Grand Committee Report of 9 June 2004

Official Report of the Grand Committee on the Employment Relations Bill
(Second Day)
Wednesday, 9 June 2004.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Lord Geddes) in the Chair.]
The Deputy Chairman of Committees (Lord Geddes): Before starting, I should say that the ventilation in the room is not of its best. If Members of the Committee or officials would like to take their jackets off, that is perfectly in order.
Clause 10 [Application where agreement does not cover pay, hours and holidays]:
Baroness Turner of Camdenmoved Amendment No. 23:
Page 13, line 14, after "hours" insert ", pensions"
The noble Baroness said: In moving the amendment, I shall speak also to Clause 19, with which it is grouped. The amendment would include pensions among the core elements about which there should be collective bargaining once recognition has been agreed under the terms of the Bill.
I find it surprising that pensions as an item for negotiation should have been excluded, although the Government themselves do not seem very sure about it, since Clause 19 simply specifies that the Secretary of State may at some time in the future decide by order that pensions should become an issue about which there should be negotiation. As we all know, pensions have become a major issue; for many years, pensions have been a matter for negotiation between unions and employers in situations where there has been union recognition. I have myself been involved in pensions negotiations on behalf of members; when I sometimes meet retired members, I find them very grateful for what the union has been able to do for them. They are fortunate because they have benefited from payments under final salary schemes.
The House will debate tomorrow the Second Reading of the new Pensions Bill, which is being introduced by the Government to cope with situations in which the employer has become insolvent. The campaign for the provisions in this Bill and for compensation for those who will not be covered by it has, in the main, been union-led. Unions have also been responsible for ensuring that member trustees, sometimes union-nominated, are appointed. It should be pointed out that we have always made a sharp distinction between negotiation about pensions and pension schemes and trusteeship. The functions are
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quite different. Our union has always run training courses for trustees, and that will be even more important under the new Bill.
The Government seem to acknowledge the importance of union involvement in pensions negotiation, since the new Pensions Bill specifically requires employers to consult unions and the workforce about changes to pension provision. I therefore find it difficult to understand why pensions are specifically excluded in a Bill about trade union recognition. Unions have always regarded pensions as deferred pay; indeed, in some instances, employees have been willing to accept rather lower salaries in companies with good pension provision, sometimes accepting lower salaries than they might have received elsewhere.
I would welcome a Government's response to all these circumstances. It may well be that simply doing as I propose—adding pensions to the core items—is not the best way to include pensions as a matter for negotiation in the Bill. I understand that currently provision of pension benefits by an employer is a voluntary matter. However, it seems to me that when there is a pension scheme, there is a strong case for a union having the right to enter into negotiations about that scheme. My noble friend the Minister will no doubt let the Committee know the Government's response to the views expressed under the amendment.
As for Clause 19, if pensions are included as a core item for negotiation, the powers by which the Secretary of State can later decide that pensions should be included would not be needed. I beg to move.
Lord Davies of Oldham: My noble friend chided the Government for being unsure about the issue, because of the terms of the clause. However, I wish to reassure her about Clause 19, which seeks to introduce a necessary element of flexibility that will enable us to take on board the basis of the representations she is making if they prove to be substantiated in future. So it is not a question of the Government being unsure, rather it is about the Government seeking in the clause to keep the door ajar, providing the necessary flexibility to respond to the points made by my noble friend. At the same time, for reasons that I will identify in a moment, we cannot accept the amendment in its entirety at present.
It is clear that my noble friend wishes to ensure that pensions should join pay, hours and holidays as the core bargaining topics for statutory recognition. Of course, we recognise the case that my noble friend has made about the significance of pensions. As she indicated, the Pensions Bill will be before the House tomorrow for its Second Reading and there will be a full debate about the issues. I will limit my comments today to the relationship between pensions and collective bargaining, which is what this Bill is about.
When the CAC makes an award of statutory recognition, the parties are obliged to bargain on three topics: pay, hours and holidays. There has been some debate about whether this implies that the parties must bargain on pensions, on the grounds that pensions are part of pay. We think it necessary to clarify the matter

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in this Bill to avoid possible confusion. The Government do not believe that it is appropriate at this time to make pensions a topic for collective bargaining under the statutory procedure. Clause 19 therefore makes clear that pensions are not part of pay for the purposes of the statutory recognition procedure. After all, the statutory recognition procedure is intended as a fall back.
The voluntary resolution of recognition claims is much to be preferred. That is how the vast majority of agreements are struck. It follows that we do not want to encourage applications for statutory recognition where those applications could be resolved voluntarily. We believe that would happen if the scope of the statutory recognition award were significantly greater than the typical scope of voluntary recognition agreements. It would draw everyone's attention to the statutory position.
Currently, statutory recognition covers pay, hours and holidays. These issues are those most commonly included in recognition agreements, and they are indisputably the core bargaining matters. The question is whether pensions have now achieved the same status. We recognise the force of my noble friend's representation, and we know that pensions are moving significantly up the bargaining agenda. TUC figures suggest that 49 per cent of new voluntary recognition agreements include pensions, but as an item for consultation. The TUC survey does not provide a figure on the proportion that include pensions as the subject of negotiation. The statutory position is about negotiation.
We have therefore commissioned research by Sian Moore of the Working Lives Research Institute and Helen Bewley of the Policy Studies Institute to look more closely at recognition agreements signed since 1998. The interim findings of their research have recently been published by the Department of Trade and Industry. The findings suggest that pensions are less likely than the core topics to be specifically included, and more likely to be specifically excluded, as a topic for negotiation in such agreements. In only 11 per cent of new agreements were pensions specifically mentioned as a bargaining topic.
Of course, that does not mean that the parties did not subsequently bargain about pensions, or that pensions were implicitly covered within the scope of bargaining in some way. The researchers are therefore undertaking further work for the DTI to examine actual bargaining behaviours. However, on the balance of the evidence available, we believe that it is fair to assume that bargaining about pensions is untypical behaviour in recognised workplaces.
Having said that, I look forward to a time when pensions can become a suitable core topic for the statutory procedure. I appreciate the argument that pay and pensions are closely linked, which was the burden of my noble friend's representation. It is right and proper that unions should be concerned about their members' incomes in retirement as they are about
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those members' current remuneration and, as my noble friend indicated, she has considerable experience of dealing with these issues.
That is why this clause includes the power, which I mentioned in my opening remarks, for the Secretary of State to add pensions to the three core topics at some future point. The Government intend to exercise this power when there is clear evidence that pensions are typically included as an item for negotiation in voluntary agreements.
We will therefore undertake periodic surveys of collective bargaining to monitor what is going on. I have referred to research that we have in hand. The interim findings, which focus on new agreements, can be found on the DTI website. As I said, we are following that up with further research. This should give a picture of the current extent of bargaining on pensions in voluntary agreements, which can act as a benchmark against which to measure change in this area. The Fifth Workplace and Employment Relations Survey, due in 2006, should also provide a guide to this.
We will, of course, undertake consultation before making an order under this power and the order will be subject to the affirmative resolution procedures of both Houses.
That is the position in general terms with regard to the clause but I want to address a few remarks to my noble friend about the amendment. She is right that, because of the way in which the amendment is framed, it covers only two out of the three crucial points in the procedure and therefore it is not a complete amendment and has its defects. I am always loath, particularly in Committee, to present the arguments in terms of defects in the drafting of amendments. I know the difficulties that everyone, except the Government, struggles under in preparing their cases with regard to amendments, particularly Back Benchers, with whom I have an instinctive sympathy. That goes without saying. After all, one never knows how quickly one will return to that blessed state.
I want to indicate to my noble friend that in advocating the basis of the clause I hope that she will recognise that I am sympathetic to the points that she makes. The Government are aware of the growing strength of representation with regard to pensions. We are not convinced that we are at the point where we can change to the statutory position without it overwhelming all voluntary negotiations because it would contain that extra dimension—of course, there will be the opportunity for issues such as this to be aired in tomorrow's debate on the Pensions Bill. It is for that reason that I hope that she will feel able to withdraw her amendment and also, I hope, her resistance to Clause 19.
Lord McCarthy: I will say this for the Government: that was ingenious. It will not do, but it was ingenious. The Government seem to be saying, if I follow them, that they cannot put pensions in the Bill because if they put pensions in it would overwhelm the voluntary system. I do not know whether that would be because once pensions were in, all employers would say, "Well,

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if it is in the Bill then we will give you pensions", or whether, because pensions are so valuable, there would he hundreds of applications for statutory recognition, everybody would come along to the CAC and there would be a great queue. It is nonsense, but it is ingenious.
The fact that we have to take into account, and we were debating it when the Committee met the other day, is that what is embodied in the 1999 Act was a balance. It was a balance between what the TUC wanted and what the CBI was prepared to sign up to. That is why those three items were put in as the subjects of statutory recognition. Otherwise it makes no sense. They are there because that was the basis on which agreement could be reached.
3.45 p.m.
Previous attempts to legislate to encourage collective bargaining have involved nothing like this. For example, in the 1992 consolidation Act, which spelled out the legal basis of labour law in this country, Section 178(2) gave a reasonable definition of what recognition should normally cover:
"terms and condition of employment … engagement or non-engagement"—
of workers—
"allocation of work … discipline … membership or nonmembership of a trade union … facilities for officials of trade unions … machinery for negotiation or consultation".
That was the rough idea. About two-thirds of what we have here is in the first item: members' "terms and conditions of employment". So we merely have an agreement or fudge, produced to get some consensus for the 1999 Act.
We say that now that the consensus is up for review and there might be a case for adding to this list of three the fourth issue of pensions. There are very good reasons for that. It has now become clear that workers are very concerned, much more so than they were even in 1999, about what is happening to pension funds. They do not trust employers in what they are doing with their pensions. Therefore, pensions have suddenly become a very important bargaining issue and because of that a lot of employers are resisting it. Therefore, it becomes a critical item that we could include to show that this recognition legislation is entitled to bite on an area where it is required.
Lord Lea of Crondall: I wish to add some points in support of my two colleagues. The Minister kicked off by saying that he wanted to keep the jaw open, not the door open. He was right the first time: I hope that he will keep the jaw open to snap up some of the red herrings that he has subsequently deployed. In trying to find out where we are going, the first red herring is that this matter is not for the Pensions Bill tomorrow; it belongs in this Bill. This Bill defines the territory of the three points, to which the fourth point should be added as life goes on.
Secondly, so far as concerns industrial politics, this will never he one of those consensus items between the TUC and the CBI. We all know that, whether in
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London or Brussels, there are some territories where one can hope, albeit with a sword of Damocles hanging over the negotiations, to find some way forward. I am almost certain that this is not such an item. However, as the Minister has said, the phraseology of Clause 19 suggests that the power of making by order an amendment to add pensions is something that the Government think may be on its way. Let me put it this way: it is becoming a question of when rather than whether.
The third red herring—if it is not a red herring, it is some similar fish—is the question of how to define -typical". I think that I have got right the form of words used here: the Government would be inclined to go down this road once it is clear that this is typical of voluntary agreements. Let me deconstruct that sentence—that is how the philosophers would look at it these days. First, why should it need to he typical? Even on the philosophy advanced by my noble friend the Minister, what is wrong with it being a significant number of agreements? Clearly, there could be a whole spectrum from nought to 10.
In the national debate about pensions, we are trying to arrest the decline—not the decline and fall—of final salary schemes. We are trying to sustain pensions because there are trade offs with retirement age, et cetera. As everyone has said, it is moving very rapidly to the top of the bargaining agenda. The test should be much more to do with there being a significant number of agreements rather than it being typical. In either case, it is difficult to say what the adjective means, but the word "significant" should be thought about.
Finally, the fourth red herring is the notion that, although we have now moved to a public policy position of contemplating this being an item for the four, in the same breath we are told that there is some distinction between what can be done logically or sensibly through the statutory CAC scheme and what can be done through voluntary collective bargaining. That is a notable red herring: of course, anything can be done through voluntary collective bargaining. We are talking here about an employer, for example, in a voluntary agreement where the union perhaps has the other three items. What if it wants to go to the CAC to get the fourth one? The form of words used by my noble friend has begged that question.
I hope that I am right in interpreting what has been said: that the door is open, as well as the jaw being open. This is obviously a matter that the TUC and trade unions generally will press further at the time when—rather than whether—the Government decide to do something about new paragraph 171A(2) of Schedule A 1 to the 1992 Act, under Clause 19 of the Bill.
Earl Attlee: The noble Lord, Lord Lea, touched on retirement age. Can the Minister say whether that matter relates to hours of work or pensions?
Lord Lea of Crondall: I am not the Minister.
Baroness Turner of Camden: I did not raise the issue of retirement age. I think that that is a separate

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argument. First, I thank my two noble friends who have responded. I agree with a great deal of what has been said. When I moved the amendment originally, I said that I was not bound by my proposed wording. I was quite prepared to accept that it is a rather flawed way of attempting to deal with the whole issue of pensions as a matter for negotiation by unions once recognition had been achieved, which is basically what we are after.
I am pleased that the Minister accepts the validity of the arguments that have been made in support of trade union recognition on pensions. That is clear. I note that he says that the door is not just ajar but open. I want us to be able to go through that door speedily. I do not see why the Bill should be utilised as a means for us to go through that door. Although we will discuss pensions tomorrow—and that Bill will go into Committee, meaning that many of these issues are likely to arise—the whole point of the amendment is to achieve a situation in which the unions feel able, once recognition has been achieved, to demand the right to deal with retirement income on behalf of their members as well as their day-to-day salaries and conditions.
It is perfectly legitimate to ask for that. I am by no means satisfied that the reply given by the Minister deals with all the points we have made. Of course we acknowledge that at the moment—I stress that—provision of pension benefits by an employer is a voluntary matter. But I think that pressure is mounting for there to be some element of compulsion. Whether that is achieved, I do not know, but certainly it is there. A view is held that a demand should be made of employers to share the burden of pension provision as far as both the state and the individual is concerned. If that happens, of course there would need to be negotiation.
I do not think I can say much more at this point. We shall look at this again because, as I said earlier, we feel quite strongly about it. Over the years the unions have developed their negotiating skills on pensions provision and they have skilled and competent people able to deal with these issues. They believe strongly that they should be able to utilise the services acquired on behalf of their members to ensure that they receive proper retirement benefits when finally they leave employment. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Lord Lea of Crondallmoved Amendment No. 24:
After Clause 10, insert the following new clause—
"ADMISSIBILITY WHERE A MAJORITY OF THE WORKERS SUPPORTED RECOGNITION
In paragraph 40 of Schedule Al to the 1992 Act (application not admissible where CAC declared union not entitled to be recognised), after sub-paragraph (3) insert—
"(4) Where the CAC issues a declaration under paragraph 29(4) in respect of a ballot in which the result was that a majority of the workers voting supported the union (or unions), a period of one year shall be substituted for the period of 3 years in subparagraph (2)(a).""
The noble Lord said: I had hoped that the Minister would comment on some of the extra points made during our last debate. In due course he may find an opportunity to do so because further issues were raised during that interesting discussion. Perhaps an opportunity will arise a little later.
I shall speak briefly to Amendment No. 24. Everyone recognises that if one has legislation of the type now before the Central Arbitration Committee with provision for a ballot, and the union loses the ballot, it cannot simply return the next day and have another go. But the Government have decided, for reasons I understand but do not agree with, that when it wins a ballot, the union has to obtain a "yes" vote of 40 per cent of all those entitled to vote.
My argument turns on the critical criterion that the union needs to secure a "yes" vote of 40 per cent of those entitled to vote. I could be tempted into listing how many Members of Parliament or councillors would be elected on that test tomorrow. I suspect that no one would be elected. Everyone knows that in such elections—whether we are talking about postal ballots or going to the polling station—achieving a 40 per cent turnout, let alone a majority of those in the bargaining unit entitled to vote, is not an inconsiderable achievement.
A 40 per cent "yes" vote is a very high hurdle indeed. Some quite important constitutional changes have fallen foul of it. I think I am correct that the first attempt at Scottish devolution, in 1978, fell at that hurdle. A majority of those voting voted in favour, but not 40 per cent of those entitled to vote.
4 p.m.
Perhaps I may apply this to the CAC procedure. Let us say that there is a ballot and the union wins. However, of the 1,000 people entitled to vote, 350 said "yes" and 250 said "no". The result would be that the union was unsuccessful. Let us take another case—although the procedure would not differ from that in the 1999 Act, which went much too far in this regard, even if one can see the point about some sort of minimum turnout—in which 350 said "yes" and 150 said "no". Again, the ballot would not be carried.
As inequitable as many trade unionists regard the provision, my amendment would not change any of it. My amendment deals with the fact that the three-year rule applies just as much to these hard cases as it does to a case where the union is defeated hands down. For example, if the union lost by 350 to 250 or by 350 to 150, it would have to wait for three years. I submit that it is against common sense and natural justice that no distinction can be drawn between the two types of case. It seems to me and many others that it is no more than fair play to say that where a union has won the ballot despite the fact that 40 per cent of the whole bargaining unit has not cast a "yes" vote, the union should be able to make another attempt after one year.
I have not brought with me an overall statistical analysis, but I am sure that the DTI has this information to hand. Although my amendment would make a difference in only a quite limited number of

