REDUNDANCY PAYMENTS BILL

HL Deb 03 August 1965 vol 269 cc206-46

6.53 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Lindgren.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1 agreed to.

Clause 2:

General exclusions from right to redundancy payment.

2.—

(2) Except as provided by section 10 of this Act, an employee shall not be entitled to a redundancy payment by reason of dismissal where his employer, being entitled to terminate his contract of employment without notice by reason of the employee's conduct, terminates it either—

1. (a) without notice, or
2. (b) by giving shorter notice than that which, in the absence of such conduct, the employer would be required to give to terminate the contract, or
3. (c) by giving notice (not being such shorter notice as is mentioned in paragraph (b) of this subsection) which includes, or is accompanied by, a statement in writing that the employer would, by reason of the employee's conduct, be entitled to terminate the contract without notice.

LORD DRUMALBYN moved, in subsection (2), to leave out all words after "dismissal" and insert: for such conduct as would entitle the employer to terminate his contract of employment without notice, whether the employee is dismissed with or without notice, and whether any notice given is that which in the absence of such conduct the employer would be required to give to terminate the contract.

The noble Lord said: I beg to move the Amendment standing in my name. It does not look as if in this House we are going to be of quite so much use on this Bill as we were on the last one; nevertheless, I think we should try to be of some use by drawing attention to some of the points of practical difficulty in its application. This Amendment is one which arises out of an Amendment made in another place in order to meet suggestions by the Opposition. In meeting these suggestions, I am not quite certain that some new difficulty has not been created.

The position, as I see it, is this. Here we are dealing with the exclusions from the right to redundancy payment. The first exclusion is that where a man is dismissed for misconduct (I am using colloquial language) without notice, he is not entitled to a redundancy payment. Where he is dismissed for misconduct with shorter notice than would normally be given under the Statute—where the employer, for example, says, "You go at the end of the week"—in that case, again, he is not entitled to redundancy payment. In another place it was represented that it might be convenient, possibly for both parties, and there might be no particular trouble, if the employer were to say: "All right. You are out; but you may stay until the end of your normal period of notice". This, as the Committee know, would be four weeks in the case of someone who had worked for over five years, and two weeks in the case of someone who had worked for over two years.

In another place, the Amendment in subsection (2) was introduced to enable a man to be dismissed with full normal notice, provided only that the notice then included, or was accompanied by, a statement in writing that the employer would by reason of the employee's conduct be entitled to terminate the contract without notice. The reason for that, I understand, was that there was a strong desire not to create any administrative confusion in this matter: that either you went on normal notice, in which case prima facie you were entitled to redundancy payment, or you went on the spot, when prima facie you were not entitled to redundancy payment.

I wonder if it is quite right to tie down to the question whether or not this evidence is provided. After all, it is rather an act of grace on the part of the employer to say: "All right. You work out your notice, but you will have to go after that". It seems rather unfair that he should have to make the redundancy payment, nevertheless, despite the man's misconduct, despite the fact that he could have been dismissed on the spot, and merely because he has acted in this way and has omitted, maybe through ignorance, to give, together with the notice, this statement in writing. The purpose of this Amendment is merely to try to avoid the requirement that this statement in writing must be given. I move it because it seems to be a little unfair to make this requirement, and, as I understand it (I may be wrong about this), so to speak, cancel the exclusion from the redundancy payment simply because of what may be a pure administrative slip in a factory or elsewhere. I beg to move.

Amendment moved— Page 2, line 22, leave out from ("dismissal") to end of subsection (2), and insert the said words.—(Lord Drumalbyn.)

THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LINDGREN)

I could not claim that on the Second Reading of this Bill the Opposition were given adequate replies on the number of points that they raised. That was due entirely to the extremely late hour, for this House, at least, when we had that discussion. Therefore, subject to your Lordships being prepared to bear with me and not being too bored, I propose to deal more fully with the Amendments that are going to be moved to-night, including this one, because most of the points of real substance that were raised during the Second Reading debate have been quite properly brought out in the Amendments on the Marshalled List.

