a reference to excluding the not-for-profit sector. That does not apply to new subsection 13A(2). However, I draw attention to the fact that according to the Explanatory Notes, the award could be made only in circumstances in which a costs award was to be made. I support the point made by the noble Lord, Lord Wedderburn of Charlton—if that is the case, it would be better if that was clearly stated in the Bill.
I do not agree with Amendment No. 74, which spells out particular categories. It would be good to see how it was related. A power is involved—I refer to the phrase, "it may include"—but if it was limited to cases in which costs were to be awarded, that would be better.
Lord McIntosh of Haringey: First, the Government owe an apology to the noble Lord, Lord Wedderburn, for not having replied to his Question of 9th January. The amount of time that has passed is quite unacceptable and I shall pursue the matter immediately. I suspect that the delay is due to the fact that the information required comes from a number of different sources. That is an excuse but not an adequate reason.
As is so often the case, this matter involves issues on the substance of the amendment—or, in this case, the amendments—and the issue of whether matters should be set out in regulations or on the face of the Bill. I start by acknowledging what is clearly the fear behind the amendment—that is, that the new provision for preparation time will impact harshly, particularly on applicants, and will deter genuine complaints. My noble friend Lord Wedderburn and Members of the Committee have received an assurance that it is not our intention to reduce the number of tribunal cases by deterring applicants in that way. We have sympathy with the thinking behind the amendment.
I turn to what is proposed in new Section 13A and in the regulations for which it provides. First, the noble Baroness, Lady Gardner, is right—it is, indeed, proposed that regulations will provide that compensation for preparation time shall apply only in circumstances when costs can apply. That brings me to the most important point of my response. Costs awarded in tribunals are absolutely minimal. They are neither frequent nor very high.
Lord Wedderburn of Charlton: I am most grateful to my noble friend, but it might be convenient if we tried to deal with precisely that point. When courts are faced with different words in different provisions of a statute, they tend to believe that different meanings are attached. If new Section 13A refers to costs, why does it not say so? Any court faced with the word "payment" will assume—at any rate, to begin with—that it means something different from "costs". I appreciate that the court will have to look at the regulations. The noble Baroness looks astounded, but there is a perfectly normal presumption that if I say
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"costs" in one section and "payments" in another, I mean something different from "costs", otherwise I would have said "costs".
Lord McIntosh of Haringey: Perhaps I may develop my argument.
Lord Wedderburn of Charlton: Perhaps I may just complete my point. If my noble friend wants to make this "costs", why does he not say so?
Lord McIntosh of Haringey: I do not want to make it "costs". If I am allowed to develop my argument, the position will become much clearer. Costs are very rare. There were only 247 awards last year, averaging only £300.
The other point that I wish to make is that costs are not only made against applicants. Last year, two-thirds of the awards were made against applicants, but in other years the proportion has been more even between applicants and respondents. However, a safeguard against unreasonable behaviour is provided for parties in a system which is otherwise very open and accessible, as it should be.
It must be right that, where a party has been taken unnecessarily to a tribunal, or has had to resort to litigation because of an unscrupulous employer, there should be a way of redressing that. Perhaps I may underline that with a real example. An employer was ordered by a tribunal to pay costs to an applicant after the tribunal found that the employer had acted entirely unreasonably. The employer had not even given a reason for the dismissal and, furthermore, the tribunal concluded that the investigation which preceded the dismissal was biased, unreasonable and breached the rules of natural justice. Surely it was right that the employee in that case should be compensated for the losses that he incurred as a result of his employer's unreasonable conduct in defending a series of actions which were indefensible. I know that there is concern among the groups which represent applicants.
7 p.m.
Lord McCarthy: Perhaps I may—
Lord McIntosh of Haringey: It is much better if I develop my argument.
Lord Wedderburn of Charlton: The Minister is making some bad points.
Lord McCarthy: The Minister is telling us of a case where the existing law seems to have dealt with the matter extremely well, yet there was a case for a further measure.
Lord McIntosh of Haringey: Exactly. I am describing the circumstances in which costs are legitimate. I think we have agreement that it is legitimate to award costs under certain circumstances. I want now to describe the circumstances in which payments—they are not the same as costs—will also be legitimate. In terms of how it will be controlled it is right, as has been said, that we will address the issue

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through the provision of guidance for tribunal users on how the costs regime applies. If we make clear to tribunal users exactly how it applies, we will dispel some of the inaccurate messages which employers or their representatives are putting out to intimidate applicants.
Under current rules, parties may only recover costs which they have actually incurred and costs awards primarily cover legal expenses. There is no power to compensate a party in respect of time they have spent preparing for a tribunal. Legal representation is not the normal procedure in tribunals. Most users and in particular applicants do not engage lawyers. Less than a third of respondents are legally represented and less than a quarter of applicants. So the present system is not even-handed towards applicants, who are less likely to engage a lawyer. The introduction of preparation time will help to address and correct this situation, rather than making it worse.