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cases, I think it fair to put the case for the change. It would not affect an enormous number of cases. I am sure that any independent observer would be more than happy to accept my argument and I trust that my noble friend the Minister will do likewise. I beg to move.
Baroness Miller of Hendon: I am very glad to hear from the noble Lord, Lord Lea, that he is not suggesting that people should be able to come back and have another ballot the next day or next week; such an arrangement would be too horrendous for words. I believe that the three-year period was probably designed to prevent what could be called a war of attrition between employers and employees who do not want representation, so that they are gradually worn down by a constant series of applications year after year. I think that Parliament agreed on the three-year quarantine period as a result of its collective wisdom, and I do not think that anything in real life has shown that it is absolutely out of order and ought to be altered. I very much hope that the Government will reject the amendment.
Lord Davies of Oldham: I am grateful to my noble friend Lord McCarthy for the way in which he introduced his amendment, save for two aspects. He chided me about not responding to one or two additional points on a previous amendment, which I would not dream of infringing upon at this stage, except to say that there was a slight mistake on my part. I had thought that my noble friend Lady Turner was replying to the noble Earl, Lord Attlee, when in fact she was withdrawing the amendment, effectively ending my contribution. I did not seek to ignore my noble friend's points. As my noble friend Lord McCarthy has rightly said, we shall return to those issues during our deliberations. We shall certainly ensure that the points in question are returned to.
The other aspect of my noble friend's contribution for which I did not thank him—although I appreciated much of it—was a trip down memory lane to Scottish devolution in 1978. As a veteran of the Parliament at that time, I remember that vote. We all recognise how significant that concept was at that time and what it meant for Scottish devolution. It is not helpful to go back over that ground in seeking to persuade Ministers about how to deal with the present position.
My noble friend will recognise the obvious point—and I accept part of the point made by the noble Baroness, Lady Miller—that we seek some stability in these arrangements. He will know that we are at this point as a result of the substantial work that produced the pre-1999 TUC/CBI agreement. Nobody on any side pretended that everybody got everything they wanted from the legislation at that time.
I recognise that my noble friend finds aspects of the present position exceedingly irksome, but he will know that a reasonable case has been put forward: a degree of stability is needed. A ballot is an important aspect for both workforces and employers. When used in the workplace, it is likely to attract considerable interest and activity. But it is not the kind of thing that one
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would wish to occur every two or three months. The noble Baroness, Lady Miller, may have overstressed the matter when she suggested that people could mobilise themselves for the very next day. But there must be some judgment on what is an appropriate interval before returning to an issue.
The Government's case is that the period of three years enables some stability. Recognition of the union allows the new relationship between the parties to bed in without attempts being made to derecognise the union within a short space of time. When workers give their union a mandate to continue to represent them in collective bargaining, their employer must respect that for three years. There is an obvious point in which that provision is a counterpart to that.
I hear what my noble friend has said. I respect the strength with which he has put forward his position. But he will recognise that some judgment must be made and agreement reached, part of which is to allow the Government to legislate on what is a reasonable time for new arrangements to bed down or, if failure occurs, a reasonable period for which the situation can prevail before a second attempt is made. The judgment of the Government is that there should be a three-year period. I hope that my noble friend will recognise that there is general strength behind that position, and that he will feel able to withdraw the amendment.
Lord Lea of Crondall: I am afraid that my colleague has failed to address the point that I made. I do not know whether he listened carefully to what I said and I shall ask him to respond in a minute. I am sure that he has heard me on this amendment almost to the point of tedium. It distinguishes the position where a union has lost the vote and it has to wait for three years. First, let me ask him to acknowledge that that is an agreed point in the context of what I am putting forward here. I ask the Minister to give further thought to what I am suggesting. That is that if there is a union victory in the ballot, but it fails, perhaps by a whisker, to get 40 per cent of those entitled to vote, as there has been in one or two cases, it is against common sense for it to have to wait for the same three-year period. That will not be a war in the sense of any other war. This is a very special case where they have won the vote.
Unless he is asking the trade union movement to come down totally against the three-year rule, I am saying that this is a helpful amendment to the Government. I ask him to think very carefully, before we come to Report, about the merits of drawing a distinction between where the union has lost a vote and must wait for three years on the one hand, and where it has won the vote but has failed to get the 40 per cent on the other. Maybe it has failed to get 40 per cent because it failed to get the right turnout, rather than it failed to get the balance of support for recognition in the establishment or the bargaining unit. It has just failed to get the 40 per cent turn out. We all know how easy it is to fail to get a 40 per cent turnout.
In this particular case, I am leaning over backwards to contradict, as it were, TUC policy and am accepting that the three-year rule is there. However, where there has been a victory for the union in the ballot but it just

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failed to get 40 per cent of those entitled to vote, will the Minister pause and think again about whether there is not a very strong case for saying that then the union have to wait for a year or 18 months? There is no point in saying two years and six months, so let me say a year. Then it can have another attempt to bring forward a procedure and it may be that if the same thing happens a second time, which would be like lightening striking twice, and would be the end of it. But that is another story and it would be too complicated to draft.
I am saying this for the 14th time to make sure that people have not misunderstood it. Basically speaking, if the union wins the vote, but it has not got the 40 per cent turnout, Ministers may distinguish this from a case where the union has lost the vote and it has to wait for three years. That is what I am putting forward and that is what I ask my noble friend to give a little more thought to. I ask him to do that before Report and I ask him to give it a little more thought before I withdraw the amendment.
Lord Davies of Oldham: I reassure my noble friend that I have given considerable thought to this. The problem is, as he says, that union won the vote and has met one of the conditions of victory, but it has not met the other condition. First of all, his amendment does not apply to anyone else who fulfils one condition of victory but not the other. It only applies on one side, the trade union side. Secondly, I think that he recognises that there must be a figure because his speech indicated it and he is a reasonable person in discussion. He has not presented a situation to the Committee where the trade union had won the ballot by three per cent to two per cent and said that that was a victory and therefore they should have the chance to have another go at it. He is indicating that it must be a narrow defeat. We would have to define exactly what "narrow" is; what the scope should be. We would need to have a figure to indicate within what range a "narrow failure" could be defined in order to arrive at 40 per cent. My noble friend will recognise that what he is doing is in effect recasting a concept which has been agreed.
I do not say that the concept is set in stone, but I do say that he must recognise that this a lopsided approach to the issue. It will not do to say that the narrowness of the failure to meet one criterion gives scope. That would require a definition. We would then have another concept of the threshold, in effect a subsidiary threshold. One threshold would stipulate 40 per cent, and there would be a second threshold which allowed that if the vote was over a certain amount, the union could come back within a year. At another percentage point or so above that, the union could come back within six months.
4.15 p.m.
This issue would open up the whole question of the criteria for judgment of the ballot. While I know that my noble friend will not accept my argument, I can say only that it is obvious that, from the Government's
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position, unless there is an entire proposal that recasts this very important concept, minor tinkering is not minor tinkering at all. It would require us to redefine the position.
Lord Lea of Crondall: I thank my noble friend for what he has said. I will prepare a different amendment before we reach the Report stage and will seek to discuss it with Ministers. That amendment will say that 3 per cent versus 2 per cent is not what I have in mind. On that basis, for the moment I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camdenmoved Amendment No. 25:
After Clause 10, insert the following new clause—
"REPEAL OF PROVISION RELATING TO RECOGNITION OF THE 1992 ACT
In Schedule Al to the 1992 Act (collective bargaining: recognition) in paragraph 7 the provision exempting employers with fewer that 21 members shall cease to have effect."
The noble Baroness said: In moving Amendment No. 25, I shall speak at the same time to the provisions of Clause 11. I and a number of my noble friends have said on several occasions that we welcome the provisions to make recognition easier for unions to obtain. There is no dispute about that. We believe that when a significant number of employees indicate an interest in union membership and in being represented, there should be proceedings by which recognition can be lawfully obtained.
However, this Bill retains the exemption for small firms, despite strong objections from the TUC. This amendment seeks to delete the exemption for firms with fewer than 21 employees. It should be said in support of this amendment that it is often employees in small firms who are most in need of protection. Larger firms are likely to have managers with some knowledge of employment law or, in the case of very large firms, personnel departments with managers knowledgeable about employment rights. That is often not the case in small firms, which employ a substantial proportion of the workforce of this country. Unless the stipulation is removed, or something similar to our amendment is accepted, several million employees, many of whom are poorly paid, will remain outside the provisions of this Bill, and thus the possibility of the protection that a recognised, independent trade union would provide.
I know that the TUC has lobbied strongly on this and I hope that there has been time for the Government to rethink their position. Clause 11 details arrangements by which employers may utilise a decline in the number of the workforce to derecognise, which would not be needed if this amendment or a similar provision were accepted. I beg to move.
Lord McCarthy: I have tried very hard to run to earth the arguments advanced when the legislation was passed as to why those unfortunate enough to work in firms of 21 or fewer could not use the procedure. That was not really discussed when the Bill went through the

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House. The best I could find was paragraph 4.17 of Fairness at Work, the document that the Government introduced when they first came into office. It states:
"Many small companies recognise trade unions already".
We know that. It goes on to say that, "Many do not". We know that too. It continues:
"In many small firms employment relations are managed not just on an individual level, but on a personal level. In these circumstances statutory requirements on trade union recognition would he inappropriate".
That is a non sequitur. I will read it again. It states:
"In many small firms employment relations are managed not just on an individual level, but on a personal level".
What is the difference between an individual level and a personal level? The Oxford English Dictionary says that "individual" means "relating to one". It says that "personal" means,
"relating to a particular individual".
All family law relates on a personal level, as does a very great deal of labour law. What on earth does this mean? It means absolutely nothing. In fact, the Government have never advanced any argument at all. Nevertheless, an argument can be advanced.
I challenge the Government—to some extent my noble friend has already done so—to say that any of the arguments that might logically be used, at least in principle, do in fact apply. One might argue that we do not need to apply this legislation to small firms because they are already very good employers—we all know what excellent employers they are—but that is not what research tells us. That is not what Guest and Rosenthal found in 1993 when they talked about the "black holes" of small firms. It is not what Sisson found in 1990 when he talked about the "bleak house" of small firms. Above all, it is not what has been shown in one WIRS survey after another.
The research shows that small firms pay below the average and that workers have less security, lower productivity and poor conditions. Of course they do—because they are small; because many are not very good at their job and cannot become big firms. If they are good at their job, then good, they can become big firms. If that happens, then on the whole their industrial relations will become better because they can afford for them to get better.
I am glad to see that the Government do not dare to advance the argument that we do not need to apply this legislation to small firms because they are much better employers.
The second argument is that these firms are already well organised. But they are not—they are extremely badly organised, and we all know why. In such firms there is a high turnover and a lot of part-time work. They also have an older labour force with family ties. All kinds of conditions in small firms make it extremely difficult for unions to organise.
Of course that does not mean that unions cannot have an impact when they get into small firms. Small firms in the printing industry were well organised and it made a difference. In the United States, particularly under the New Deal, a whole range of small scale industries were unionised. The result was an improved
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labour force, improved wages and higher productivity. The point is not that unions cannot make a difference but that the objective conditions can make it much more difficult to unionise.
So I do not think that the Government can advance any such argument. They certainly did not do so in Fairness at Work.
My last point is that although the Bill couches the point in a way which is not apparent, what we are giving here is a right to workers and we are supposed to be giving it to all workers. It is not the employers' right to recognise; it is the workers' right, in certain specialised circumstances, to gain recognition. By what right do we deny this right to those who need it most and who are in the most difficult situation? I think that it is time that the Government changed, moved and altered their position, just a bit, to enable small firms with underpaid workers, to make an attempt at recognition.
Baroness Miller of Hendon: I would certainly oppose Amendment No. 25. Indeed, I would also oppose that Clause 11 should be deleted from the Bill. As regards Amendment No. 25, the noble Baroness, Lady Turner, and the noble Lord, Lord McCarthy, both made the point that trade unions have lobbied the Government heavily on this point. I know not whether the employers organisations have equally lobbied the Government hard on that point, but they have lobbied me and told me of the difficulties that they would have if this happened.
The noble Lord, Lord McCarthy, made the point that employees in companies that employ fewer than 21 people often have poor pay, are not necessarily well treated, and so forth. That is not my experience of small businesses. We should not start on the basis of always assuming that things are wrong. In my understanding, small businesses employ overall a far larger part of the workforce than larger employers. It is important that we protect them so that they do not go out of business.
Clause 11 relates to the employers right to end bargaining arrangements. To delete that would be wholly objectionable. The clause contains very stringent provisions about how that might be achieved. If the amendment is accepted or passed, an employer would be saddled with union recognition for ever, no matter what changed circumstances there may be for the company or, indeed, even a change of views of the current employees. I would strongly oppose its deletion.
Lord McCarthy: Does the noble Baroness not recognise that under the terms of the legislation there is a derecognition procedure that an employer could invoke, which is exactly the same as the rule for companies with under 21 employees?
Baroness Miller of Hendon: That may very well be the case. But I think that this would fall heavily on small businesses.
Lord Razzall: As noble Lords will recognise, I do not tend to intervene in the private grief between the Minister and his side on these issues. The negotiations

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between the TUC and the Government should be taken in totality. So far, in the first hour of this Committee, we have listened to an attempt from the Minister's side to rediscuss and renegotiate on a piece-by-piece basis individual items that were part of the overall package that was eventually arrived at as a compromise between the TUC position and the Government position.
To Members of the Committee who were not part of those discussions the Government appear to be in some difficulty. If they start to unravel the individual pieces of the Bill, the CBI and the employers will say to them, "You have given in to the noble Lord, Lord McCarthy, and the noble Baroness, Lady Turner, on those points and therefore"—
Lord McCarthy: Does the noble Lord agree—
Lord Razzall: I have listened to the noble Lord for two days: I should like to finish what I have to say. Before the noble Lord, Lord McCarthy, rises, I want to say that I found one thing that he said absolutely reprehensible. He said—which I wrote down—that, "The reason that small businesses are small is because they are not successful. If they were successful they would be bigger and therefore the 21 requirement would not apply".
That is a reprehensible remark, particularly in the context of the modern world. I suspect that it is some time since the noble Lord, Lord McCarthy, had direct experience of what is happening in business. Clearly. Her Majesty's Government have been successful managing the economy of this country. To a large extent that is due to the economic success of the sort of businesses that the noble Lord, Lord McCarthy, just said were unsuccessful because they employed under 21 people. The world in which we had sweatshops in Manchester with fewer than 21 people employed is fortunately almost gone for ever. The sweatshops ought to have gone—although we may regret the fact that a lot of the manufacturing industry has gone to India or China or wherever. In the modern world, we have large numbers of modern hi-tech industries with firms that employ significantly fewer than 21 people. They are highly successful. To say that small firms with fewer than 21 people are a failure and that if they were not a failure they would be bigger is a charge that simply ought to be withdrawn.
4.30 p.m.
Lord McCarthy: But this is a review. One cannot really say that the Government set the thing in stone in 1999, as they said that in five years' time they would have a review. This is the review. All sorts of things are being changed; one cannot say that if one changes this little detail the whole thing will unravel, otherwise we would not have a review at all.
Lord Davies of Oldham: Of course, the Government do not oppose the principle of recognition in small firms. Indeed, we know that recognition in some small firms can work very well. We recently funded a project proposed by several unions under the strategic
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partnership fund to explore the ways in which unions can work best with proprietors and managers in micro-businesses. The project should certainly produce some useful guidance on good practice in that regard.
We simply do not believe that it would be appropriate to impose recognition in very small micro-businesses. Such firms tend to have personalised working relationships, as my noble friend Lord McCarthy said. I shall not get into a discussion about individual versus personalised at this stage. It is likely that in small organisations managers and workers will have much more direct contact. That is bound to change the character of relations in such organisations.
I would be the first to appreciate the point that my noble friend Lord McCarthy made that there can be instances when things go very wrong indeed. It is certainly the case that small units in the past were the source of grievous exploitation, but it is a different world today. People are much more confident with regard to their rights and their bargaining position in wider society, not least against the background of a more successful economy—as the noble Lord, Lord Razzall, was generous enough to suggest. With low levels of unemployment, people working in small organisations are likely to get a decent deal; if they do not, they are up and off. That is certainly the position with a lot of young workers these days, who do not consider themselves as committed to one workplace for the length of their working lives. We are in an infinitely more flexible economy these days. As the noble Lord, Lord Razzall, said, small units are a feature of that economy.
We know the threshold opposed by the trade unions, and the Government considered the issue very carefully. As my noble friend Lord McCarthy said, this is an opportunity to review the 1999 position, so it is only right that the Government should look into these matters afresh. We have reviewed carefully the operations of the Employment Relations Act 1999. However, unionisation and collective bargaining have never been a marked feature of employment relations in such very small businesses. The review that we carried out discovered a lack of demand for recognition in the smallest organisations. Very few workers in small businesses are union members, although such businesses employ millions of people in the present economy. We estimate that in firms employing 10 to 20 workers only 4 per cent are union members.
I understand my noble friend's concern that those figures should be improved upon, and I recognise that there are cases in which such improvements would bring benefits to workers. However, we have to face the facts as they are. We are talking about a very small percentage of workers in organisations of fewer than 20 workers. We have also seen limited demand for recognition in those organisations that are just above the threshold. I feel that I shall spend the whole afternoon chopping and changing with figures, but let me make the obvious point. Less than 5 per cent of CAC applications involve businesses employing