I hope to be able to persuade the noble Lord that this Amendment is unnecessary, because the Bill already provides for all the possibilities when the employer dismisses the employee for misconduct. The purpose of subsection (2) of this clause is to make it clear beyond doubt that an employee rightly dismissed for misconduct (except when he is already under notice, in which case he will be dealt with under Clause 10) is not entitled to a redundancy payment, irrespective of whether there may also be redundancy at the time. These matters are dealt with, as the noble Lord has suggested, under paragraphs (a), (b) and (c) in this subsection. They deal respectively with the situations where the employer dismisses a man without notice (which is in paragraph (a)), dismisses with less notice than he would have been required to give if the worker had not misbehaved (which is in paragraph (b)), or lets the worker work out his full notice to which he would otherwise have been entitled, or even more than that, despite his misconduct (which is in paragraph (c)). That is the paragraph with which the noble Lord has specifically dealt this evening. So far, the Bill and the noble Lord's Amendment differ only in presentation.

It would not be true to say that, under the subsection as it stands, the employer who allows the worker some notice, or his normal notice, is in any way prejudicing his position or exposing himself to the possibility of a reference to the tribunal by so doing. It will, of course, be open to the employee who is dismissed for alleged misconduct to appeal to the tribunal on the grounds that he did not in fact commit misconduct, and that the real reason for his dismissal was redundancy. But the employee can do this whether he was allowed notice or whether he was not—that would make no difference to the position.

There is one extra requirement in the Bill under paragraph (c) which does not, appear in the Amendment we are discussing—namely, the requirement on the employer, when he allows the employee to work out his full notice, to give the worker a written statement making it clear that, because of the employee's misconduct, the employer was entitled to dismiss him without notice. This requirement is necessary so that if the case goes to a tribunal there will be a record available that the allegation of serious misconduct was in fact made at the time of the notice. Without such a provision, it might be difficult for the tribunal to establish what had happened. For example, while the employer would claim that there had been misconduct and that therefore no payment was due, the employee might contest this and point to the fact in support of his argument that he was given normal notice. This requirement is, therefore, a necessary protection for the parties. But these cases will, of course, be rare, and it is not, therefore, an onerous requirement on the employer to give a written notice in such circumstances. Indeed, in view of the importance of the transaction, it is a very reasonable one. This is the only difference between the present provision in the Bill and the noble Lord's Amendment. I hope he will agree that the difference represents a necessary protection, not least for employers themselves, and in the circumstances I hope that he will withdraw his Amendment.

The noble Lord mentioned the case of an employer who forgets that there is a requirement under the Bill for notice to be served on a worker whom he has dismissed for misconduct. But the number of employers who have no office staff is very few indeed—as few as the number of workers who are likely to be dismissed in these circumstances. In most organisations where redundancy is likely to arise there is a fairly large staff department. All the ramifications of Industrial Injuries, National Insurance, Pay-as-You-Earn, and all the rest of it, make a staff department and a personnel manager an essential part of modern business, and in those circumstances I do not feel that this provision is likely to be onerous on the employers. In fact, it is for the employer's protection, and to enable him to justify, or to give evidence of, facts which arose perhaps three weeks, a month, or, if it is a long-service employee, six weeks before, and of which memories of circumstances might be blurred at the time the matter goes to the tribunal.

LORD DRUMALBYN

I am very much obliged to the noble Lord for his explanation of the reason for this. Of course, this Bill applies not only to those organisations which have staff who can look after matters of this kind; it applies also right down to the employer who employs only one person, even to a person who employs one domestic servant. So it will not be as straightforward as the noble Lord suggested in all circumstances. I should have liked, had it been possible, that this should not be an absolute requirement, but should only be taken, as other things in the Bill are taken, as prima facie evidence by the court. But I quite see the difficulty here. One of my reasons for raising this question is that I think the more publicity that can be given to this, and the more it can be brought to the attention of trade associations and the rest, the better. If this is to be a requirement, it is as well that everybody should know it. I hope that as much publicity will be given to it as possible, and in that hope I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

7.8 p.m.

VISCOUNT FALMOUTH moved, after Clause 2, to insert the following new clause:

Redundancy payment may be varied

". Notwithstanding the provisions of this Part of this Act, in any case in which a tribunal, on an application being made to them in that behalf by an employer, are satisfied that an employee who is entitled to a redundancy payment under this Act has received an offer of suitable employment the acceptance of which by him would not result in any loss of earnings nor necessitate the payment by him of any expenses, the tribunal shall, after taking into account all the relevant circumstances, make such determination as to the amount of the redundancy payment to which the employee is entitled as seems to the tribunal to be just and equitable ".