Preparing for a tribunal can be time consuming and costly, particularly when a party is pursuing its case without a representative and must undertake all the work in his or her own time. There has been research to suggest that the average amount of time spent by applicants preparing their case is 42 hours and a half of all applicants spend longer than 20 hours of their own time preparing for a case. The new provision will help us to give tribunals the option of recognising this and compensating the parties accordingly.
Tribunal allowances already cover loss of earnings for attendance at the tribunal, so why should there not be the possibility of compensation for preparing for it? Similarly, an employer or one of his staff may have to set aside part of his working day to prepare the defence and for the hearing. Preparation time will cover the time a party has spent gathering information and documents for the case, speaking to witnesses and preparing for the hearing. It may also recognise that a party has had to devote time to a case unnecessarily, which could have been more productively spent elsewhere.
Compensation for case preparation will not be limited to actual expenditure. That is why we are talking about payments rather than costs. We doubt that it is possible or sensible to assess preparation time by a precise calculation of loss in every case. We cannot keep records and it may not involve any actual expenditure.
In an unfair dismissal case where the applicant is unemployed, it would not be appropriate to award preparation time compensation for the actual expenditure because there might not be any. It might, however, be appropriate to order some form of compensation to the applicant in recognition of the time spent in preparing for the case as a result of the respondent's unreasonable actions.
We intend to set out in the regulations guidelines for assessing case preparation compensation. We will consider a range of tools to ensure that case preparation compensation is reasonable. For example, fixed amounts, ranges of amounts by reference to different jurisdictions, linking assessments to the
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applicant's rate of pay or former rate of pay, and the remuneration of the employee of the respondent who dealt with the matter. We will also consider capping awards in respect of preparation time.
We also provide in the regulations that, where a tribunal intends to set the amount of a costs award and also intends to make an award of preparation time, the total amount will not exceed the current limit on costs awards. We will take great care in framing the regulations and we will of course consult.
I have said some new things here. I have said—which may not have been said before—that the total amount of payments that can be made for preparation time, added to the costs award, cannot exceed the current limit for costs awards. I have made clear that costs awards are very rare and the amounts of money are very small. Therefore, it is clear that this extension of provision for compensation from actual costs, in other words, legal costs, to payments for time, which cannot be assessed so accurately, is perhaps a significant change, but a significant change in a very small field indeed. If between now and Report stage, I think about ways in which assurances can be given on that point, I will be happy to give that consideration.
Lord McCarthy: Can I ask the noble Lord, Lord McIntosh of Haringey, before he sits down, there was a sentence in which he said "a very small field indeed"? There was another sentence a little earlier when he said "quite frequently", so it would be "quite frequently in a very small field". I am not quite certain what that very small field is.
Lord McIntosh of Haringey: Let us engage in textual analysis when we see Hansard. I do not remember saying "quite frequently".
Lord Gladwin of Clee: Forgive me, but the Minister went rather quickly over the issue that I am concerned about. There is already evidence that an employer's representative will use the threat of costs in an intimidatory way. I am not making this up. My noble friend Lord McIntosh of Haringey said something about that, and I am hoping it was an assurance. I wonder whether he would repeat what he said because I believe we shall be saved from that situation by the wisdom of the employment tribunals. However, what we will not be saved from is the employer who—and it happens—uses threats against an employee who has gone to a tribunal, in an intimidatory way, to frighten them off pursuing their claim. That is a real issue and I need some guarantees about that.
Lord McIntosh of Haringey: I understand that point. I am afraid it concerns not what is in this Bill, but the increase in the maximum amount of costs which occurred in July of last year. That is a serious issue which needs to be addressed.
What I said was—and I think this is the relevant part—compensation for case preparation will only apply for the exceptional and abusive cases which we all agree do not properly belong in the employment tribunals. In order that that should be made clear to both applicants and employers, because that is what is

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necessary to stop intimidatory messages, I have said that it will be put in guidance for applicants and for respondents.
Lord Wedderburn of Charlton: This is perhaps one of the most serious debates that your Lordships have had in this Committee.
The Minister, in sticking to the stone brief which Ministers have stuck to throughout the Grand Committee so far, with one very tiny exception for which we are immensely grateful, has advanced an understanding of the clause which is quite extraordinary.
The Minister spoke almost entirely of a recovery of preparation time payments by applicants. He ignored totally what the Law Society says, and I quote it again,
"Although this provision is couched in language that applies equally to both parties, it is likely to impact disproportionately on applicants".