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between 21 and 30 workers. That category of organisations just above the threshold is little involved with regard to the CAC procedures.
The definition of the threshold includes employment by the employer and any associated employers. That arrangement captures the situation where employers might split their businesses under common ownership to ensure that each entity is too small—in other words, below the 21–person threshold. Our review found that the legislation had worked as intended. There was no evidence that employers had restructured their businesses to avoid the recognition threshold.
Of course, recognition is not the only means whereby workers can receive union services at the workplace. We must remember that the right to be accompanied by a union official at disciplinary and grievance hearings applies to employers of all sizes of unit. The 1999 Act established that right, and other parts of this Bill strengthen the entitlement. That is only right and proper. I can reassure my noble friend that these arrangements are part of the 1999 position. They deal with the individual entitlements of workers, ensuring that individual union members can access their union's services at key events affecting their future.
I maintain that my noble friend's proposal is inappropriate. It could lead to unhelpful situations where employers—including tiny organisations employing just one or two people—are required to establish formal bargaining arrangements with trade unions. Our preferred approach in the case of these very small organisations is to leave it entirely to the parties whether recognition should occur. Our funding of the project on effective union relations in micro-businesses should help to inform the decisions which those parties take.
My noble friends also indicated that they did not like Clause 11, and I have a very extensive defence of the intricacies of that clause. However, I assume that the reason why they do not like the clause and are objecting to its standing part of the Bill is due to the particular point of the threshold.
Baroness Turner of Camden: Yes, that is right.
Lord Davies of Oldham: So I shall not go into a long defence of Clause 11, and I hope that I have given a strong enough argument for my noble friend to feel able to withdraw the amendment.
Baroness Turner of Camden: I thank my noble friend the Minister for that response, which did not really surprise me.
I shall deal with some of the points raised in the debate. I should tell the noble Baroness, Lady Miller, that of course we are not against small businesses. I have never been against them; in fact, when I was a member of the TUC general council, I and my noble friend Lord Lea were members of a committee set up deliberately under the DTI to give assistance to small businesses. We supported that move because we realised that small businesses employ a lot of people
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and help to deal with unemployment in several areas. We are not against small businesses, and nor is our proposal.
We are concerned with ensuring that if people exercise their right to belong to a union, recruit their colleagues and want then to be bargained for in a small firm, they should have the right to the bargaining arrangements available in the Bill, even though the firm involved may be small. As my noble friend Lord McCarthy pointed out, if the membership falls, the employer under the Bill would have the right to opt for derecognition, because the procedures are set out in the Bill. We are concerned about ensuring that, if people want to belong to a union in a small firm and want to have their terms and conditions bargained for because they have managed to recruit their colleagues, that should be available to them under the Bill.
In response to the remarks of the noble Lord, Lord Razzall, I repeat that we are not against small businesses. This provision is not directed against them. We are concerned about the right of individuals to belong to a union and be bargained for by it. I accept that this is a package, so to speak, but in Committee we are entitled to deal with individual issues, which is what we have been trying to do.
We are concerned that this is a matter for a very large number of employees. I gather that around 6 million workers are employed in small companies. We are anxious to ensure that they can enjoy the same rights available to those who work in large companies. However, I note what the Minister has said. I shall think about his response to see whether there is some way in which we might be able to come back to the matter on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12 [Unfair practices in relation to derecognition ballots]:
[Amendment No. 26 not moved.]
Lord Triesmanmoved Amendment No. 27:
Page 15, line 34, leave out from beginning to end of line 3 on page 16 and insert—
"119C (1) This paragraph applies if the CAC decides that a complaint under paragraph 119B is well-founded.
(2) The CAC must, as soon as is reasonably practicable, issue a declaration to that effect.
(3) The CAC may do either or both of the following—

(a) order the party concerned to take any action specified in the order within such period as may be so specified, or

(b) make arrangements for the holding of a secret ballot in which the workers constituting the bargaining unit are asked whether the bargaining arrangements should be ended.

(4) The CAC may give an order or make arrangements under sub-paragraph (3) either at the same time as it issues the declaration under sub-paragraph (2) or at any other time before it acts under paragraph 121.
(5) The action specified in an order under sub-paragraph (3)(a) shall be such as the CAC considers reasonable in order to mitigate the effect of the failure of the party complained against to comply with the duty imposed by paragraph 119A.
(6) The CAC may give more than one order under subparagraph (3)(a).
119D (1) This paragraph applies if the CAC issues a declaration under paragraph 119C(2) and the declaration states that the unfair practice used consisted of or included—

(a) the use of violence, or

(b) the dismissal of a union official.

(2) This paragraph also applies if the CAC has made an order under paragraph 119C(3)(a) and—

(a) it is satisfied that the party subject to the order has failed to comply with it, or

(b) it makes another declaration under paragraph 119C(2) in relation to a complaint against that party.

(3) If the party concerned is the employer, the CAC may refuse the employer's application under paragraph 106 or 107.
(4) If the party concerned is a union, the CAC may issue a declaration that the bargaining arrangements are to cease to have effect on a date specified by the CAC in the declaration.
(5) The powers conferred by this paragraph are in addition to those conferred by paragraph 119C(3).
119E (1) This paragraph applies if the CAC issues a declaration that a complaint under paragraph 119B is well-founded and—

(a) makes arrangements under paragraph 119C(3)(b),

(b) refuses under paragraph 119D(3) or 119H(6) an application under paragraph 106, 107 or 112, or

(c) issues a declaration under paragraph 119D(4) or 119H(5).

(2) If the ballot in connection with which the complaint was made has not been held, the CAC shall take steps to cancel it.
(3) If that ballot is held, it shall have no effect.
119F (1) This paragraph applies if the CAC makes arrangements under paragraph 119C(3)(b).
(2) Paragraphs 117(4) to (11) and 118 to 121 apply in relation to those arrangements as they apply in relation to arrangements made under paragraph 117(3) but with the modifications specified in sub-paragraphs (3) to (5).
(3) An employer's duty under paragraph (a) of paragraph 118(4) is limited to—

(a) giving the CAC the names and home addresses of any workers in the bargaining unit which have not previously been given to it in accordance with that duty:

(b) giving the CAC the names and home addresses of those workers who have joined the bargaining unit since he last gave the CAC information in accordance with that duty;

(c) informing the CAC of any change to the name or home address of a worker whose name and home address have previously been given to the CAC in accordance with that duty; and

(d) informing the CAC of any worker whose name had previously been given to it in accordance with that duty who has ceased to be within the bargaining unit.

(4) Any order given under paragraph 119(1) or 119C(3)(a) for the purposes of the cancelled or ineffectual ballot shall have effect (to the extent that the CAC specifies in a notice to the parties) as if it were made for the purposes of the ballot for which arrangements are made under paragraph 119C(3)(b).
(5) The gross costs of the ballot shall be borne by such of the parties and in such proportions as the CAC may determine and, accordingly, sub-paragraphs (2) and (3) of paragraph 120 shall be omitted and the reference in sub-paragraph (4) of that paragraph to the employer and the union (or each of the unions) shall be construed as a reference to the party or parties which bear the costs in accordance with the CAC's determination.
119G (1) Paragraphs 119A to 119C, 119E and 119F apply in relation to an application under paragraph 112 as they apply in relation to an application under paragraph 106 or 107 but with the modifications specified in this paragraph.
(2) References in those paragraphs (and, accordingly, in paragraph 119H(3)) to a party shall be read as including references to the applicant worker or workers; but this is subject to subparagraph (3).
(3) The reference in paragraph 119A(1) to a party informed under paragraph 117(11) shall be read as including a reference to the applicant worker or workers.
119H (1) This paragraph applies in relation to an application under paragraph 112 in the cases specified in sub-paragraphs (2) and (3).
(2) The first case is where the CAC issues a declaration under paragraph 119C(2) and the declaration states that the unfair practice used consisted of or included—

(a) the use of violence, or

(b) the dismissal of a union official.

(3) The second case is where the CAC has made an order under paragraph 119C(3)(a) and—

(a) it is satisfied that the party subject to the order has failed to comply with it, or

(b) it makes another declaration under paragraph 119C(2) in relation to a complaint against that party.

(4) If the party concerned is the employer, the CAC may order him to refrain from further campaigning in relation to the ballot.
(5) If the party concerned is a union, the CAC may issue a declaration that the bargaining arrangements are to cease to have effect on a date specified by the CAC in the declaration.
(6) If the party concerned is the applicant worker (or any of the applicant workers), the CAC may refuse the application under paragraph 112.
(7) An order given to an employer under paragraph 1 19C(3)(a) or sub-paragraph (4), on being recorded in the county court, may be enforced in the same way as an order of that court.
(8) The powers conferred by this paragraph are in addition to those conferred by paragraph 119C(3).""
The noble Lord said: Amendment No. 27 provides the remedies available to the CAC where it finds that a complaint of unfair practices in relation to a derecognition ballot is well founded. As far as possible, the framers of the Employment Relations Act 1999 sought to ensure that the procedure for derecognition of a union which has been the subject of an award of statutory recognition should mirror the Part 1 procedure for recognition. Therefore the remedies introduced by this amendment are essentially the mirror of those which will apply to unfair practices in relation to ballots on recognition. We have already discussed these remedies in some detail in our debate on Amendment No. 20. I hope, therefore, that noble Lords will permit me to concentrate on only a couple of small points of difference between the two rather than the areas in which they are the same.
This applies in the rare situation where a worker or workers, not the employer, has made the application to derecognise the union. This is provided for in paragraph 112 of the statutory procedure. It is the only case under the statutory procedure where there are three distinct parties to the application: the union, the employer and the applicant workers. The amendment

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therefore contains additional paragraphs 119G and 119H. Paragraph 119G ensures that the remedies for unfair practices apply in relation to an application for derecognition by a worker, and makes clear that an applicant worker can both make complaints and be the subject of complaints of unfair practices.
There is a difficulty, however, in applying the "red card" sanction—the football analogy I used during our first sitting in Grand Committee—which applies where the employer has failed to comply with an order of the CAC, or has committed a second unfair practice subsequently. This same difficulty applies where the employer has committed an unfair practice which involves either violence or the dismissal of a union official. If the application in question had been made by the employer, the CAC would be able to reject the employer's application for derecognition. Where the application in question has been made by a worker or workers, for two obvious reasons the same sanction could not apply.
First, it is not possible to know with certainty the employer's attitude to the worker's application. It might be natural to assume that the employer would favour derecognition of the union, although he might take exactly the opposite view. If it is the case that the employer favours derecognition, then the sanction that the application was rejected might well have a punitive and deterrent effect on the employer. However, there may be situations where the employer is in favour of the continued recognition of the union, perhaps because he believes that a less preferable union is waiting in the wings to seek recognition should the worker's application be successful.
Secondly, even were it possible to determine the employer's true attitude towards the application under consideration, it would not be just to punish the union or the worker for transgressions which might have been committed by the employer. The worker should not have the application rejected, nor should the union he derecognised because the employer has misbehaved.
4.45 p.m.
With that in mind, the Government have devised a different remedy for that very particular case. Where, in the case of' a worker application for union de-recognition, an employer is guilty of failing to comply with an order of the CAC, committing a second offence after the order has been issued against it, or committing an unfair practice involving violence or the dismissal of a union official, the CAC will be able to order him to refrain from all further campaigning in the ballot. This order and the CAC's initial order to take mitigating action will be enforceable as though they were orders of the county court, should the employer continue to fail to comply. If an employer does not comply with an order of the county court, he may be found to be in contempt of court and liable to an order for sequestration or even imprisonment.
To date there have been no applications by either an employer or a worker for de-recognition of a union awarded recognition under the procedure. The
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Government expect applications by workers to be extremely rare. We must legislate, however, for the possibility that it could occur, and for the possibility that an unprincipled employer may see encouraging the worker to make an application as a way to engage in unfair practices—a matter that they could undertake with impunity. I believe that the sanction I have just described and the enforcement mechanism that backs it up are sufficiently strong to discourage rogue employers seeking to exploit worker applications for their own ends.
Amendment No. 28 mirrors Amendment No. 22, providing that where the CAC decides to order a ballot on de-recognition to be rerun, its duty is to reveal the result of the first ballot to the parties, and that would then not apply in these circumstances.
Amendment Nos. 30 and 94 make consequential changes to the Bill and the recognition schedule. Amendment No. 30 deletes a reference to the power at paragraph 27C from Clause 14, because that power is deleted by Amendment No. 27. Amendment No. 94 ensures that the provisions of Clause 12 apply to applications for de-recognition under paragraph 128.
The Government believe that the remedies for unfair practices in relation to de-recognition ballots, like those for unfair practice in relation to recognition ballots, are fair and effective. They provide a mirror image of what is to apply in the case of recognition as well as a strong alternative to deal with the unusual case where there are three parties to a ballot. In that light, I beg to move.
Baroness Miller of Hendon: When I first saw Amendment No. 27, I took a sharp breath, as it has substituted the deletion of 17 lines with a huge provision. It took me quite some time to get my mind around it. I thank the noble Lord for explaining the amendment very clearly. I think that I spoke to Clause 9 on something very similar. We are perfectly happy with the amendment and those grouped with it.
On Question, amendment agreed to.
Lord Triesmanmoved Amendment No. 28:
Page 16, line 3, at end insert—
"( ) In paragraph 121 of that Schedule (duties of the CAC when informed of result of ballot), after sub-paragraph (1) insert—
"(IA) The duty in sub-paragraph (1) does not apply if the CAC makes arrangements under paragraph 119C(3)(b).""
On Question, amendment agreed to.
Clause 12, as amended, agreed to.
Clause 13 agreed to.
Clause 14 [Power to amend Schedule Al to the 1992 Act]:
Lord Triesmanmoved Amendments Nos. 29 and 30:
Page 17, line 2, leave out "27C,
" Page 17, line 3, leave out "119C,"
On Question, amendments agreed to.
Lord Davies of Oldhammoved Amendment No. 31:
Page 17, line 3, after "166A," insert "166B,"
The noble Lord said: As Amendment No. 31 is a straightforward amendment, I shall be able to make a contribution that is slightly less controversial, at least on this side of the Committee, than all my previous ones.
This amendment should have been made in another place when Clause 16 was added to the Bill. Clause 16, as the Committee will be aware, provides a power at paragraph 166B of the statutory procedure for the Secretary of State to provide that the use of unfair practices is prohibited during any period of the statutory procedure prior to the ballot period. The purpose of this power is to allow the Government to respond rapidly should evidence emerge of intimidation taking place before the balloting period.
The amendment is consequential to the addition of Clause 16 to the Bill. It works by inserting a reference to the power at paragraph 166B into Clause 14—the general power of the Secretary of State to amend the schedule following representations from the CAC. Clause 14 lists the specific powers of the Secretary of State to amend particular parts of the schedule. The power at paragraph 166B should therefore be added to that list.
I apologise to the Committee that the amendment was not made in another place and that we are producing it now. We do so in order to ensure that the provision is consistent throughout the Bill. I beg to move.
On Question, amendment agreed to.
Clause 14, as amended, agreed to.
Clause 15 [Means of communicating with workers]:
[Amendments Nos. 32 and 33 not moved.]
Clause 15 agreed to.
Clauses 16 and 17 agreed to.
Clause 18 [Information about union membership and employment in bargaining unit]:
Earl Attleemoved Amendment No. 34:
Page 20, line 5, at end insert "together with the evidence on the basis of which the case manager prepared the report"
The noble Earl said: I should like to speak to the identical Amendments Nos. 34 and 35 together. These amendments are a simple plea for open justice for both sides, the union and the employer alike.
Under Clause 18 the CAC may assign the case to what the section calls "a case manager". The employer, the union and indeed an individual applicant worker are obliged to supply the case worker with such information that the CAC thinks is appropriate. Then, under subsection (6), the case manager writes a report that he submits to the CAC itself. Presumably, and in most cases, the CAC will ultimately base its decision on the contents of that report. Under subsection (8), the CAC must then send copies of the report to the employer, the union and, where appropriate, the individual worker.
However, that does not go far enough. If these parties are going to be able to make representations to the CAC before it announces its decision based on the case manager's report, they really are entitled to see not only the decision but also the evidence on which the case worker based his decision.
It is not beyond the bounds of possibility that the case manager may have misconstrued the facts due to a misunderstanding, or have recommended a decision not supported by the facts. As the procedures laid down by the Bill do not provide for the exchange of evidence or even necessarily a face-to-face hearing, there is no opportunity for one side to test the evidence given by the other. It is a basic principle that a party to judicial proceedings—or in this instance quasi-judicial proceedings—should know exactly what case has to be answered.
All this amendment does is to provide that very necessary ingredient which I am sure has been omitted from the Bill only because of an oversight. I beg to move.
Lord Triesman: It is certainly true that these two amendments are simple and short but, my goodness, they would significantly change the effect of Clause 18. Perhaps I may begin by explaining what the clause does and the way in which it improves the operation of the statutory procedure. I shall then describe why I think that the amendments would be a great deal more damaging than perhaps the noble Earl, Lord Attlee, thinks they would be.
There are a number of points in the statutory procedure where the CAC must apply certain tests to the union's application in order to decide the question that has been put to it. The first of those points is at the admissibility stage. The CAC must satisfy itself of a number of things before it can accept a union's application. Those include that at least 10 per cent of the proposed bargaining unit are members of the union and that a majority of workers in the proposed unit are likely to favour recognition.
Later in the process, the CAC may have to apply the same tests again where a bargaining unit which differs from that proposed by the union has been determined, and the CAC may have to conduct a further check of union membership levels when deciding whether a union should be awarded recognition without a ballot.
In order to decide all those questions, the CAC case manager checks the names of the union members in the relevant bargaining unit, which are supplied by the union, against the list of workers in the bargaining unit, which are supplied by the employer. I hope that I shall not be taxing the Committee's patience if I repeat that point: the list of workers who are members of the union is compared with the list of workers that is supplied by the employer.
Petitions in support of or opposition to a union's application may also be received by the CAC. In that case, the CAC case manager will also seek to verify by

