TRANSFERRED UNDERTAKINGS (COMPENSATION TO EMPLOYEES) REGULATIONS, 1950 (Hansard, 29 June 1950)

§ THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LUCAS OF CHILWORTH)

My Lords, I beg to move that the Special Order, as reported from the Special Orders Committee on March 22 last, be approved. When compensation regulations in connection with nationalised industries have troubled your Lordships in the past, the occasion has usually been marked by complaints of failure to make them clear. I shall attempt to-day—whether I shall succeed or not I do not know—to make these regulations clear to all your Lordships; and I hope that when I have done so you will approve them. Many of the features of these regulations are common to the regulations made in connection with other nationalised industries, and I do not intend to trouble your Lordships with 1237 those. But I do intend to say a word or two about those which, perhaps, break new ground, because in making compensation regulations for road haulage we are, for the first time, legislating for an industry which previously has had no code of compensation, or any well-established procedure.

When we made compensation regulations in respect of the coal, gas and electricity industries and the railways, we were dealing with industries where upon nationalisation a complete monopoly was set up, so that if a man lost his employment in that industry he had to find an entirely new field of activity. It is not so in road haulage. If a man is unfortunate enough to lose his job through the nationalisation of the road haulage industry, there is abundant scope for similar work outside the Road Haulage Executive. The following figures will illustrate the position. At the end of March the British Transport Commission operated 50,074 motor vehicles. There were still 126,000 vehicles operated by individual "A" and "B" licensees, and approximately 34,243 heavy commercial vehicles—that is, vehicles of three tons and over—operated by "C" licensees. Your Lordships will appreciate from these figures that there is no monopoly in the road haulage industry.

In these regulations we believe that we have been fair both to prospective claimants and to the British Transport Commission. I think your Lordships will agree that in here would be no justification for creating in these regulations a set of new rights which would be far in excess of anything enjoyed in the industry before nationalisation. I believe that the standard we have adopted is better than anything that existed in the industry in general. But we are not setting a standard for the terms and conditions of the future. What we are seeking to do is to give compensation for loss of terms and conditions of the past. In doing so, we have been guided by three principles: first, to adhere as closely as possible to previous regulations in such matters as qualifying service, provision for appeals, and other details; secondly, to provide for all who qualify a minimum award such as a good employer might provide; and, thirdly, to give scope for awards above the minimum to those who can show they might have expected something better.

1238 Frankly, I have no illusion that there will be many cases in the industry where a claim on the basis of right of expectation can be maintained. I expect that the majority of cases it is the minimum award that will be paid. Therefore, I will describe in detail the minimum award. The amount of the award is two-thirds of emoluments lost (and emoluments are defined in paragraph (3) of Regulation 1), less two-thirds of any unemployment, sickness, or injury benefit drawn. The period over which it is paid for a man under forty-five is thirteen weeks, unless he obtains other employment within that period. For a man over forty-five a further week is added for every complete year of service after forty-five up to a further thirteen weeks, unless he gets other employment within the period. Anything over six months is reckoned as a complete year. The period of compensation in his case ranges from thirteen to twenty-six weeks according to his age. Where a man gets other employment within the period of his compensation, but at a lower emolument, he continues to receive two-thirds of his loss—that is, the difference between the amount of the emolument he did receive and the amount he is receiving—and this continues for the remainder of the period of the award.

I now come to the question of expectation. The periods of compensation I have outlined can he increased if a man cart successfully claim that he would have received something better from his previous employer. The extent of the increase will depend Oil the nature of the expectation, but may be of any length right up to the time of retiring age. These minimum awards are the best of which I have any knowledge, and I have spent thirty years on the fringe of this industry. I am sure they are better than most employees could have expected from their previous employers. How many of the employers in the road haulage industry would have been willing or able to see that an employee whom they discharged was in receipt of two-thirds of his previous earnings for at least three months, even making allowance for unemployment benefit? If there are any firms in the industry which would have given better terms than this minimum, the regulations provide for a claimant to receive such better terms. Your Lordships will see that expectation means this: What expectation did a man have that if he 1239 was discharged, his employer would have given something better by way of compensation than is stated in the minimum terms.

The qualifying period for compensation is that a man must have been employed by an "A" or "B" licence holder from January 1, 1940. Continuous service is required; there can be breaks in this employment but they must not exceed eighteen months in the aggregate from January 1, 1940. War service is not counted as a break, and war service includes service in the Armed Forces, the merchant navy, civil defence or any employment to which he was directed by the Ministry of Labour and National Service. It is as well to bear in mind that in order to qualify he must have been in the employ of an "A" or "B" licence holder before starting his war service. A further point that is worth emphasis is that we do not stipulate that he must have been in the employ of one employer. What we do say is that he must have been employed in the industry on "A" or "B" haulage.

When we come to pensions, these regulations do not deal with provisions (which remain to be made) for a claimant who has any pension rights, including expectation of pension under customary practice in his old employment, to have these rights fully preserved in the form in which they existed at the time of loss of that employment. These regulations will come later and will freeze and preserve the rights and the amounts he had already earned. These regulations provide for additions to those rights in the case of men over forty, who are likely to experience most difficulty in securing further opportunity for making provision against retirement. The addition we propose is equal to the amount by which the pension would have been increased had there been one additional year of reckonable service for each year that the man had served after the age of forty, up to a maximum of ten such added years. The example is a man who lost pensionable employment at forty-five would be credited with five additional years of reckonable service for pension purposes. If this man loses his employment over forty years of age, to the amount which we shall freeze will be added one year for every year over 1240 forty up to a maximum of ten; and the pension which has so accrued by the amount frozen and the amount we are going to add will be paid to that man upon the due date on which he would have been paid out had his original scheme gone on to maturity date. The completed liability for the addition to the pension will fall on the British Transport Commission whether the pension was contributory or not.

The pension rights include not only organised pension schemes, but also customary and ex gratia payments, whether by way of weekly pensions or lump sums. This provision for compensation for loss of pension rights is the same as in previous similar regulations. Under the terms of the Transport Act these regulations can apply only to employees of undertakings acquired by notices of acquisition. Many undertakings, however, have been acquired by voluntary agreement. The figures up to April 30 are: by voluntary agreement, 471 undertakings, and by notice of acquisition, 2,203 undertakings. In all cases of undertakings acquired by voluntary agreement, either the agreement contains a clause providing for the application of the provisions of these regulations or the British Transport Commission have given an undertaking that they will act as though this was so. Therefore, in effect, it will make no difference to an employee whether his former employer's business was taken over by notice of acquisition or voluntary agreement.

Should the question of liability to income tax of payments under these regulations be raised, I can only say that this would be decided in accordance with general income tax law. Subject to this qualification, I can say that the liability is understood to be (a) in respect of periodical payments—these will be assessable to income tax and will qualify for earned income relief; and (b), of lump sum payments—these are not regarded as assessable to income tax, but such payments will be few and will not normally exceed £250. The regulations, in my view and I hope your Lordships agree—provide a code suitable for an industry which previously not only had no general code, but could not show any generally accepted practice of compensation. It was an industry in which each employer was a law unto himself, and most concerns were 1241 small. It was also an industry in which movement from one concern to another was frequent. The regulations provide, in my view, a minimum award for all who satisfy qualifying conditions essentially the same as those adopted in other industries, and provision for a higher award when a man can show an expectation for something better. I hope your Lordships will approve these regulations. I beg to move.