I refer to recovery by respondents of the costs of preparation time, not by any loss they prove—we have seen that—but by some a priori set of rules for how much money the Government think they should be given. That will impact disproportionately on applicants. They will be made to pay extra.
The second point is that we also "provide in regulations". The Minister will forgive me if I quote him wrongly but I understood that he said we also provide in regulations. If the Government know what is in the regulations, let us see them now—they are not going to appear in the Bill. If they will not let us see them, why will they not publish their draft of the regulations tomorrow? They know what is coming, so why not let us see them? They should be in the Bill. Our modest amendment is that the provision should be restricted to cases in which costs might be payable because proceedings on one side or the other were conducted vexatiously, unreasonably or in a misconceived manner. That is so obvious that the Minister must accept it, but he will not include it in the Bill. Instead, he said that the proposal would be limited to the new limit that the Government imposed.
Sometimes there runs through my head in these proceedings a song which that excellent radio station Capital Gold confirmed the other day was sung by Lesley Gore in the 1960s. it is called, "It's my party and I'll cry if I want to". I wonder why the Minister did not refer to the Law Society. Does he suggest that it is wrong and that the provision goes way beyond normal juridical principles?
Baroness Gardner of Parkes: I find disconcerting the discussion about what the Law Society want. The Law Society contains the very people who are totally covered by the word "costs". The Minister made the point that these payments would relate, as I said earlier, to charities that have to spend a great deal of time defending cases and have lost out badly. However, he also quoted applicants who might have no money of their own. It is a significant point against the Law Society that although it is busy not wanting anyone to have payments, it claims for any case for
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which it could claim only under the same circumstances in which that claim could be made, and for every legal fee. I do not need John Grisham to tell me about billing 24 hours a day.
Lord Wedderburn of Charlton: With great respect, it is rather unworthy of the noble Baroness to impute such a state of mind to solicitors generally. I appreciate that she did not like it when in a particular case—the details of which I have no knowledge—a charity seemed to suffer because it had to pay for proceedings. I do not know the circumstances of that case. If the noble Baroness wishes to send me a full account of it, I shall view it. People are hard done by in life and I am trying to stop other people being hard done by. The proposal involves having an arbitrary set of rules imposed on people as to preparation time. In a later amendment, we shall deal with the question of whose preparation time is involved. The noble Baroness must not sweep aside the Law Society's views—they are put forward as the views of the body that represents solicitors in this land. It had adopted a legal view and a view of a practical nature about how the provision will impact. It makes it clear that, for example, the respondent's claim will, in many cases—I hope that the Minister realises that this is what it says—include compensation for the time of several, or many, people. The applicant's claim for costs will be limited, at best, to the value of his or her time. That is a summary of what it says. A very serious matter is involved.
Baroness Gardner of Parkes: Will the noble Lord tell us why the applicant would be limited to only himself? Would he not have friends or other people?
Lord Wedderburn of Charlton: The noble Baroness should read the clause. It is necessary to read the clause in order to debate it. It states:
"Employment tribunal procedure regulations may include provision for authorising an employment tribunal to order a party to proceedings before it to make a payment to any other party"—
not merely the respondents in the case of an applicant—
"in respect of the time spent by that other party in preparing his case".
In other words, in the case of an applicant by the applicant—
Baroness Gardner of Parkes: Or any other person.
Lord Wedderburn of Charlton: It does not say that. The noble Baroness really must not make up a Bill to discuss in Grand Committee as if it says something different from what it does say. The Bill says—and I shall come to this on a later amendment, so perhaps we could discuss it then—
Baroness Gardner of Parkes: The noble Lord just read out to me that it could be the party or any other party, and he stressed "any other party". My question is: why could not the any other party be someone who was helping the applicant just as much as helping anyone else?
Lord Wedderburn of Charlton: Because the word "party" means party to the proceedings. It is not just a vague word dreamed up by some layman; it is a legal term. If you are a party to the proceedings—the noble Baroness said she does not agree. I would be happy to meet her in a case and be confident of winning in a dispute about the meaning of the clause. Let me read it again.
Baroness Gardner of Parkes: Read it again.
Lord Wedderburn of Charlton: The noble Baroness says, "Read it again". I hesitate to weary Members of the Committee, but the noble Baroness demands that I read it again. It states,
"to order a party to proceedings before it to make a payment to any other party"—
that means a party to proceedings before it—
"in respect of the time spent by that other party in preparing his case".
That is why the Law Society, in analysing the meaning of the clause, says quite rightly that it will impact disproportionately on applicants. And why it also says that this is something which is quite outside the normal civil proceedings that we know.
Perhaps the noble Baroness will allow me to complete the point. If the noble Baroness knows of an authority, either in the rules of the Supreme Court or in the county court rules, or in the rules relating to any court or tribunal, no doubt she will cite it to me as the basis on which this proposal could be made.