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checking the employer's list that the workers who have signed a petition are members of the bargaining unit. On the basis of those checks, the case manager compiles a report for the panel on the level of union membership and the likely level of support for recognition within the bargaining unit.
Currently, the CAC relies on the parties voluntarily agreeing to provide it with such data. At present, that is done on the basis of goodwill. That has been relatively successful, but it has limits. Negotiating that with the parties inevitably gives rise to some delay. On occasion, one or other of the parties has initially refused to co-operate with a check. Fortunately, the CAC has always been able to find a way through those difficulties. However, it relies on the goodwill of the parties. Ultimately, if a party refuses to agree, the process may be significantly delayed or frustrated.
The clause introduces a power for the CAC to require any party to an application to provide it with the information it needs in order to conduct the checks that I have described. At the same time, the clause codifies the CAC's current practice, which aims to protect the confidentiality of workers' personal details.
That ensures that the names of union members and workers who sign pro-recognition petitions are not disclosed to the employer. Likewise, the names of the workers in the bargaining unit plus the identity of individuals who sign anti-recognition petitions are not disclosed to the union. It also makes clear that the CAC panel does not see those names. So the panel bases its decision only on evidence that is available to all the parties.
That measure will reduce delays in the process. Of particular relevance to this debate, the clause also enshrines in law measures to protect the confidentiality of sensitive worker details in either direction. The amendments would require a case manager to disclose all the evidence to the CAC panel, and thus to the parties, on which the report was compiled. In other words, the case manager would need to append to the report all the data supplied by the employer and the union. That would of course include the identities of workers, and other personal data would be revealed. Confidentiality, which I think all parties would prefer to preserve because of their interests in either direction in the outcome, would be completely undermined.
I wonder if I could, in making this submission, also test out something that has worried me about this amendment and possibly some later amendments. It is worth seeing if there is a genuine difference, or if this is just my imagination. Amendments of all kinds are studied by people way beyond your Lordships' House, and if I may say so, because of the fame of the Miller amendment, probably those standing in the name of the noble Baroness, Lady Miller, are studied with particular care. I wonder whether there is a concern here about whether the CAC's own processes are reliable and whether it can be trusted with sensitive information.
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I am sure that there is no intention to cast doubt on the integrity of the CAC; I have not put that argument, and I hope that it will not be taken in that way. It would be important, looking at these amendments, to ensure that people do not draw the wrong conclusions. I say for the record, and I hope that this is a shared thought, that the integrity of the CAC in handling these kinds of matters has been proven to be extremely sensitive and robust. It has been shown to have treated confidential areas appropriately.
The processes are led by Sir Michael Burton, an experienced High Court judge who has done a tremendous job in steering the CAC through new and sensitive territory. I do not think that there is evidence that those who have worked for the CAC or have been involved in its processes have been liable either to undermine either party or to compromise areas of confidentiality, which noble Lords on both sides of the House have been keen to retain where appropriate. If there is any clarification about an anxiety of that kind, or if I have just got it wrong, which is possible, I would be grateful.
In the light of the submissions that I have made, which are really about confidentiality and the exchange of information in rather sensitive circumstances, I ask the noble Earl to withdraw the amendment.
Baroness Miller of Hendon: I thank the Minister for his lengthy explanation. I was surprised when he said that if this amendment were accepted, Clause 18 would substantially change the Bill. I thought that this was a small, simple, easy amendment. I notice that the official sitting behind the Minister is signalling "no" rather than "yes", so I accept that that is the correct position.
So far as the point that was worrying the Minister is concerned, of course there is no suggestion of that at all from our side of the House, and I am happy to state that now. I do not know if the Minister is correct—I do not suggest for one moment that he is—that when I put down an amendment people notice that it is put down by the same Baroness Miller who had the Miller amendment and they look at it with great interest. I would like to think that was so, but I doubt it.
Having said that, I have no aspersions whatever to cast on the fairness of the CAC. That does not mean that certain later amendments we have put down suggest in any way that we do not think that there could not be some improvements to make it easier for the two parties that are going there. It is not because of any aspersions as to what might happen in the CAC. I will read what the Minister said with great care. I apologise that I did not return in time to move the amendment, so my noble friend had to move it, albeit most ably.
Earl Attlee: I beg leave to withdraw the amendment, subject to the usual caveats.
The Deputy Chairman of Committees (Lord Ampthill): I do not think that we interpreted that absolutely, but never mind.
Amendment, by leave, withdrawn.
[Amendments Nos. 35 and 36 not moved.]
Clause 18 agreed to.
Clause 19 ["Pay" and other matters subject to collective bargaining]:
Baroness Miller of Hendonhad given notice of her intention to move Amendment No. 37:
Page 21, line 21, after "unless" insert "evidence of the extent to which pensions are included in the issues covered by non-statutory collective bargaining arrangements has been published by the Secretary of State and full consultation on the proposed content of the order has taken place with representatives of employers and employees, and"
The noble Baroness said: I listened with great care to what the noble Baroness, Lady Turner, said about her earlier Amendment No. 23, and also to what the noble Lord, Lord Davies, said. I must confess that since I put this amendment down, I have become uncertain that I have got it right in every respect and that it would achieve what I wanted. In order not to waste the time of the Committee, I would like to have some more time to reflect on this matter. I will perhaps bring the amendment back at a later stage.
[Amendment No. 37 not moved.]
Clauses 19 and 20 agreed to.
Lord McCarthymoved Amendment No. 38:
After Clause 20, insert the following new clause—
"PERCENTAGE OF WORKERS VOTING IN BALLOT
(1) Schedule 1 to the 1992 Act (collective bargaining: recognition) is amended as follows.
(2) In paragraph 29(3)(b) for "40" substitute "30"."
The noble Lord said: This amendment deals with the issue that we have debated several times: the conditions required in order to achieve a declaration in favour of recognition. What we call the overall turnout test, instead of being 40, should be 30. I do not want to go over the ground gone over before by my noble friend Lord Lea, except to say that we face a long series of hurdles.
First, there is the fact that the employer is refusing to recognise; the union has to take this employer who is against recognition to the CAC; they must pass the 10 per cent test; they must then either get 50 per cent membership or they must win a ballot; and after that there is the further, sometimes called electorate test, of 40 per cent of the electorate voting in favour. We did not have anything of this kind in the previous Act, and we did not have it in the Industrial Relations Act 1971. The Government say that it is all right, partly because that is what we agreed in the first place, and it is a balance—I accept that. However, the Government also say that it is working well. They have said on many occasions that because it is working well they cannot accept any major change, certainly not a change of the magnitude represented in this amendment. Well, I suggest that if the Government look closely, they will see that it is working adequately rather than well, and it could work a lot better.
There have been 233 applications. Depending on how you look at it, that is much better than last time in some ways, because then we had hundreds and hundreds of applications, but we had so many applications that they could not be dealt with by ACAS, the institution supposed to deal with them. One might say that we had to lower the number of applications, and we have. We have only had 233 applications, because unions know that it is extremely difficult to satisfy the criteria. The Government say that it is working well because 64 declarations have been in favour, and only 23 cases have been lost in relation to ballots. If they go forward and have a ballot, only 23 times have they lost.
The Government also say, and they stress this, that outside the area of the statutory recognition procedure, there has been a significant rise in the number of voluntary recognitions, and therefore it is working well. We say that it is not working more than adequately. A large number of cases are abandoned because agreement cannot be reached on the criteria, or because the unions get discouraged, or because they come to realise that they cannot satisfy the criteria. The Government have admitted that there are long-delayed results. There are records of determined, even unlawful resistance, which is why the present Bill contains provisions for unfair practices. The TUC listed these in its evidence to the Government, which is why there has been some move made in this review.
One of the problems of the legislation is that it has, perhaps naturally in the present circumstances, swallowed the notion of the ballot panacea. It is difficult to argue against voting nowadays. Voting is regarded as the proper way of testing opinion, despite the fact that it suffers from absenteeism, difficulties of contact, and in the end it is difficult to get a high level of responses. That is what people mean when they say that abstentions are votes against recognition. When the previous system operated—when the CIR operated the system and when ACAS operated it—we did not have ballots. We had surveys. Members of' the organisation went round and asked people what they wanted. They took long schedules about, and on that basis, totally confidentially, they decided whether they wanted to recommend recognition. We do not have that now; it is not possible to have that now. So, we get a situation where significant numbers of workers come forward who want to get recognition, but for all kinds of reasons and failures of contact, and all kinds of ways in which employers can put obstacles in the way, unions do not obtain the necessary 40 per cent quota.
My noble friend Lord Lea tried to put forward a mild way in which we might do something for what might be called a close-run thing, when you win the first one and you cannot win the second one. The Government will not listen to that; or maybe they will when they come back. In the meantime, one way around it would be to lower the universal test from 40 to 30. I beg to move.
Baroness Miller of Hendon: I very much hope that I misunderstood what the noble Lord said when he moved his amendment. At one stage I was beginning to

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think that he thought that ballots were not necessary at all. He could not possibly have meant that. I do not say that he said that; I said that one could have interpreted it that way. He also said towards the end of his speech that maybe they could not reach the 40 per cent because some employers put obstacles in the way. He did say that and agrees that it is a possibility.
Some people would say—I am not saying that I am one of them—that a real majority is 50 per cent plus one. I do not think that 40 per cent is an impossible percentage to reach if people genuinely want to do this, either in recognition or de-recognition—
Lord Lea of Crondall: Does the noble Baroness agree that the normal meaning in the English language of 50 per cent plus one is that you get a simple majority? It is not 50 per cent of those entitled to vote.
Baroness Miller of Hendon: That may well be one interpretation. I am not saying that it is incorrect. I am simply saying that I do not think that one can say that because they have not reached 40 per cent it is because in one way or another someone stopped people who wanted to vote from voting. If 40 per cent is the amount that is required, 40 per cent of people would vote. To my way of thinking, that is how it would be. I do not have Schedule 1 of the 1992 Act in front of me. Perhaps the Minister when he replies will say, if this amendment were carried, and the figure was 30 per cent, what would happen if 40 per cent did not want it? Presumably that would be no majority, and it would not count—
Lord McCarthy: If you only needed 30 per cent, that would be all you required. If 40 per cent did not want it, that would be a different answer.
Baroness Miller of Hendon: That is extraordinary. The noble Lord, Lord McCarthy, is not suggesting for one moment that anyone stop the other 70 per cent from voting in any way—they just did not vote. That is the bottom line. As far as I am concerned, 40 per cent is low enough.
5.15 p.m.
Lord McCarthy: Does not the noble Baroness agree that the TUC has submitted evidence on this? I do not know whether she has seen that evidence, but I understand that it is partly—I do not say entirely—because there is evidence that employers have found it relatively easy to make it difficult for people to vote. They could hold the vote when people were not there and therefore could not vote. Thus it was felt necessary to put in the Bill a whole series of remedies for unfair practices so that we could deal with the problem, which is not an imaginary problem.
Lord Lea of Crondall: It is important to make absolutely clear on the record the actual situation that results from a minimum "yes" vote of 40 per cent. With respect to the noble Baroness, Lady Miller, who understands these questions very well, I think she may have a blind spot about this point.
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At the moment, far from a simple majority of 50 per cent plus one, as she advocates, let me cite an arithmetical example of a result that would not lead to recognition. I have written it down to ensure that I get it right. If a vote was won by 39 to 38—we are not arguing here whether that is a sufficient majority, I seek simply to illustrate the point—that represents a 77 per cent turnout with a majority vote, but the answer would be no. That is how it works at the moment.
There are, I think, some half a dozen cases of near misses of this sort, which is why, as my noble friend Lord McCarthy remarked, there are different ways of skinning this cat. But I also think that a 50 per cent turnout is another way of looking at it. No doubt we shall discuss that before we reach the Report stage.
As for the most satisfactory way to deal with it, at the moment it is something of a travesty of democracy to demand a turnout of 77 per cent.
Baroness Miller of Hendon: I certainly have not seen the evidence from the TUC. However, no doubt the Government will have seen it and therefore I am perfectly content to listen to whatever the Minister has to say on this amendment. It is interesting to note that in so many amendments, the aim is to lower the threshold. Perhaps in this case the Government think that that is the correct course. If that is so, then so be it.
For the record, I did not say that I thought it should be 50 per cent plus one; I made a particular point of saying that I did not think that. I merely cited the number.
Lord Triesman: This has been a difficult issue for some time, one in which sharp contention is possible between unions and employers. However, with the greatest respect to my noble friend Lord McCarthy, it is not fair to say that it is working only adequately. Voluntary arrangements are not a bad starting point. From my own experience, where a union is able to achieve an agreement on a voluntary basis, that is not bad and usually sets the sails rather fairer for the period that follows than when one has had to grind out a raw dispute through a compulsory mechanism. Often that leads to a result that leaves a sourness on the part of all those involved. So I would not want anything on the face of Bill that might harm the voluntary route since, objectively, that must be the best option for everyone.
While it is possible to find out the opinion of people in a workplace, voting is an attractive option when compared with most of the alternatives. These days, people are extremely concerned to ensure that they have the right to express their own views. They may choose not to vote, but it is regarded at the least as a very valuable asset in the generality of instances.
I want to come in principle to the realpolitik of the matter. The 40 per cent threshold is an integral part of the recognition procedure. Because of it, a "yes" vote produces an unequivocal demonstration that there is positive support for recognition among the workforce. This prevents anyone, whether an employer or anyone else, from arguing that a union won on an unrepresentative ballot in a low turnout. Even when

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the process is compulsory rather than voluntary, that improves the chances of a constructive working relationship between union and employer being established.
When the threshold was introduced, some thought it would be a major barrier to recognition. I paused and considered that point myself, but it is always worth looking at the evidence to see whether one's own concerns have been realised in practice. In fact, out of the 88 ballots ordered by the CAC, only two have been lost because of the 40 per cent threshold. A quick sum in my head puts that at near enough 2.5 percent; therefore, 97.5 per cent have not fallen on the threshold.
It is also worth bearing in mind that the 40 per cent threshold also applies in derecognition ballots. I note that the proposed clause does not amend subparagraph 121(3)(b) of Schedule Al of the 1992 Act, which imposes an identical requirement in derecognition ballots. I do not know whether that is the intention of Members of the Committee in tabling the amendment. However, it is the Government's belief that whatever the arrangements finally agreed, the recognition and derecognition arrangements should mirror one another and be seen to be fair because they have done so right across the piece.
The most crucial part of the realpolitik is that the 40 per cent threshold was part of the balanced package that was negotiated with unions and employers in 1999. It is absolutely right for my noble friend Lord McCarthy to say that this is an occasion for review; there has been a detailed review, in which no evidence was found to suggest that the process has failed. We would be inviting others to unpick those parts of the recognition procedure which they did not like if we were to amend the threshold arrangements now. I cannot believe that that would do anything other than to disturb all the elements of the balances that have been struck. The issues are not small ones, nor are they without their symbolism. Moving in an area with such an impact is bound to raise a vast variety of difficult issues. I do not want to overstate, but I believe that that is the case.
In conclusion, the Government believe that the 40 per cent figure serves a generally useful purpose and should be retained. I would therefore ask my noble friend to withdraw his amendment.
Lord McCarthy: The Minister as usual makes a very good case, and I accept that something had to be done this time to mark out the difference between this time and the previous two times, which were generally regarded as disasters.
The key to that difference is the ballot—I fully accept that. The point was that, if there were a ballot, as long as it was a majority ballot, it would be very difficult for the employers to resist. On the other hand, ACAS used to recommend recognition when there was a membership of only about 10 or 15 per cent. When it did a survey, it almost always recorded a majority; therefore, the committee would recommend some kind of recognition, because it related it to the size of the
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union membership in the bargaining unit. I regard that as a much more sophisticated and intelligent way in which to find out what people think.
I must say this, although I know that I shall shock certain Members of the Committee—sometimes there are better things than votes. There are things that one wants to find out, which one can find out much more scientifically through surveys. There may be a 100 per cent return and, as long as one believes the people who collected the survey, one gets a much more sophisticated feeling of what people think than if one has asked them to vote.
I accept that that option is not possible, however, and that the Government this time had to do something different. I would not want them to depart from the principle of voting at this point. Nevertheless, it is not quite true to say that this balanced package was universally agreed; it was a settlement, and all settlements contain elements in which one or another of the parties continue to argue for its point of view. That was the TUC's point of view—it never accepted that there should be a 40 per cent threshold, but it had to in order to reach agreement, so it signed the agreement.
What the TUC wanted, as my noble friend Lord Lea said—or what it hoped for—was that the standard way of getting recognition would be the 50 per cent vote. If it could be demonstrated to the CAC, the public and employers that there was that 50 per cent, it would not be necessary to go on and have a ballot. However, because of the peculiar way in which the legislation was drafted, which we have discussed and which I shall not go over again, it is much more frequently the case than was expected and hoped for that we have to go on to the second stage.
I am not suggesting that the Minister is doing this intentionally, but it is not fair to say that everything is going well, because we do not really know about the number of cases that never come forward. I am in a difficult place, because I do not know either. The Minister said that only 1 or 2 per cent fall on the 40 per cent threshold, but when unions know that they could not win the 40 per cent, they do not go forward. They do not want to have the case thrown out, because that finishes them for several years, whether the law says so or not.
We are bound to go on with these arguments. It is not fair to say that they are settled; they will continue to be pressed. I hope that in the course of this review, the Government will make some movement on the issue as well as others. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendonmoved Amendment No. 39:
After Clause 20, insert the following new clause—
"APPEALS FROM CAC AND RULES OF PROCEDURE FOR CAC
(1) An appeal lies to the Appeal Tribunal on any question of law arising from any decision, order or declaration of the CAC, or arising in any proceedings before the CAC under this section."
(2) The Secretary of State shall within three months of the passing of this Act promulgate rules of procedure to be followed in all proceedings before the CAC covering (but not exclusively)—

(a) evidence;

(b) conduct of witnesses;

(c) discovery, exchange or documents and witness statements between the parties;

(d) prior disclosure to the other party of the case to be answered;

(e) details of and use of written evidence and statements and such other matters as he shall deem appropriate.