The noble Viscount said: I must first apologise to the Committee for not being present at the Second Reading of this Bill, which was so well described as a landmark. I have a personal interest in the Bill, both as an employer and as one who is closely connected with an employers' association. In moving this Amendment, I take into account the general principles of the Bill which were so well received in your Lordships' House on Second Reading, and must attract the support of all good employers. But there are important points which I think require the attention of the Committee.

I move the addition of this new clause, on the grounds that the full redundancy payment should not be made where suitable alternative employment is provided with another employer, and where the employee does not suffer any loss of earnings or expenses in moving house and home. The need for the mobility of labour has always been emphasised by all Governments, and I would submit that the redundancy payments are intended, in part, to compensate particularly the younger man for the inevitable costs of movement from one part of the country to another where there are fresh jobs available. As the redundancy payment depends on length of service, part of the payment is intended—and very rightly so, in my opinion—to compensate for what one might call the loss of expectation arising from long service. Nevertheless, I think I should make the point, that if part—and I say advisedly "if"—of the redundancy payment is to cover loss of earnings or expenses incurred in moving home, that part of the payment must surely be restricted to cases where these factors apply.

It would seem, therefore, that if the mobility of labour is to be encouraged by this Bill, where an employee has the opportunity to move, perhaps far away to another job, suffering loss of earnings and incurring expenses, he should get the full amount of the redundancy payment; but if he has the opportunity to accept suitable employment which does not involve him in any expense or loss of earnings, the amount of redundancy payment should be limited to the long service element and be determined by the tribunal which is being set up under the Bill. I beg to move.

Amendment moved—

After Clause 2, insert the said new clause.—(Viscount Falmouth.)

VISCOUNT FALKLAND

I support this Amendment. As I said on Second Reading, I think the tribunal should decide the amount of a redundancy payment when there is no expense of residential transfer. I cannot see that a payment intended to encourage mobility of labour will serve this purpose unless it is paid only in respect of this. I still think it is human nature to get the greatest advantage from a redundancy payment, and residential change is likely to be avoided, if possible, or at least deferred. The general principle of redundancy payments will have the support of good employers, but I think there are points of detail which require change before the Bill reaches the Statute Book.

LORD LINDGREN

In spite of the plausible manner in which the noble Viscount, Lord Falmouth, has moved this Amendment and the noble Viscount, Lord Falkland, has supported it, I cannot advise your Lordships to accept it. It would destroy the basic principle of the Bill which, as the noble Viscount said, has been widely accepted by both sides of industry during our consultations and has indeed received wide support in Parliament, the Press, and throughout the country. This principle is that workers must be entitled to a legal guarantee of compensation on redundancy and that this should relate to the loss of security built up in the job, as measured by length of service put in with the employer, as well as loss of earnings. Without such a guarantee, the Government believe that the scheme could not make the necessary impact on the attitudes of workers towards desirable industrial and economic changes.

If this new clause were accepted, an employee would never know in advance of redundancy what compensation he was to get or, indeed, if he would get anything at all. The provision suggested in the Amendment assumes that the only things for which a redundant worker ought to be compensated—assuming he finds fresh work—are direct loss of earnings or increased expenses. But there are many other factors involved. First, the worker has to abandon a familiar working environment round which he may have built much of his life, and start again in a different setting with different workmates. That is something which no worker can be expected to welcome, and the older one gets the less one welcomes it. Then there is the loss of security. Because of the general operation of the "last in, first out" rule, the longer the worker has been in his existing job, the more security against dismissal he has built up. Once he moves to another job, he is back at "square one" and liable to be among the first to be dismissed if there is redundancy.

Even though a worker finds suitable work with comparable earnings, he may well lose in other respects because of his reduced seniority; for instance, in such matters as pension rights, entitlement to sick pay and holiday pay.

Even if it were possible to measure all these things precisely in monetary terms, the sort of provision envisaged in the Amendment would be quite impracticable. It envisages a separate determination by the tribunal—with no rules to guide them—for all workers who receive offers of suitable employment not involving direct financial loss, and whose employers choose to take the matter up. Any arrangement on these lines would produce an impossible amount of litigation, and widespread anomalies, and injustices as between workers with one employer and workers with another. The new clause is concerned with offers of suitable alternative work, but it pays no regard to when that work materialises, whether immediately or after the worker has suffered a spell of unemployment. Nor does the clause say anything about what is to happen if the new job folds up within a short period. If the object of the Amendment is to fit the compensation to the hardship suffered after redundancy, it obviously ought to have regard to these factors, in particular, to how long the worker remains unemployed before starting fresh work.