7.15 p.m.
Baroness Gardner of Parkes: When the noble Lord says that the matter concerns only the two parties, I do not understand his argument at all. He is saying that the party on the one side could represent many people working on that case on behalf of that party. I heard him say that and I will read Hansard to check it. Then he went on to say that any other party can mean only the second party to the proceedings. In that case, why does the word "any" appear if it is any other party? If they are both parties to the proceedings, why are there not just simply two parties, the respondent and the applicant?
I cannot understand how he can in one case have brought forward a number of people, all of whom would be claiming this payment, and in the other case saying only one person is concerned. That is the point I am trying to make and I do not understand the distinction he has made.
Lord Wedderburn of Charlton: Perhaps the noble Baroness and I are not really in disagreement because the jurisdiction will be—if the noble Baroness could imagine herself as a party to proceedings rather than sitting on the tribunal—to make a payment to any other party. That means either the other party to the proceedings direct, the applicant or respondent, or it could mean a third party who is joined to the
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proceedings. There are third-party proceedings which can be initiated in the tribunals, and if the noble Baroness has experience of looking at the cases she will know that there are sometimes many parties joined. That is why it says "any other party". Those are the people to whom the payments can be made.
Now we come to the question: in respect of what? If the noble Baroness will look at line 34— I do not think she has line 34—she will see that it states:
"in respect of the time spent by that other party".
That is either the respondent or applicant, or a third party, or any other party to the proceedings.
"in preparing his case".
That is absolutely clear; there is no problem about that. I know what the clause says and so does the noble Baroness. It is quite unjustifiable to tell me that that should be put on the statute book of the United Kingdom when it means not payment but costs; that it is only intended to operate as costs because this is all part of the campaign to make people pay more, especially, as the Law Society says, disproportionately applicants.
It is all part of the pressure to make people pay more—in this case, not even judged by what somebody else has lost. It is just a payment from some scale of amounts drawn up in the offices of the Department of Trade and Industry which my good friend, the General Secretary of the Transport and General Workers' Union, has said he suspects of becoming the provisional wing of the CBI. This really will not do. The Government have made a deal with the CBI to put forward preparation time, and say that they will limit it to costs, but regulations limiting it to costs could, with a future Secretary of State next year, be struck out and got rid of.
Nothing can be done in a Grand Committee. One wonders what a Grand Committee is for anyway, with such a controversial Bill. We cannot do anything in a Grand Committee, but we can do something on Report. All I am left with, in regard to Amendments Nos. 73 and 74, is to beg leave to withdraw them.
Amendment, by leave, withdrawn.
[Amendment No. 74 not moved.]
Baroness Miller of Hendon: May I say something before the noble Baroness talks to Amendment No. 75? My understanding was that in Grand Committee we have the opportunity to stop the proceedings at some time between 7 p.m. and 7.30 p.m., at a convenient time and at a convenient place in the proceedings. I passed a note to the Chairman of Committees some time ago, at a time when I thought it would be suitable to adjourn after Schedule 3 stand part. It would have meant that we would indeed have reached Amendment No. 75. That was what was suggested to me.

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The next amendment on the Marshalled List is Amendment No. 75. If we assume that the amendment will take vaguely as long as the all the others have taken, we would be talking about 8 p.m. or 8.15 p.m. My understanding is that that is not normally the procedure in Grand Committee. The noble Lord, Lord McIntosh, looks somewhat surprised, but I would like some guidance on this. I was told that that was usual in Grand Committee. The noble Lord, the Chief Whip, it shaking his head.
Lord McIntosh of Haringey: This is about timing?
Baroness Miller of Hendon: Yes, that is all it is about.
Lord McIntosh of Haringey: I know that the noble Baroness is saying that we should stop now. The rule for a Grand Committee is that we should stop at a convenient time between 7.30 p.m. and 8 p.m., not between 7 p.m. and 7.30 p.m. What I proposed, and
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what happened yesterday, was that we should stop at the conclusion of debate on the amendment which is being debated at 7.30 p.m.
Baroness Miller of Hendon: I suggest that we get on with Amendment No. 75 therefore, but I certainly intend to speak to our Chief Whip. This is not my understanding at all.
Lord McCarthy: Is the Minister saying that, in fact, we cannot stop now, because of some rule he has? I think the general wish in the Committee is to stop now. If we go on, many people will go away.
Lord McIntosh of Haringey: The wish of the Government is to make progress on the Bill and we use rules which have been agreed through the usual channels. However, if it is the general wish of the Committee—and I do not want to take this as a precedent that we should stop now—I beg to move that the proceedings of the Committee should be adjourned until 3.30 p.m. on Monday next.
The Committee adjourned at twenty-three minutes past seven o'clock.