(3) For the purposes of subsection (2), the Secretary of State may revoke or amend such rules from time to time as he shall deem fit."
The noble Baroness said: The amendment is in two parts. The first is to be found in proposed subsection (1) and the second in proposed subsections (2) and (3).
The purpose of the first subsection is very simple, and virtually self-explanatory. There should be a statutory right of appeal on matters of law—not fact—from the CAC in recognition and derecognition cases. I have proposed that it should be to the Employment Appeals Tribunal; that seems to me to be the most appropriate body. Currently, appeals have to be made by way of judicial review.
The Government have suggested—and perhaps the Minister will repeat that suggestion today—that since relatively few employers resort to that process, it must follow that the vast majority who have had statutory recognition cases are content with the way that the CAC has dealt with them. However, that is not so. The CBI tells me that many employers have not sought a judicial review because of the substantial costs, to say nothing of the delay involved. That must impact especially hard on smaller businesses, which do not have the same deep pockets as the union with which they may be dealing.
Speedy and inexpensive access to justice should always be the objective of legislation. I trust that the Government will accept this very moderate amendment.
At this stage, the second and third subsections constitute a probing amendment; nevertheless, it is a very important one. The two subsections would require the Secretary of State to promulgate universally applicable rules, so that unions, employers and individual workers in one part of the country will act and be treated in the same way as those in another part of the country. The CAC is not one sole tribunal, any more than the High Court is just one judge; it is a whole number of separate tribunals sitting in different geographical areas or even sitting in the same area, if there is enough work for them. There are separate tribunals with separate chairmen, separate members and separate caseworkers. What is absolutely not required is separate rules of procedure, separate standards of evidence and so on. What is required is consistency, the same sort of consistency that universally applies in civil litigation because of the comprehensive rules of civil practice. I hasten to add that I am not asking for anything as comprehensive and detailed as the several thousand pages that they occupy. It would also inhibit the practice of "forum
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shopping", where an applicant on either side, given a choice of venues, will try to pick the one whose practices they believe favour them the most. The absence of a comprehensive set of law reports relating to CAC decisions itself militates against consistency.
In my amendment, I have tried to make it as easy as possible for the Secretary of State by not requiring the rules to be made by statutory instrument but simply by a ministerial edict. This is employed in the High Court, where from time to time, what is called a "practice note" is issued, which is binding on all litigants and their lawyers.
In order not to be unduly prescriptive, I have proposed that in addition to what I may call the basic requirements of a judicial or quasi-judicial tribunal, which I have set out in the amendment, the Secretary of State shall have power in the rules of procedure to include anything else that seems to him to be appropriate.
Finally, I have proposed that the Secretary of State shall have the same power to alter, modify, or even revoke the rules, again by a ministerial direction, without having to go through the procedure of a statutory instrument. The subject of this part of this amendment is of concern to employers operating nationally who need to know where they stand when involved with the CAC. I have no doubt that this would be an objective of the unions as well. It is certainly as much in their interests as that of the employers.
I called this part of the new clause a probing amendment because a clear indication is required from the Government as to how they propose to ensure that there is consistency and uniformity in proceedings before the CAC, no matter where those proceedings take place. I beg to move.
Lord Lea of Crondall: I am a member of the CAC, but that is not necessarily material to this point. We are talking about a paradox. The noble Baroness, Lady Miller, has mentioned a wish to have inexpensive access to justice. The CAC provides very inexpensive access at the moment. Indeed, the parties to the Treaty of London in 1999, or whatever it was, were looking for the most inexpensive and informal way of approaching this matter.
The noble Baroness referred to all litigants and their lawyers. Most people do not come along with lawyers and long may it remain so—this is not private information because all the cases are heard in public if anyone wants to go and listen, although it is not the most entertaining day out. The route down which the noble Baroness would take us is the opposite of the one she wants to go down. It is a very expensive route where everybody does have to come with lawyers and has to act in a terribly legalistic way. At the moment, speaking only for myself, but I think most people would agree, the ideal is that people close to the ground—the trade union officials and the managers—come along and answer questions about how it is. That is it.

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The paraphernalia of laws of precedent and going to different courts almost implies that there is a whole pyramid of different courts, of which the CAC is one level. Of course, there is judicial review which is costly to someone, either the taxpayer or the parties. I do not think it is the taxpayer but the parties who have to pay. The prima facie question is whether that route is in the spirit of the CAC, whether it is better or cheaper. I very much doubt it.
Baroness Turner of Camden: I fully support what my noble friend Lord Lea has just said. For many years, I was a member of the CAC. It was a very informal process, not legalistic at all. In fact, representation by lawyers was actively discouraged by the chairman when I was a member. If one follows this kind of procedure one is erecting an enormously legalistic, expensive system giving the employer, who wants to be difficult, has plenty of money to spend and is perhaps hostile to a recognition claim, the opportunity to utilise a legalistic procedure that is not envisaged in the Bill. It would not help any of the parties concerned. I hope that my noble friend will not feel tempted by this amendment.
Baroness Miller of Hendon: Before the Minister replies, I would like to tell the noble Lord, Lord Lea, and the noble Baroness, Lady Turner, that I appreciate that both of them have far more knowledge of how the CAC works than I have or am ever likely to have, particularly as the noble Baroness has just said that she was a member of the CAC for many years. However, as I said when I moved my amendment, the CBI asked for something like this. It said that judicial review is very expensive and lengthy and that the Employment Appeals Tribunal might be quicker and less expensive. However, the Minister will be able to clarify that for us.
The other matter is that, when I spoke about the second part of the amendment, which is a probing provision, I used the words, "This amendment is one of concern to employers". That was put to me by another organisation that represents employers, the EEF. It is a matter of concern and, although listening to the two noble Lords it sounds as though it is not a problem, I believe that it is a problem. I shall be interested in what the Minister says on this point.
Lord Triesman: I hope that noble Lords will not feel that my response is inadequate because I have not been a member of the CAC. I was involved in a lot of the discussions that the trade unions and the big employers' organisations had before 1999. I was very familiar with the issues at the forefront of the minds of all those involved. By way of an introduction, I want to say that throughout most of those discussions, although there were, of course, issues upon which people did not agree, we found a very strong area of commonality in thought around three things.
The first was that, in dealing with industrial relations issues generally, it would excellent if we could have solutions that grew out of common sense and a process of discussion among the principal parties. It
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was felt that that was a very good part of the industrial relations tradition of the United Kingdom and would be particularly important for the CAC. Indeed, I can remember a number of colleagues on the employers' side of those discussions making the point, with which I wholly agreed, that the industrial tribunals—they became the employment tribunals—were also designed to work on that basis.
The second big factor, which my noble friend Lord Lea mentioned, was that everyone is trying to restrain themselves to reasonable costs in whatever they do. I was quite taken by the point made by the noble Baroness, Lady Miller, about small firms and the costs of expensive judicial processes, whether in judicial review or appearances at many of the other senior courts of the land. Those of us who had to try to live on relatively slim trade union budgets often had to gulp hard and wonder how we could manage in those circumstances. I think that everyone was very keen on keeping within the constraints of reasonable costs.
The third element—although distinct, it is very close to the first—is that, as everyone always seemed to emphasise, there are great advantages in not drifting accidentally into what I would describe as perhaps an American model where litigation is at the forefront, rather than the better option of the techniques of the industrial relations process. It was felt that people could get together and find a solution, which was not always possible under the more adversarial system which inevitably operates in the courts. That is the way in which lawyers argue with one another.
I hope that that was not too much of a digression. I was trying to describe how we set the scene which became for everyone, I believe, employers and employees alike, part of what I described in an earlier debate as the 1999 deal.
This amendment deals with two separate issues. The purpose of subsection (I), as the noble Baroness, Lady Miller, said, is to establish a right of appeal to the Employment Appeal Tribunal against any decision or action taken by the Central Arbitration Committee under the statutory recognition and de-recognition procedure. Currently, as we have all acknowledged, parties have the right to seek judicial review of any decision taken by the CAC under the statutory procedure. We believe that is sufficient and that the creation of an additional right to appeal to the EAT would be counter-productive. I hope that I will shortly be able to illustrate why I believe that that is so.
When the CAC considers an application, it needs to take into account a large number of decisions. Introducing additional rights of appeal against the individual decisions of the CAC would be very likely to cause long delays to the process, especially if proceedings could not continue until the appeal was determined. These delays would tend to favour employers at the expense of trade unions and also encourage exactly the sort of legal wrangling that, as I hope I have made clear, we are all seeking so hard to avoid.
It is also of vital importance to remember that the CAC is a specialist body that operates in a very specialised area. When it makes its decisions, it relies

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on its members applying their industrial relations expertise and experience, and long may that be so. That could not be matched by any appeal court, not even the EAT. In the Kwik-Fit judicial review, the High Court and the Court of Appeal concurred with that view. When the matter was debated in the other place, my honourable friend Gerry Sutcliffe quoted Mr Justice Elias of the High Court—I quote this because I think it is a way of summing it up—who said that,
"courts do not have the relevant expertise, nor is it desirable that these procedures should become a happy hunting ground for lawyers".
Although he may have been damaging the income of some members of his profession, the wisdom of his words sticks with me.
Parties feeling aggrieved about the manner in which the CAC has reached its decisions are currently able to challenge the decision through judicial review. I suppose that there is always an aggrieved party in a decision that goes one way or the other; people will feel that they should have had a certain decision. However, despite all of that, there have been only seven applications for judicial review. In only two of those was the CAC found to have acted improperly, although one case remains outstanding. I think that that suggests that the CAC has exercised its legal powers responsibly when they have been tested in the courts.
The noble Baroness, Lady Miller, made a fair point about whether the judicial review system properly reflects people's feelings about whether things are working well. I am inclined to the view that, on its own, it should not be the only test. The CAC has consistently conducted customer surveys among both the employer side and the union side. Those have shown a level of satisfaction with the work that is just a shade below 80 per cent. That would probably not be a bad customer survey outcome for any of us.
I think it right to ask the two questions that the noble Baroness, Lady Miller, also asked about the consistency of decisions, how they are reported and how people might know that there is consistency. The CAC members themselves—and I remember this from the way in which the CAC was set up—receive detailed training in their roles. They all operate with procedural guidance that the CAC has developed. We consider that that generally ensures consistency across the different panels and the way in which they process cases. We have lifted from the website—I promise that I will not read it—the very long document in which these procedures are set out. It comes very close to what one might regard as pretty specific codification and I think it no bad thing that that has happened.
5.45 p.m.
Should there be law reports? It is also true that on the CAC website there are full details of all the activities and cases. The amendment would not alter that; that would remain the case. At the moment we cannot legislate for the production of law reports in this area because they are produced by commercial
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bodies which I presume engage in the business if they regard it as a credible business activity and there is a gap in the market.
I apologise for the length of my reply but these are very substantive issues.
I turn to subsections (2) and (3) of the amendment. These provisions place a duty on the Secretary of State to promulgate rules of procedure. I have touched briefly on the issues of consistency and reporting. The Government have examined in considerable detail this question in our review of the Employment Relations Act 1999 and concluded that it is not desirable to create procedural rules for the CAC's decision making under the statutory procedure. The CAC operates under a lengthy schedule that is enshrined in primary legislation. I am told—I have not counted it—that it is more than 27,000 words long, a little less than the length of a good-length novel.
The schedule sets out in detail how the CAC should deal with applications under the statutory procedure. It would not be appropriate for the CAC to be subject to a further layer of procedural rules as that would complicate the procedures further and be likely to make the decision-making process more rather than less confusing.
As I said, the CAC does not have the trappings of a conventional court with testimony under oath and so on; nor do the Government think it should. We are very confident that it operates a clear and rigorous process. The CAC currently produces excellent guidance for the parties which sets out its normal procedures so that the parties are clear about them and provides clear and relevant information about how and when their evidence will be used. It is an accessible and helpful document which I have read and, unlike some official documents, it is certainly clear. I believe it to be of far greater value to the parties than a complex and legalistic set of rules of procedure. The CAC has exercised its powers in this sensitive area appropriately. That is supported, as I said, by good evidence of customer satisfaction.
The Government are aware of concerns that new measures to outlaw unfair practices will become new areas of activity for the CAC, which will be called on to make decisions that are different in nature from those for which it is currently responsible. I am pleased to inform the Committee that the CAC is considering how best to approach those new functions under these provisions. Sir Michael Burton, chair of the CAC, has indicated his intention to review the CAC's procedures in the light of the Bill. I understand that the CAC secretariat intends to consult all key stakeholders in the coming months to ensure that their views can be expressed on these matters.
I was a bit surprised that the noble Baroness did not provide a role for Parliament in the amendment. As drafted, it would give great discretion to the Secretary of State to promulgate whatever rules she sees fit without regard for the views of any other party and without parliamentary scrutiny. I wonder whether that does not expose the statutory procedure to the risk that governments of different persuasions might seek to skew the procedure in favour of one side or another.
The Government are of the view that, given its considerable expertise and experience, it is far better to leave this matter in the hands of the independent body. As Sir Michael Burton himself is also the president of the Employment Appeal Tribunal, he has both those points of view.
I have heard a bit from the CBI but much more from the EEF about concerns regarding details that it feels are not fully clear. The body has been pressed on the point, hut, apart from expressing a certain dissatisfaction, it did not tell us what happened, when it happened and what it felt went wrong. I feel that answers to those questions might carry us further.
The Government do not believe that it would be appropriate to create procedural rules for the CAC's handling of applications under the statutory procedure, nor have we seen any evidence to suggest that the current approach is lacking in any way. Moreover, I believe that the amendment provides dangerous scope for elected politicians to interfere in the workings of an independent judicial body led by an eminent High Court judge without proper parliamentary scrutiny.
I hope that I have covered the matters properly rather than just at length. I urge the noble Baroness to withdraw the amendment.
Baroness Miller of Hendon: I thank the noble Lord for his very comprehensive answer to the points I made. I should like to make a couple of comments before I almost certainly seek leave to withdraw the amendment; there is no question about that.
I shall have to read the Minister's reply very carefully because it was quite lengthy; by the time one reaches the end one is not absolutely sure about what was said at the beginning. However, I have tried to make a few notes. He said that I suggested that there should be a statutory right of appeal from the CAC in recognition and de-recognition cases. I made it clear that that applied only to matters of law and not to matters of fact. I was not going to suggest that, and that is not how I read it. I would not like him to think that everything should go that way because that is not the case at all.
The Minister's comments about judicial review also were interesting. I think he said that there have been only eight and that, although one case is outstanding, a mistake had been made in only two. Nevertheless, the CBI has made the case that there would have been many more cases had employers not found the costs prohibitive. So that does not necessarily mean that only eight people wanted a judicial review. They may simply have ultimately decided that it was best to let it go.
I was very interested to hear the Minister's comments about the 27,000 words already in the rules of procedure. When I was talking about the rules of civil practice, I was told that they comprised very many thousands of pages, never mind thousands of words. So I understand that there might be a problem.
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I thank the Minister again for the answer. As I said, I will read it carefully. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Information about employees to be balloted on industrial action]:
Lord Triesmanmoved Amendment No. 40:
Page 22, leave out lines 38 to 40 and insert—
""(c) containing—

(i) the lists mentioned in subsection (2A) and the figures mentioned in subsection (2B), together with an explanation of how those figures were arrived at, or

(ii) where some or all of the employees concerned are employees from whose wages the employer makes deductions representing payments to the union, either those lists and figures and that explanation or the information mentioned in subsection (2BA).""