However, one has only to think of the need to have regard to any unemployment to see how completely inappropriate is a scheme of lump-sum compensation for that purpose. Reducing hardship during unemployment is the function of unemployment benefit under the National Insurance scheme; and this is precisely the trouble. The noble Viscount's approach is, I say with respect, mixing the two things up. It is trying to make redundancy compensation do the job that unemployment benefit ought to do. The noble Viscount wants the amount of compensation to reflect the hardship the worker may encounter after he becomes redundant; and a spell of unemployment would be a major element in such hardship. But this must be dealt with through unemployment benefit; and, as your Lordships know, the Government have that matter under review at the present time. We have always regarded better provision through unemployment benefit as complementary to the present Bill.

I am quite sure the principle in the Bill is right. Redundancy compensation should relate to length of service in the job and should not be conditioned on what happens to the worker afterwards. This has always been the principle behind the "golden handshake" for managerial staff who become redundant. Nobody has ever suggested that compensation to a company executive should be reduced because he had found himself an opening with another firm, and it would be quite wrong to apply such a principle to workers generally. The Bill follows the practice under existing voluntary redundancy schemes which provide for lump-sum compensation related to length of service.

I therefore trust that the noble Viscount will be satisfied with the explanation that I have given and will not press the Amendment.

7.19 p.m.

LORD DRUMALBYN

If I may say so, I think my noble friends have been feeling their way towards something which I know has troubled a good many of us. It is all very well to have a "by and large" scheme of this kind, but you really cannot claim then that you are giving compensation in respect of redundancy where what happens on redundancy will be so different as between one person and another. This is a basic difficulty and it is not overcome in any way. Indeed, it is accentuated by unemployment benefit, because, while one man may go direct from one job to another without incurring any expense and, as the Amendment says, without any loss of earnings—and possibly even with greater earnings—another man, who has served for exactly the same time, may remain out of a job for a long period and may have to move somewhere else. In a sense that is not justice. It is not fair, as between one and the other, that they should receive exactly the same compensation.

We understand the terms of the Bill, and the question raised by the Amendment—and it is a fundamental one to the Bill—is whether it would have been possible to draft the Bill in such a way that one part of the element of redundancy, as the Amendment suggests, would be related to length of service in time, and the other part, also based on years of service but taking into account what happened to the person afterwards related to the degree of hardship in the individual case. Of course that would not be easy for the tribunals, but I should have thought some guidance of a general character could be given to the tribunals, and that before very long standards would be worked out to deal with this particular aspect.

I cannot advise my noble friends to press this Amendment, because clearly it is too late at this stage to make such a fundamental alteration to the Bill. I have every sympathy with them, however, in drawing attention to this very great difficulty of dealing fairly between two people in identical circumstances, both of whom will get the same redundancy payment but one of whom seems to need it and the other does not. This is the basic difficulty. I am glad that they have drawn attention to it. I am afraid that it is too late to do anything, but perhaps one of these days something may be done about it.

LORD LINDGREN

I am grateful to the noble Lord for having extended the discussion a little, because it gives me the opportunity to say this. Nothing is fair in this world between two individuals in apparently the same set of circumstances. There may be two workers who have been working for the same employer for the same length of time, and hardship arises when they become redundant. If one worker was fortunate enough to have had no family sickness he may have a nest-egg tucked away in the Co-op., or in war savings, or something like that. The other fellow, in exactly the same conditions, may have had a couple of kiddies ill for a long while, and may have spent a lot of money, in spite of the Health Service, in trying to get them back to health. Or he may have suffered considerable hardship because his wife is incapacitated and he has had to pay for someone to come in and help with the children. As soon as you get outside the general principle with which the Bill is concerned—that is, that where a worker has provided continuous service over a long period of time and then becomes redundant he is entitled to redundancy payment—and try to do something more, you get into all sorts of situations which, in the end, would come down to having a means test.