The noble Lord said: The Government's review of the 1999 Act concluded that the essential features of pre-1997 law on industrial relations should be retained. This body of law has become an accepted and workable feature of our employment relations system. However, some aspects of the law continue to trip unions up so that even where the unions meet the essential requirements of the law, they can still make technical mistakes that leave their action open to time-consuming and costly legal challenge. That cannot be right and it does not constitute good regulation.
Clauses 21 and 24 of the Bill have been included to simplify and clarify the provisions requiring unions to provide notices to employers in advance of industrial action ballots and in advance of any subsequent industrial action. Clause 21 relates to the ballot notice and Clause 24 relates to the notice of industrial action.
We propose amending these two clauses in very similar ways, though there are some minor differences. For the most part my introductory remarks apply equally to our proposed amendments. As I go through them, however, I should like to note the differences.
Let me outline the operation of the clauses as they stand. The clauses define the information that must be provided in the notices. The requirement is to provide two lists identifying the categories of workers involved and the workplaces involved. In addition, the notices must contain figures identifying the total number of workers involved, the number of workers in each category, and the number of workers at each workplace.
The clauses are based on the information a union can realistically be expected to provide to the employer. They remove the need to provide detailed matrices. But the union's duty is clear and the essential needs of the employer are met. No longer would unions be required to supply data of questionable accuracy and usefulness to employers.
Our proposals for the Clauses have been generally approved by unions and employers have not raised serious objections to them. However, it has been drawn to our attention that the new requirements could be improved on in an important respect if we made allowance for information to be given by reference to the established practice of deducting

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union subscriptions at source where that practice exists, because of the formality and accuracy of the records involved. This system, which we colloquially know as "check-off", remains widespread in this country, and covers many millions of workers. It is a common way of paying union subscriptions in large organisations—across the public sector trade unions, for example. In practical terms, the system involves the employer deducting the subscriptions from the wages of union members and then paying those moneys to the union. I shall not describe the whole process, as I suspect that it is well known.
It has been established through case law that unions can meet their current legal obligations by referring in notices to their members paying by this system. This arrangement has provided unions with a ready means of referring accurately to their members. It has also allowed employers easily to identify those individuals through their payroll systems. It is clear to us that Clauses 21 and 24, as currently worded, provide less scope to unions to refer to check-off information as a reasonable short-cut to meeting their legal obligations. That is regrettable and both employers and unions would lose as a result. Our intention, therefore, in tabling this group of amendments is to ensure that check-off information can he drawn upon by unions to meet, in whole or in part, their obligations.
In relation to ballot notices, the key changes which achieve these objectives are made by Amendments Nos. 40 and 41. Their equivalents for industrial action notices are Amendments Nos. 44 and 45. 1 shall concentrate here on the first pair of amendments as the wording in the second pair is virtually identical.
Amendment No. 40 provides that notices may contain information other than the lists and figures specified in subsections (2A) and (2B) where some or all of the balloted employees pay their subscriptions by check-off. Amendment No. 41 then goes on at new subsection (2BA) to set the condition which other information must meet. Namely, the information must be such as would enable the employer "readily to deduce" for himself the same lists and figures. The only conceivable way in which a union could meet this condition is by referring to specific classes of employee who pay by check-off.
I have one or two examples to illustrate the point; if the Committee is dissatisfied with the explanation and would like worked examples, I could give them. However, it would not be reasonable to go through them if the generality of the point of using check-off as a sensible way in which to work is accepted by the Committee.
Finally, a union will be balloting some members who pay by check-off and, inevitably, other members who do not. In respect of the non-check-off employees, the union will always have to provide lists and figures relating to them. There is no movement away from that. I can give a quick example: 100 union members are to be balloted, 90 of which are workers whom the employer employs and who pay their union subscription by check-off. The 10 others are not; they may work in another place or another department.
The union meets the legal requirements if its notice states that it is balloting all those employees who pay subscriptions to the union by check-off, plus 10 others. Those 10 others belong to such and such a category and work at such and such a site.
6 p.m.
The amendments that I have not yet mentioned are simply consequential, although I could address them if it would be helpful. I wanted to describe the amendments because, although we want to lighten and make more flexible any parts of the regulatory burden, I do not want any noble Lord to feel that we have stepped aside from rigorous conditions to be met in the unfortunate circumstances where industrial action must be contemplated. I beg to move.
On Question, amendment agreed to.
Lord Triesmanmoved Amendments Nos. 41 and 42:
Page 23, line 7, at end insert—
"(2BA) The information referred to in subsection (2)(c)(ii) is such information as will enable the employer readily to deduce—

(a) the total number of employees concerned,

(b) the categories of employee to which the employees concerned belong and the number of the employees concerned in each of those categories, and

(c) the workplaces of the employees concerned and the number of the employees concerned who work at cach of those workplaces."

Page 23, line 8, after "section" insert ", or the information mentioned in subsection (2BA) that is so supplied,"
On Question, amendments agreed to.
Baroness Miller of Hendonmoved Amendment No. 43:
Page 23, line 17, at end insert ", or
(c) in the possession or under the control of a branch of the union or an official or representative of the union"
The noble Baroness said: I should like to speak to Amendments Nos. 43 and 47 together. I have tabled them at the behest of the Engineering Employers Federation, which, I am told, has also voiced its concerns about the matter to the Government. They deal with an anomaly in the Bill, which 1 am sure is merely due to a misconception by the draftsman of the structure of some unions and also of the difference between a union officer and a union official.
Proposed subsection (2C) requires the union to supply such lists and figures as reasonably practical and which are in the possession of the union. The words "in the possession of the union" are defined in proposed subsection (2D) as being held by the union in a document, on a computer or in the possession of,
"an officer or employee of the union".
Unions are organised both centrally, with a head office or headquarters, and via local branches. A union officer is someone who occupies a position in the headquarters—the general secretary, the treasurer, the president, or whoever. The members who run the

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branches at the sharp end of the union's activities are not necessarily ex officio officers of the union. They are often volunteers, who are not paid and hence are not employees. On the other hand, unions, for very proper reasons, try to operate in a decentralised and local way whenever circumstances permit.
It is very likely that the sort of records of the lists and figures that must be supplied in accordance with subsection (2C) are not in the possession or control of an officer or paid employee of the union but are in the possession of a branch run by, say, an unpaid shop steward. It cannot be right that such information cannot be supplied to the CAC because, with the best will in the world, headquarters cannot get its hands on it.
In the case before the High Court of Willerby Holiday Homes v UCATT, the union unsuccessfully sought to excuse itself from providing information that was readily ascertainable from its local branch but which was not held in the union's head office.
Proposed new subsections (2C) and (2D) are nothing less than an attempt to reverse the very reasonable and proper decision of the High Court to prevent any union that might be minded to do so from hiding behind a specious subterfuge. That subterfuge is to pretend that information in the possession of a branch is not in the possession of the union.
I do not suggest before the noble Lord, Lord McCarthy, or the noble Baroness, Lady Turner, that that is what they would do. Nor do I suggest that every union branch, perhaps one confined to a single, very large workplace, would, for some nefarious reason, try to withhold the information, first from union headquarters and hence from the CAC.
But branches have been known to be at odds with their leaders. Branches may not have the facilities to comply with the requirements within the time limits, and, in common with some political parties, some branches like to guard their membership details from headquarters to preserve a degree of independence. This amendment removes that temptation from the unions and maintains the common sense decision of the High Court. It ensures even-handedness between unions and employers.
It would be intolerable for an employer to pretend that it could not comply with a proper request for information under the Act because the data was not held in its head office but in some local branch. Any such attempt would, quite rightly, be given short shrift by the CAC and the court. The same rules should apply to a union seeking recognition. I am amazed that the Government should seek to overturn an entirely reasonable decision of the court in that way. I wondered where that idea came from.
All the amendment does is to ensure that the pre-existing definition, as confirmed by the High Court, remains in force, and that a possible loophole to hinder the work of the CAC is not created. I beg to move.
Baroness Turner of Camden: I cannot see why the present wording is not acceptable to the noble Baroness. The clause refers to information,
"in the possession or under the control of an officer or employee of the union"
—in other words, people for whom the union is directly responsible. The noble Baroness's amendment refers to information,
"in the possession or under the control of a branch of the union or an official or representative of the union".
As the noble Baroness rightly said, a representative of a union could be a volunteer without necessarily having the appropriate authority and so on. The wording of her amendment does not help us at all; the Bill's wording seems absolutely appropriate. I cannot see why the noble Baroness wishes to amend it.
Lord McCarthy: I agree with that. I wonder whether the noble Baroness knows the view of the unions on that. I cannot think what incentive they would have in saying that they could not produce the information if that were not true. Nor can I think what incentive they would have in not giving names that they have. It would not make the ballot any easier for them to conduct. I do not know whether such a matter has ever caused any difficulty in a recognition ballot with the CAC; perhaps the noble Lord, Lord Lea, knows. I do not know why the Engineering Employers Federation did not go to the proper place to ask—not us, but the union.
Baroness Miller of Hendon: In response to the noble Baroness, Lady Turner, the wording was suggested by the EEF, which is why I tabled the amendment. As I said quite early on, I tabled it at the behest of the Engineering Employers Federation.
In response to the noble Lord, Lord McCarthy, I did not go to the trade unions to sort out the matter, and I know not whether the EEF did. But the federation has been in conversation with the Government on the matter. Perhaps the Government in replying to me will be able to give the noble Lords who expressed concern the information that they sought. I know it not.
Lord Triesman: As I outlined when dealing with Clauses 21 and 24 on the law of pre-industrial action notices, the current law in this area has been shown to be too complicated. It places unrealistically high demands on unions and opens up the way for legal actions on what turn out to be relatively minor breaches of the law. Nobody condones a breach of the law whether it is major or minor, none the less the risk of running into a minor one, almost by misadventure, is quite great.
It is probably fair to say that there are huge variations in union structures. I know hardly any unions that have the same structure as another. There are hugely complex layers of responsibility between paid employees, those who have time off to assist the union and others who assist the union but do not have any time off. That includes the national structure and branch structures, which the noble Baroness

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mentioned, and often those at regional level and on a national level in Scotland and Wales. There is a huge variety of structures.
Having thought about it in some detail and after representations, the Government concluded that the provisions of the Bill must simplify the law without giving ground on the fundamental duties and responsibilities of unions. We have made it clear that a union needs to supply only the information that is in the possession of, or under the control of, union employees or officers of the union. Both those terms were chosen not least because they are clearly defined. We can see in each case who is responsible and we can define them in a way that allows all of the individuals in the process to understand who is responsible. The formulation ensures that unions are not under an obligation to assemble and present information held by their lay officials around the country.
The requirement is therefore confined to what the union can realistically be expected to assemble; namely, information held by, or accessible to, the officers and staff of the union. For a large union, this definition would cover information held at head office or by any of the regional or district offices and so on from which their full-time officers operate. That will often be a very large network.
Trying to impose the same kind of requirements on the lay officials of a union—to use the terms in exactly the same way as the noble Baroness used them—would, from the experience of all those who have run such an organisation, be an extremely difficult thing to do. In some areas, there are people who are quite exceptional and have time to work for the union, have some support around them and are capable of doing it. In other areas, unions will have people who are not of the same ability or do not have the same kind of logistical support—
Lord McCarthy: Or no-one.
Lord Triesman: I was not going to get on to the case where a union does not have anyone running a branch because that would make us all too upset and I would not want to distress everybody. However, there is vast variability in the quality of lay officials and in what they have available to them.
The amendments seek to widen considerably the information on which the union must draw when constructing these notices. As well as including information held by, or under the control of, the union's officers or employees, the union will also be required to draw on information held by other officials or lay representatives. The union would be required to contact its lay officials up and down the country who, in most cases, work on union business for a very limited part of their time and to extract from them any information that they might hold. For large unions, involved in large disputes, we would be talking about thousands of people.
Let me outline the severe limitations under which volunteer lay officials operate. For the most part, they will not have office equipment. They will work part time. They will spend just a few hours a week on union
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business. Their rights to paid time off for union business are limited, and have become more limited over the years, especially where a union is not recognised. Unsurprisingly, the ability to maintain accurate or up to date records varies from location to location. The ability to communicate that information to full-time union employees is also similarly varied in a way that it never is for the full-time officials, who can be instructed to do things and will have to deal with those instructions as being binding on them.
The formulation used in Clauses 21 and 24 is based on the reality of the information systems held in voluntary organisations. We should not frame the obligations on the basis of the circumstances in which employees of the union operate or the circumstances in which the employers operate. That is why there is.a duty on employers to disclose information in Clause 3, which is framed in a different way and is different in its scope.
From what she said, I think that the noble Baroness may be concerned that unions may try to evade the law by deliberately switching information to their branches or lay representatives in order not to be able to comply. Someone would then say that the union tried hard but could not comply. I wish to counter that point strongly.
Unions need good information in order to function efficiently. They need that information for many purposes such as communicating with their members, collecting subscriptions, reporting to the certification officer and being able to deal with any inquiry that the certification officer makes of them. It is not correct to suppose that unions will want to move information around to try to avoid meeting those provisions. I do not think that it is useful to amend the clause in that way.
6.15 p.m.
I have some difficulty with the amendments as regards clarity. They refer to "officials", for which a definition is provided in Section 119 of the Trade Union and Labour Relations (Consolidation) Act 1992. That definition refers to representatives elected or appointed in accordance with union rules. However, I am not clear what a "representative" means in the amendment, where it appears to be a separate category. It could include, for example, individuals who take it upon themselves to represent the union without express authority. I must say that I have run into a good many such individuals in my time.
Pre-industrial action notices should be based on information that a union can realistically be expected to provide for the employer where the obligations are absolutely clear. The definition of qualifying information is already broad and includes all the main data held by unions. The requirement in the Bill ensures that the essential needs of the employer are met without placing an unnecessary burden on unions and without resiling on the commitment to provide that information to the employer. The EEF may be unduly apprehensive in these circumstances, with a perhaps not entirely realistic view about what unions can do on the ground.
For those reasons, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Miller of Hendon: I thank the Minister for his detailed reply; it was very helpful. I hope that the Minister did not think that I even thought that the head offices would transfer information to another branch and use that as an excuse for not producing the evidence or the information, not evidence, that was required. I cannot believe that the EEF would have thought that either. That is an unnecessary fear on the part of the Minister. I do not think that that is the reason.
I am grateful for the Minister's lengthy answer. It will enable the EEF to see what the Government feel about these matters before advising me accordingly. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21, as amended, agreed to.
On Question, Whether Clause 22 shall stand part of the Bill?
Baroness Miller of Hendon: We oppose Clause 22. In Clause 22 the Government propose to amend Section 227(1) of the 1992 Act, which apparently has worked perfectly well for some 12 years, during which we have enjoyed considerable industrial peace as a result of the previous government's trade union legislation, which this Government are dismantling—only slice by slice, but it adds up in the end to quite a long sausage.
The insertion of the words "by the union", which this amendment proposes, narrows the scope of those whom the union must ballot about taking industrial action. I find it ironic that in a Bill where the Government are providing for a greater amount of consultation between employers and their workers, they are simultaneously providing for much less consultation with the workers between themselves.
Superficially, the proposal may seem to some, especially the unions that have promoted this clause, to have some sort of logical attraction. "Why", they doubtless ask, "should the union ballot those whom it does not ask to take part in industrial action?" That is a fairly straightforward question. I note that the noble Lord, Lord McCarthy, said, "Yes, that's right". I understand his point of view.
There are several equally logical answers for why they should. First, it is a fact of life that when a strike or go-slow takes place—and they are the usual forms of what is euphemistically called "industrial action"—woe betide any worker, even if he is not a member of the union, who crosses the picket line or works normally. He is quite often subjected to a degree of harassment, which often continues long after the original dispute is resolved. The enmities and bitterness engendered by the last coal miners' strike continue in some areas even today. If a worker is to suffer the consequences of being expected, if not coerced or feeling forced, to take part in industrial action, with those consequences including economic loss and possibly the risk of losing his job or his
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employer going out of business, the least he is entitled to expect is to be consulted and that his views might be taken into account.
In the case of RMT v Midland Mainline, the Court of Appeal said, in words that I have just more or less echoed:
"It is overwhelmingly probable that there will be some … who in the knowledge that their colleagues will expect them to take part in industrial action, will do so … In those circumstances it would not be reasonable for the union to believe that … all such unballoted members would not take part in the action. It therefore follows that such unballoted members should have been … accorded entitlement to vote".
I have précised it somewhat by leaving out a couple of words, but the meaning is the same. I am not sure whether the Court of Appeal meant to use the word "members" or "workers", but in either case the meaning and the principle involved are the same. It is obvious that if there are workers whom the union expects to go on strike, either as a matter of union discipline or because of what the union would call solidarity, all such persons must be balloted. That is what the current law of the land, as enunciated by the Court of Appeal, says. There is no reason to change it except for the fact, I presume, that the unions do not like it.
Lord McCarthy: I may be wrong, but thought that the words in Section 227(1) came from a much earlier trade union Act. This is a consolidation. In fact, I think that they came from an early Conservative government. The idea was that you wanted only the people whom the union wanted to be involved in the strike to have the ballot. Mr Tebbit was a suspicious man at that time. He thought that they might pack in all kinds of militants who would vote, but should not be entitled to vote because they did not have to go out on the stones. It would be only those people who were involved. I thought that these were old words that did not need to be changed, certainly not by representatives of the Conservative Party.
Baroness Miller of Hendon: I am afraid that I do not have the Act in front of me to see whether Section 227(1) came from that Act or an earlier one. Undoubtedly, the Minister will be able to say whether the noble Lord, Lord McCarthy, is right and I quoted it from the wrong Act. Again, this was on behalf of someone who gave me that information, and I put it into the text of my amendment.
Lord Triesman: I sometimes feel in these debates that history plays strange tricks on us. I have a feeling that this is one such occasion, for exactly the reasons that my noble friend Lord McCarthy has just given. When the Conservative legislation on trade unions came through in its sequence of Bills and Acts, there was a strong belief that unions would try to define the people who were taking part in industrial action with sufficient breadth to ensure that the vote for industrial action was certain to be achieved. If you could define a significant number of people who you may in fact never call on to take industrial action, but who were known to be pretty tough and committed to industrial

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action, you would get the right poll result, and that would lead to the industrial action that you were seeking to take.
On the other hand, it would scarcely be a fair or truthful reflection of the group of workers who were to be called on to take the action. I have a feeling that the Engineering Employers Federation, or whoever else, may now feel that there is a need to stand that history on its head. My own view, for what it is worth, is that in our legislation we should ask trade unions only to ballot those who really believe that taking action is the right thing to do, since they are the people on whom the burden would fall.
Section 227 of the Trade Union and Labour Relations (Consolidation) Act 1992 defines those individuals to whom the union must give an entitlement to vote in an industrial action ballot. Currently the section requires unions to ballot those members,
"who it is reasonable at the time of the ballot for the union to believe will he induced to take part … in the industrial action in question".?
Until 2001 the accepted interpretation of the section was that the entitlement to vote applied to those who were likely to be induced "by the union". Those words were in the Act, and are also a quotation. However, the phrase from the Act, "will be induced", has been shown, as the noble Baroness, Lady Miller, rightly pointed out, in the case of RMT v Midland Mainline [2001] to be unclear. The noble Baroness pointed to a lack of clarity that exists between the original intention and the outcome of that case.
In its judgment, the Court of Appeal considered that the phrase related to any union member who might take part in the action, even though they had not been induced to do so by the union. In other words, the union had a rather serious dilemma on its hands, in that it had to predict how members whom it had no intention of inducing to take industrial action might act, if a strike were to be called among a group of people whom it did wish to induce to take action. Problems might arise; for example, if an individual were induced to take action by a colleague or took action of his own volition. A group of people might feel, as the noble Baroness accurately put it, some sense of solidarity that induced them of their own volition to take the action.
The very varied circumstances described in what we have just been discussing are ones in which the union would be required by statute to ballot an individual, if that individual suddenly decided that he wanted to take action in solidarity, when it reasonably believed that by calling the action it might prompt the individual to take part. Clearly, it is difficult to foresee how that would ever be possible; I suspect that it would generally he impossible. Unions would find it very hard to forecast the possible reactions of the members that it does not induce with any accuracy. A consequence might be an overreach in trying to get lots of people to ballot on an industrial action who had no intention of taking it and who would never ask to take it, and getting a very distorted result in favour of industrial action, when the group that the union
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wished to take industrial action might not wish to do so. We would find ourselves trapped by those circumstances.
In the view of this Government, requiring unions to predict an outcome over which they have no control is unnecessary. Therefore, Clause 22 amends the provisions relating to entitlement to vote in an industrial action ballot and clarifies that the entitlement to vote applies to those who are likely to be induced "by the union". I want to be clear about this matter because the changes from the 1992 Act are central to what is being discussed. The words "by the union" are not found in the 1992 Act. I hope that I have not mistakenly given the impression that they were; they need to be inserted by the Bill, which is the burden of the point that I am trying to make.
This clause removes ambiguity in Section 227 by placing a reasonable requirement on unions and improving the way the law reads. I hope that the Committee feels able to support Clause 22 standing part of the Bill.
Clause 22 agreed to.
Clause 23 agreed to.
Clause 24 [Information about employees to he contained in notice of industrial action]:
Lord Triesmanmoved Amendments Nos. 44 to 46:
Page 24, leave out lines 14 to 16 and insert—
""(a) contains—

(i) the lists mentioned in subsection (3A) and the figures mentioned in subsection (3B), together with an explanation of how those figures were arrived at, or

(ii) where some or all of the affected employees are employees from whose wages the employer makes deductions representing payments to the union, either those lists and figures and that explanation or the information mentioned in subsection (3BA), and":"

Page 24, line 29, at end insert—
"(3BA) The information referred to in subsection 3)(a)(ii) is such information as will enable the employer readily to deduce—

(a) the total number of the affected employees,

(b) the categories of employee to which the affected employees belong and the number of the affected employees in each of those categories, and

(c) the workplaces of the affected employees and the number of the affected employees who work at each of those workplaces."

Page 24, line 30, after "section" insert ", or the information mentioned in subsection (3BA) that is so supplied,"
On Question, amendments agreed to.
[Amendment No. 47 not moved.]
Lord Triesmanmoved Amendments Nos. 48 and 49:
Page 24, line 43, leave out from first "a" to end of line and insert "notified category of employee and his workplace is a notified
workplace"."
Page 25, line 1, at end insert—
""( ) In subsection (5)—

(a) a "notified category of employee" means—

(i) a category of employee that is listed in the notice, or

(ii) where the notice contains the information mentioned in subsection (3BA), a category of employee that the employer (at the time he receives

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the notice) can readily deduce from the notice is a category of employee to which some or all of the affected employees belong, and

(b) a "notified workplace" means—

(i) a workplace that is listed in the notice, or

(ii) where the notice contains the information mentioned in subsection (3BA), a workplace that the employer (at the time he receives the notice) can readily deduce from the notice is the workplace of some or all of the affected employees."

Clause 24, as amended, agreed to.
6.30 p.m.
Clause 25 [Dismissal where employees taking protected industrial action locked out]:
Lord McCarthymoved Amendment No. 50:
Page 25, line 21, leave out "eight" and insert "twelve"
The noble Lord said: We return to the question of industrial action and protected action, which, I am afraid, is at the cost of taking a little longer than I would want. I have to tell a rather long story because there is an historical context, which begins in 1992 with Mr Tebbit's trade union Act and his celebrated provision that came to be called the "frightener clause". Section 229(4) of the Trade Union and Labour Relations (Consolidation) Act 1992 says:
"If you take part in a strike or other industrial action, you may be in breach of your contract of employment".
I shall not go into why that went into the Act, but it did. It crystallised and specified a situation that had always been the case. Mr Tebbit said that. Indeed, the overwhelming number of workers who went on strike in the past usually did—how could they otherwise?—break their contract of employment.
However, it was not really appreciated that that was the case. The clause did not act as a frightener or a disincentive. From time to time, employers have felt that it was in their interests to dismiss people—or, perhaps, some people but not others—on the grounds that they were breaking their contract of employment. If that was thought to be a very likely event, the customary solution was that the last thing that the union did before it returned to work, as part of the settlement, was to ask for a no-victimisation arrangement. But that only happened sometimes.
The decision by the Conservative government to put in what was called the frightener clause has had a number of consequences. Apart from anything else, it has led to the current difficulty of trying to find some way of allowing industrial action to continue, given the frightener clause. Of course, if you do not want industrial action and you think that it is always wrong, you will not be interested in anything that might be done.
As I said, three things happened. First, the measure helped undoubtedly to discourage strike action. It had to be put into contracts of employment, so the employers had no alternative. Secondly, in some cases, it stimulated more militant action than would otherwise have been the case. Most importantly, it wrote repeal on to the TUC's agenda. There was not
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much hope that the TUC would get anything done about that in the days when there was a Conservative government—that is what they put in the Bill.
During that period, the difficulty was that the continental doctrine of suspension was discovered. They discovered that in other countries there is no problem because, every time you go on strike, your contract is suspended and it goes on the shelf. I am simplifying, but so far as the law is concerned one could strike for ever because the contract is suspended. What brings people back to work is the money that they are losing, rather than the threat of dismissal.
Undoubtedly, it was going to be the case that if a Conservative government was defeated in an election and a Labour government returned the question of what to do about the frightener clause would arise. We have been talking for the past two days in Committee about the settlement, the balance, the arrangement, the negotiation, the fudge or whatever it was that the Labour Government had to construct between the CBI and the TUC when they came back into power in 1997. What to do about the frightener clause was one of the central issues.
The frightener clause is still there; it never was repealed. It was given a period of eight weeks during which the striker was protected—he could not be dismissed during the eight-week period of protection. But the parties had to make reasonable attempts to settle. That worked for a while or worked imperfectly for a while.
With this amendment, I am arguing that that is not a satisfactory long-term solution. In previous employment debates, my noble friend Lady Turner and I have argued that we should accept what happens in every other civilised country; namely, that we should have the doctrine of suspension. It could be argued that this Government have signed international agreements that embody the doctrine of suspension but that they do not carry it out.
We are trying to do something much more modest than that. There have been a number of notorious cases in which employers have deliberately filibustered through the eight weeks. They have refused to negotiate until the end of the eight weeks when they have dismissed the workers. In this Bill, something is being done to try to do something about that: something was done before and something is being done in this Bill. But I put it to the Committee that on looking at the Bill it is very difficult to see precisely what is being done to improve the situation.
The best explanation is in the Explanatory Notes, which I know are not legally enforceable. There are two pages of Explanatory Notes. If the matter goes to a tribunal, it would have to consider how far the parties have accepted that the services of a conciliator and a mediator will be used. It would have to consider whether meetings have been held on behalf of the employer, and so it goes on. One wonders whether it would be settled within the eight weeks.
The real weakness is that there can still be prevarication. We do not suggest that if there is another four weeks added to the eight weeks that

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prevarication would be at an end, but it would, at least, give some opportunity for the workers to have a little longer. Some people may think that this would result in a significant increase in industrial action, but we can comfort ourselves by looking at recent strike statistics produced by the Government. In a year when there were very few strikes, last year there were only two strikes that lasted long enough to be affected by this legislation. Nevertheless, it would be a modest way forward to adjust the balance. I beg to move.
Baroness Turner of Camden: This is a matter of some importance to trade unions and their members. We are referring to what happens where there has been legitimate industrial action within the procedures laid down in legislation. Currently, employees who are engaged in such action where the necessary procedures of ballots and so forth have been complied with they have a protected period of eight weeks during which time they cannot be dismissed.
That period of eight weeks is not long enough. If all the processes have been gone through, we do not really see why there should be a protected period at all and why there should not be protection for the whole period of industrial action. Since the Government have committed themselves to supporting ILO conventions that provide for the right of workers to withdraw labour, we do not see why there has to be any arrangement under which an employer can dismiss while action that has already had the support of existing legislation is continuing.
As my noble friend pointed out, there is nothing to prevent an employer prevaricating—it has happened—and deliberately prolonging a dispute beyond the eight-week period so that he can utilise that period in order to get rid of people that he wants to get rid of. That is entirely unsatisfactory.
As my noble friend has indicated, we are prepared to press for a rather modest amendment. We seek to extend the eight-week protected period to twelve weeks in order to make it just that bit more difficult for an employer to mess about and generally prevaricate so that he can get rid of a few people that he wants to get rid of. I hope that the Government will be prepared to look with some favour on this modest attempt to amend the existing legislation.
Baroness Miller of Hendon: I shall listen with particular interest to the Minister, which I hope that he will not accept. Before I say why I think that, I should like to make one general comment. The legislation introduced by my noble friend Lord Tebbit and the Conservative government considerably reduced the amount of strikes over a period. I agree that industrial relations are much happier now than they were then.
It may be that I am just ignorant of these things, but I have never heard of the frightener clause. I should be interested to know whether that word was used by the trade unions or whether my noble friend Lord Tebbit called it a frightener clause. I certainly have never heard that expression before.
As the noble Baroness, Lady Turner, said, this amendment would simply extend the period for which a striker is protected from dismissal from eight weeks
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to twelve weeks. I believe that eight weeks is long enough. It is long enough to concentrate the minds of both parties on settling. We could just go on and on with lengthening the time. In fact, the noble Baroness has said that she is not sure that twelve weeks would be enough. She does not know why there should be any limit.
Today, in general terms, there has been an extension by the addition of the lock-out period to the protected period. Sometimes it is quite a long time before the matter is resolved. I think that the quicker that these matters are resolved, the better it is for both sides who are involved in the dispute.
Lord Triesman: It is automatically unfair to dismiss an employee for taking lawfully organised, official industrial action during the first eight weeks of that action or subsequently where the employee ceased taking industrial action within the eight-week period. For the sake of clarity, the amendment seeks to extend that period from eight to 12 weeks.
This issue has been debated many times both during our consideration of this Bill and the passage of the Employment Relations Bill 1999. The issue was looked at in detail during the review of the Employment Relations Act 1999: it is right that it should have been looked at in detail and reviewed. One of two cases made it extremely important that that review took place.
The Government take the position that it is necessary to put a time limit on the period during which it is automatically unfair to dismiss someone for taking industrial action. We need to take into account the legitimate interests of the employer as well as those of union members. We also want to encourage the early resolution of disputes. That is the purpose of much of the effort.
I should add that other protections extend beyond the eight-week period. Most notably, it is unfair for the employer to dismiss an employee at any time for taking protected industrial action if the employer has not taken reasonable procedural steps to resolve the dispute with the union. That unlimited protection is very important and unfortunately receives very little attention. It is hardly ever discussed because I think that the unions and others tend to focus on the simpler, numerical aspects of the protective regime.
After the consultation of the Government, in the judgment of the Government, eight weeks remains a fair period. The eight-week protections cover the vast bulk of industrial action.
6.45 p.m.
Analyses by the Office of National Statistics suggest that over a three-year period 93 per cent of strikes lasted less than eight weeks. If the period were extended to 12 weeks that proportion would not increase noticeably but the dispute would become more protracted and a scenario in which all parties would be likely to suffer.
I should also add that there are measures in this Bill that strengthen the protections introduced in the 1999 Act. They do so in a targeted way, which resolves problems that have arisen in practice. One case which has been brought under this legislation has been at the forefront of thinking; namely, Friction Dynamics in which the employees concerned won their case. It is extremely important and has stirred a great deal of quite understandable passion.
In that case an extension of the protected period from eight to 12 weeks would not have helped in any sense the resolution of the dispute. The employer had already determined his position and the course of action to take however long it would have taken. Probably, most Members of your Lordships' House would express sympathy to those who were involved in that dispute. As I say, the increase from eight to 12 weeks sadly would not have made any difference to the outcome.
The Government chose eight weeks for the protected period and at that time determined to keep its operation under review. As I have explained, the review concluded that this provision is working adequately. Extending the protection to 12 weeks might mean that disputes would become unnecessarily protracted. Furthermore, because the eight-week period is intended to cover the bulk of cases, the proposed amendment would only afford further protection—if, indeed, it affords protection—to a very small percentage of employees.
A point has been made in relation to 40 per cent or 21 workers or to any of the numeral thresholds of which this is another. There is always something that is potentially relatively arbitrary about a figure that is hit on in the first instance. I suppose that all of us who have concluded agreements—whether as someone who has concluded agreements with trade unions as an employer or with employers as a trade union—arrive at a figure for a pay settlement or for other arrangement that is not exactly what either side want. The figure lies somewhere between the two.
Someone could say, "Is there an absolute and precise logic for that figure compared with a figure that is slightly wide of that in either direction". But the truth remains that it is an agreement. That is how the figure has been arrived at and that is why its durability is of some importance if it can be shown that it has not caused reversals of a kind that were never intended by the figure in the first place. On that basis, I ask my noble friends to withdraw their amendment.
Lord McCarthy: First, I shall deal with the questions asked by the noble Baroness, Lady Miller of Hendon. I never said that Mr Tebbit had called the clause the frightener clause. He had a much more elevated way of describing it. I said that that is what the trade unions called it—the frightener clause. It frightened people, which it was bound to do. I would not go so far as to say that that never crossed the mind of the noble Lord, Lord Tebbit. He said—he had a case—that people had a right to know. In fact, he did not make it as specific as he might have done. He said, "You might breach your
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contract of employment". But it is stronger than that—you almost certainly do. It was the trade unions that called it the frightener clause.
Perhaps I may now turn to what the Government are saying. I do not believe—I am not certain that the Government are convinced—that anything terrible would happen if we changed the law to what we are suggesting. As the Minister said, it would affect very few people. I quoted the evidence from a recent government publication on last year's strike statistics, which are the lowest since the war. It is not the lowest since the beginning of strike statistics, but it is a very long time. Our strike figures are very low.
Most strikes do not last as long as the protection period, so it will not make much difference. It is not really credible to make our flesh creep while saying all that, and then saying, "Well people will make strikes last longer". If strikes last for the length of the period, they are very unusual strikes. Most people who know anything about strikes know that if one does not win in the first fortnight, one will not win at all. In fact, if one is really going to win, one will win in the first 24 hours because people will be on the phone. I do not know of a strike that has been won after all that time. But people sometimes want to feel that they are sticking it out. Lots of people go back to work, other people never come out in the first place, but some people feel very deeply and they loose a very considerable amount of money but they want to stay out and they do. In the end, of course, they either get another job or they get the sack.
All we are saying is that this would be something that would make some recompense for people who are sticking it out on strike. It would not make it impossible for employers to prevaricate for seven weeks. One cannot make it impossible for employers to prevaricate but some might prevaricate a bit less.
Finally, the noble Baroness has said that we are signatory to international obligations that say that we should do something better than this. But we must point to the fact that in many countries, particularly in Europe, there is a very effective suspension system and it does not lead to anything dreadful. It does not lead to anything dreadful because the reason why people return to work is either because they know that they cannot win or because they are losing so much money. So we are only asking for something that operates in many other countries. I find that continental trade unionists cannot understand why we have not had it for about 50 years. We have not had it and we did not do it when there was a possibility of doing it because nobody really appreciated that when one went on strike one broke one's contract. It was not a live issue. What the noble Lord, Lord Tebbit, did was to make people conscious that that was the law. We are trying to mitigate that just a little bit but I am not going to get anywhere tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendonmoved Amendment No. 51:
Page 25, line 29, at end insert—
"(7E) For the purposes of this section, an employee shall not be deemed to have been locked out if his employer shall have suspended him for refusing or failing to work wholly or in part in accordance with the terms of his contract.""
The noble Baroness said: Clause 25, which was originally Clause 21 in the Bill as introduced in the other place, was generally welcomed on both sides as remedying what was perceived as an injustice in the decision in the case that the Minister has already mentioned, Davis v Friction Dynamics.
It extends the period in which a worker cannot be dismissed during a strike from the present eight weeks by adding any period during which the worker is locked out by his employer. "Locked out" are two words inextricably mixed up in the more pejorative lexicography of industrial relations. Indeed, there have been occasions when negotiations to resolve the substance of a dispute have been side-tracked by the issue of whether there was a strike or a lock out. For example, an employee, or a group of employees, refuses to adopt a new method of working, or to operate a new machine, so the employer sends them home. Are they on strike, or have they been locked out? Perhaps it is a bit like the definition of an elephant: it is something that everyone can recognise when they see it, but it is impossible to describe it accurately.
I quote from a leading textbook, Harvey's Industrial Relations and Employment Law:
"The meaning of these concepts"—
that is "strike" and "lock out",
"has given rise to some difficulty".
The textbook points to the problem that arose as to whether the definition of the words to be found in Section 246 of the Trade Union and Labour Relations (Consolidation) Act 1992 should also be incorporated into Section 238.
It appears that different divisions of the Employment Appeal Tribunal took opposing views on this subject. As an aside, these differences underline the point that I made when speaking to my amendment to Clause 20 when I pointed out the need for consistency in these quasi-judicial proceedings. So confusing was this issue, at least for the purposes of the 1992 Act that in one case Lord Justice Eveleigh, a judge of the Court of Appeal, said that he thought:
"It would be strange if a strike for the purposes of Section 238 was something different from a strike for the purposes of the 13th schedule"
In the course of the passage of the Bill through the other place, the Government failed to make use of the legislative time available to solve the problem by proposing a clear and unequivocal definition, if only for the purposes of this new clause. The Minister said that he thought that he hoped that the courts would supply a suitable definition in time. I have good news for the Minister: the courts have given a definition. In a differently constituted Court of Appeal, in the case of Express and Star Ltd v Bunday, the court held that
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in each case it is a question of fact whether there was a strike or a lockout. That was the learned judge's attempt to describe an elephant, I suppose. Lord Justice Glidewell said:
"What is material is that in my view the ordinary meaning of lock-out comprehends not merely the act of the employer in refusing to allow his employees to work, but the reason why he so refuses".
The learned judge went on to give the example of a manufacturer faced with employees who refused to work normally on an urgent order unless paid at double the normal rate. He said that in such a case, if the workers were suspended, the employer could not be regarded as having locked them out. That is where the definition contained in this amendment comes from. It incorporates Lord Justice Glidewell's definition.
At the meeting that the Minister was courteous enough to have with me after the Second Reading, I drew his attention, and that of his advisers, to Lord Justice Glidewell's ruling and definition. I hope they have taken the time to consider it very carefully. In the absence of an alternative equally clear definition by the Government, I hope they will accept the clear, unambiguous one that I have proposed.
What is not an option is for the meaning of this phrase, which has been given even more importance by the extension of the eight-week period created by this Bill, to continue in the uncertain state it is in at the moment, with one Employment Appeals Tribunal ruling one way, and another ruling the other way, and with the Court of Appeal also finding great difficulty in giving a dear definition of the legal principles, in clear unambiguous legal terms.
It is Parliament's duty to make the law, and for the judges merely to interpret it. Parliament, or in this case the Government, cannot abdicate that responsibility, and simply leave it to the opinion of the judges to decide such an important issue—perhaps not even consistently from case to case. In the hope that the Government will grasp the nettle, I beg to move.
Lord McCarthy: May I ask the noble Baroness two questions? Her amendment says:
"For the purposes of this section, an employee shall not be deemed to have been locked out if his employer shall have suspended him."
That is a distinction from "dismissed him"; we are not saying that he was dismissed but that he was suspended. But of course he is not working, so he is losing money; he is suspended; he is in limbo. The employer suspends the employee—says, "Don't come in tomorrow". But all he has done, it is said, is to refuse or failed,
"to work wholly or in part in accordance with the terms of his contract".
My next question is, does that happen within the protected period? If it does, the employee cannot be dismissed, can he? The distinction is whether he can be suspended. If he cannot be dismissed, why can he be suspended? Surely if he cannot be dismissed but he is

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suspended, in a sense the employee is subject to a lock-out, because the employer is refusing to allow him to work. He has committed no offence—he is acting perfectly lawfully—so is that not a lock-out?
7 p.m.
Baroness Miller of Hendon: Those are the words I have. The entire definition came from the decision by Lord Justice Glidewell in the case I referred to earlier. I used it simply as an example of what I thought, and the definition in the amendment comes from that by incorporating Lord Justice Glidewell's definition. It is not only the one covering an employer refusing to allow his employees to work, but also the reasons why he does so. Obviously, that is what would happen in this particular case. You cannot suspend someone for no reason.
As I said when introducing the amendment, to give the reason is like trying to describe exactly what it is: you know it only when you see it. I gave what I thought was a fair example that if a rush order suddenly came in and the employer said to the employee, "I would like you to help me put this through", because part of the employee's contract was to do that work, but the employee refused, if he was then suspended, it would be appropriate for the reason to be taken into account.
I do not know if that answers the point put to me by the noble Lord.
Baroness Turner of Camden: That seems a bit odd. Any industrial action involves a breach of contract. If you take industrial action and refuse to work, you are in breach of your contract. This would appear to give the employer an opportunity to impose a lock-out but to call it a suspension.
Lord McCarthy: That is right.
Baroness Turner of Camden: The lock-out would operate, although the employer would have said, "You cannot come into work, but we are not locking you out. This is a suspension". I see no difference because the individual would have breached the contract of employment presumably in order to take part in industrial action during the protected period, but because the employer called it a suspension, it would not be a lock-out within the terms of the Bill. I cannot understand that.
Baroness Miller of Hendon: The noble Baroness has made her point, as has the noble Lord, Lord McCarthy. If it is necessary for me to look again at the wording, I shall do so. However, no doubt the Minister will have something to say.
Lord Triesman: The 1999 Act introduced landmark new protections for employees taking "protected industrial action"; that is, official industrial action that is lawfully organised. Generally speaking, the new protections have worked well, but there are some areas where we think they could be improved, drawing on experience in the case of Friction Dynamics. That case showed that an employer might be tempted to instigate
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a lock-out after the action has begun and thereby negate the protections. In such circumstances, the employer's intention is to sit out the eight-week period and dismiss the employees as soon as it has ended. That is certainly against one of our policy intentions, which is that the eight-week period should encourage a negotiated return to normal working. Lock-outs usually ratchet up the tension in disputes and can often make it more difficult to resolve the underlying issues.
Clause 25 addresses this by stipulating that lock-out days do not count towards the protected period during which it is automatically unfair to dismiss. So, where lock-outs are not used, the protected period lasts eight weeks, or 56 days. But where, for example, the employer locks out the employees for the first two calendar weeks of the industrial action, then the period during which it is automatically unfair to dismiss would be extended by 14 days. In other words, it would end 70 days after the action had begun.
Our industrial action law, which is brought together in the Trade Union and Labour Relations (Consolidation) Act 1992, has referred to "lock-outs" for many years. However, the 1992 Act and its immediate predecessors have never included a definition of a lock-out. The interesting question is whether that was an omission because people could not describe the elephant or whether it was deliberate. However, when going back over the history, it is quite clear to me that it was deliberate. Historically, lock-outs take place against varied backgrounds and in widely different circumstances. We, along with earlier governments of both parties, have thought it best to leave it to the tribunals and courts to decide whether a lock-out has occurred, basing their judgments on the facts of each case. So we have followed this accepted approach and have not included a definition of a lock-out in the Bill.
The absence of a definition has not presented difficulties for the courts or others. The Court of Appeal decision in Express & Star v Bunday, to which reference has already been made, is a key case in understanding the legal position on lock-outs. I too want to quote from the judgment, but from another of the judges concerned, Lord Justice May. He said that,
"each of these cases must be decided on its own facts and merits and … I have no doubt that the best appreciation of what is or is not a strike or lock-out will come from either an Industrial Tribunal or the Employment Appeal Tribunal, highly experienced in these matters as these bodies respectively are. Indeed, I have little doubt that the draftsman omitted any specific definition of a strike or a lock-out because it is difficult, if not impossible, to draft a definition which is likely to fit every case and because it was going to be experts who would have to decide whether one or the other of these states of affairs had occurred".
I am deeply sensitive to the notion that two non-lawyers in this case may end up juxtaposing Lord Justice Glidewell and Lord Justice May.
We see here that the absence of a precise definition causes concern in some quarters, but the lesson of the remarks made by Lord Justice May is that any definition is likely to create more problems than it resolves. We know that that is the case because it is so hard, as has been said, to describe the elephant. That point was very fairly made.

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It has been put to me that Lord Justice Glidewell did not define the term "lock-out". He gave an example of a case in which he did not think there was a lock-out, and which the noble Baroness has described, and her amendment extrapolates from that example.
I think that Amendment No. 51 illustrates the dilemma very well. It seeks to define certain behaviours that do not fall within the meaning of a lock-out for these purposes, but it does so in ways which are likely to narrow the meaning of a lock-out much too far. The amendment states that the suspension of an employee,
"for refusing or failing to work wholly or in part in accordance with the terms of his contract",
does not constitute a lock-out. But in taking any industrial action, there is almost always a breach of contract. I would go so far as to say that it would be extremely rare for there to be no breach of contract. A lock-out is usually an act that the employer contemplates only in response to industrial action or because it is likely to take place. In most cases, therefore, this amendment would permit the employer to suspend a person indefinitely for taking or proposing to take industrial action while the eight-week period continued to run. Apart from the fact that this was more or less what happened at Friction Dynamics, the amendment renders the amendments proposed in the Bill almost, if not entirely, ineffective.
The Government therefore cannot accept this wording as it would encourage retaliatory behaviour in the form of lock-outs against those who are taking protected industrial action. With respect, my noble friends sought to illustrate that point in the questions that they rightly asked. It would provide an easy escape mechanism for a ruthless employer to dislodge the protections, and it would substantially undermine the very purpose of Clause 25. From what the noble Baroness said, I do not believe that that was her intention in raising the issue.
This amendment seeks to establish hard and fast rules in an area where, regrettably, such rules cannot be fairly applied. We need to leave space for tribunals to exercise their expert judgment, taking into account all the difficult issues they have to face. I therefore strongly urge the noble Baroness, Lady Miller, to withdraw her amendment.
Baroness Miller of Hendon: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camdenmoved Amendment No. 52:
Page 25, line 29, at end insert—
"( ) In section 221(2) of the 1992 Act (restrictions on grant of injunctions and interdicts) for all the words after paragraph (b) to the end substitute "the court shall, in exercising its discretion, not grant an injunction if the applicant has not shown that he is likely to succeed at the trial of the action"."
The noble Baroness said: I am very sorry that my noble friend Lord Wedderburn is not here today to move this amendment because it is the kind of issue that he would be rather keen on. I know that he has strong feelings about it.
The intention of the amendment is to provide that an injunction should not be granted against a union unless the employer can show that he would be likely to succeed if the case went to a full court hearing. The reason for that is that from time to time injunctions have been sought and obtained against unions even when a threatened dispute was being conducted in accordance with the full requirements of the law. Nevertheless, the courts occasionally grant injunctions. The effect of that is to interfere with the right to conduct effective industrial action. As anyone who has had to run an industrial dispute knows, timing is often crucial. The delaying effect of an injunction, even though when the case is heard in full in the court it is lost because the union has followed the correct procedures, is serious.
I understand that there have been several unsuccessful attempts to change the law in this direction since it is manifestly unfair to unions. If the injunction is granted but not complied with, the union is obviously in contempt of court and could be fined. Eventually that may take the path that leads to the sequestration of assets and so forth.
I hope that, on this occasion, the Government may be prepared to consider what we are saying sympathetically. The law is not even-handed between employers and unions in this respect. Until it is, the positive right to take industrial action in accordance with the provisions of the ILO conventions which our Government support, and which we in the trade union movement have always supported, should be protected. I hope that my noble friend will be prepared to be sympathetic to this amendment. I am sure that he knows all about it because it is not the first time that this subject has been raised. I beg to move.
Baroness Miller of Hendon: I am sure that the noble Baroness is correct to say that this is exactly the sort of amendment that the noble Lord, Lord Wedderburn, would have moved had he been able to be with us today. I believe that he is not very well. I hope that he is making a good recovery and that in due course we shall see him moving amendments and so forth in his customary way.
I have listened carefully to the noble Baroness and I wish to put a brief question to her. Am I right in understanding that the court already has the power under civil practice rules not to grant an interim injunction if it does not think it reasonable to do so? If that is the position, I can say only that perhaps the amendment is not necessary.
Lord McCarthy: No, unfortunately that is not the position. Although it has not been brought out into the open, we are dealing here with the effect of the American Cyanamid v Ethicon case. That was not a case in the field of industrial relations, but in the commercial field. Essentially, before that ruling, it was not possible to impose an interim injunction unless a number of things could be established, most important of which was that there had been some wrongful act. Therefore if the American Cyanamid case had not

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been brought, so long as someone acted within the protected period of around eight weeks, they would not be liable to an injunction.
The worry is that, because of the way common law works, that case has naturally been transferred over into industrial relations law, so that now someone only has to have a serious case to consider, and the process then starts. That does not mean that if the court decides to consider the case that the injunction will be granted. The noble Baroness is quite right: it could decide against. But we are concerned about the basis on which it could decide to impose an injunction.
No one can deny that an interim injunction is effective because the penalties that follow on defiance of an interim injunction are horrendous. On the other hand, an injunction is no real problem because it will take a long time to get there; there will be further and better particulars, which will go on and on; meanwhile the strike will go on.
7.15 p.m.
However, there have been industrial relations cases where employers have applied for an interim injunction and it has been granted over the weekend. Once you get the first trip into consideration, as a result of the Ethicon case, then all the court must consider is whether the damage to the employer will be worse than the damage to the union. If the court decides—there have been such cases—that the damage to the employer is horrendous, immeasurable or horrific, whereas the damage to the union is negligible, it will grant the injunction.
It is not easy, but it is not too difficult, for an employer to produce evidence to show that a particular strike at a particular time will have very substantial consequences in terms of lost revenue, disruption and impact on the general viability of the firm. That can all be added up and a conclusion reached; it looks very impressive. But if the union can be subject to an interim injunction, even if it has obeyed the law, it will be very difficult for it to make or sustain the argument that putting off the strike compares with the easily calculable costs of the immediate strike to the employer. Therefore, they will almost always lose. The union will be talking about intangibles, saying that the dispute has been going on for a long time; that they have had a ballot; that they have done all kinds of other things to obey the law; and now they will have a strike. They may even be on strike and the strike may be winning or at least looking solid. But it will suddenly be called off indefinitely until the injunction comes to be heard in the normal process. It is the end of the strike. From the union's point of view, the strike has been destroyed by the granting of an interim injunction over the weekend.
Once again, that does not happen in other countries and they seem to manage it. So we ask the Government to consider, not going back to the pre-Ethicon formula, but something rather less definite, precise and significant. We ask merely that lawyers look at the evidence and decide whether they are likely to succeed
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if a trial went forward. Lawyers can look at the evidence one way or the other; all we suggest is that they do not act quite so automatically.
Lord Triesman: This amendment seeks to change the matters to which the courts are to have regard when deciding whether or nor to grant an injunction against a proposed industrial action. I wholly accept that injunctions can have a critical impact on the progress of a dispute, that timing is fundamental and the stakes high for both parties. The union stands to lose the impetus in its handling of the dispute if the injunction is granted and the employer's business will be disrupted if the industrial action goes ahead. In the midst of all that it is important, therefore, that the arrangements concerning such injunctions are fair and reasonable.
This amendment seeks to bring about a significant change in industrial action law. My noble friends would like to see various other far-reaching changes to the law in this area. I acknowledge that this is certainly as far reaching as any of those other changes. However, on taking office in 1997, we said that we would retain the key features of the law on industrial action. We reiterated that commitment during last year's review of the Employment Relations Act 1999. The Government consider the main features of the current law to be workable and that unions have, by and large, successfully adapted to them.
We have taken steps, however, to simplify and clarify aspects of the law. I do not think that we are slicing it away, as has been suggested; I hope none the less that we are clarifying it. Our proposals on industrial action notices fall into this category. As a result, there should be less scope for unions to fall foul of the law through minor, technical slips. That can easily happen, and it can be extremely aggravating. It should be easier for unions to show that their proposed line of action is lawful and, accordingly, that the statutory immunities apply.
When contemplating a request for an injunction, the court must look at the likelihood of a union establishing that it would have the protection of the law if the case should reach a full hearing. The amendment seeks to transfer this responsibility to demonstrate likely success to the employer or other claimant. This would be a retrograde step. The union is, of course, in a better position to know what has actually occurred; it is its actions, or failures to act, that are at issue. Therefore it should have the information at its disposal to show where the facts of the case lie and to argue, in the light of those facts, however complicated, how it complied with the law.
I have referred to "the union" and will continue to do so, but it is worth bearing in mind that in principle Section 221(2) applies equally to acts done by others that they believe to be in contemplation or furtherance of a trade dispute. Though the onus is placed on the respondent, the claimant still needs to show that he has an arguable case and to demonstrate that there is a serious issue to be tried. This ensures that frivolous or weak claims cannot get very far in the process. So it is

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not accurate to depict the current injunctive system as providing an automatic or easy way for the employer to spike the union's guns.
I fully appreciate that the law in this area impacts on the balance of power in industrial disputes. I understand that my noble friends want to shift that balance of power a bit more towards the union. As I have stated, that runs contrary to government policy. I can recall in the discussions that led to the 1999 Act my honourable friend Ian McCartney setting out how those balances across the whole of the system ought to work. That did show what the policy was going to be, and we are adhering to that policy this evening. In no sense is it altered. I therefore urge my noble friend to withdraw the amendment.
Baroness Turner of Camden: I thank my noble friend for his explanation of the Government position. I am not really surprised by it. I hold to the view that the present set-up is balanced unfairly against unions, because it is possible, as my noble friend Lord McCarthy has demonstrated, for a union to have its guns spiked—if I may use my noble friend's phrase—by an employer. If that employer is able to demonstrate to the satisfaction of the court, irrespective of what the eventual position is and
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irrespective of the fact that the union may be acting entirely within the law, the employer can nevertheless put up a case that will encourage the court to grant an injunction. That, as my noble friend acknowledges, can have a desperately inhibiting effect on the union's position and on the possibility of running an effective dispute, even though the union may have followed all the procedures laid down in the legislation.
It is not my intention to pursue this amendment, but I was anxious to raise it and to get the explanation in Hansard. We can at least say that we have tried, again, to amend the law in this respect. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 25 to 27 agreed to.
Lord Triesman: This might be a convenient moment for the Committee to adjourn until next Tuesday at 3.30 p.m.
The Deputy Chairman of Committees (Lord Tordoff): The Committee stands adjourned until Tuesday, 15 June 2004.
The Committee adjourned at twenty-four minutes past seven o'clock.