I would make this point—and I hope that the noble Lord will not think I am trying to bring in class warfare. If a business executive is declared redundant, the board of directors give him £5,000, or three years' salary, or twelve months' salary; and nobody calls it a question of hardship. The real hardship, very often, is that if a worker misbehaves himself, as we were discussing on a previous Amendment, he gets the sack, but if a business executive misbehaves himself it becomes incompatibility of temperament and he is given a year's salary. Where is the relationship of hardship in the two cases?

LORD DRUMALBYN

The trouble is that these "golden handshakes" are not standardised. The noble Lord is not introducing a Bill to standardise "golden handshakes". He is introducing a Bill to standardise redundancy payments, and this is the whole difficulty involved, owing to the different circumstances between people with very much the same length of service with the same employer and so on.

LORD LINDGREN

If you have been with a firm twenty years, even a "copper handshake" is more welcome than nothing.

VISCOUNT FALMOUTH

I am very grateful to noble Lords for having brought out these points in this discussion which perhaps were not fully brought out on Second Reading. I beg leave to withdraw the Amendment.

Amendment, by leave withdrawn.

Clause 3:

Dismissal by employer

3.—

(2) An employee shall not be taken for the purposes of this Part of this Act to be dismissed by his employer if his contract of employment is renewed, or he is re-engaged by the same employer under a new contract of employment, and—

1. (a) in a case where the provisions of the contract as renewed, or of the new contract, as the case may be, as to the capacity and place in which he is employed, and as to the other terms and conditions of his employment, do not differ from the corresponding provisions of the previous contract, the renewal or re-engagement takes effect immediately on the ending of his employment under the previous contract, or
2. (b) in any other case, the renewal or re-engagement is in pursuance of an offer in writing made by his employer before the ending of his employment under the previous contract, and takes effect either immediately on the ending of that employment or after an interval of not more than four weeks thereafter.

7.26 p.m.

LORD DRUMALBYN moved, in subsection (2), to leave out paragraph (a) and the words "in any other case," at the beginning of paragraph (b). The noble Lord said: There are two cases here and the effect of this Amendment is to remove one of them. The first case is where the dismissal takes place and then, before the period of notice elapses, the man is given another contract to come into effect immediately on the ending of his first contract. In that case the consequences follow that there is no redundancy payment that can be claimed. In the other case, which is the one which, under the Amendment, is left as the only case, there is a period of four weeks after expiry of the notice during which the employer may renew the contract—"an offer in writing made by his employer".

There are several difficulties about the first case that I am seeking to leave out. Let me take this one to start with. It may be that the employee himself does not want to take his redundancy payment. He may have received an offer of employment a day or so after his notice expired, and he may want to go back, and he does not want to take his redundancy payment; he wants this to be regarded as continuous employment throughout. He does not envisage the possibility of his becoming redundant at a later time and he wants it to run right through. There is a technical difficulty, as I see it, here. It may be subsequently discovered that he has not taken his redundancy payment when his employment does come to an end, and he will then be debarred from getting it, if that time occurs more than six months after his failure to claim his redundancy payment. He may lose it altogether. If the noble Lord looks at Clause 9(2) that seems to be the effect.

Then there is the whole question of temporary closures. This was argued in another place and I need not go into it in detail. Where there is temporary closure, undoubtedly the normal thing would be to lay off people; but it has not always been done in that way in the past, and I think it would be a good thing if the noble Lord were to make it clear that this is the way it will have to be done in the future if this clause is to remain part of the Bill. It is very important. That old habit of paying people off, having a temporary closure and then re-engaging them will expose the employer to having to make redundancy payments. Therefore the only way in which ho can deal with that kind of situation in the future is to lay the men off, and, if the lay-off is not too long then there is continuity of employment.

There is the third case I should also like to mention, namely, the question of run-down, possibly with staggered discharges. Here, in the case of, say, a cut—quite a large reduction in the number of people employed—the employer may not know at the time when he gives notice which of the men, or how many of them, he is actually going to take on again. In such a case I think it would have been the practice in the past normally to give the lot notice and then re-engage those he wanted to take on again. This, at any rate, is one way of doing it. If this clause remains as it is, I suppose that instead of doing that he would have to lay them all off until he had made up his mind. I am not at all sure. That is the case one had in mind.

I quite appreciate that the Bill is drafted with the object of encouraging employers to make up their minds as soon as possible on this matter, and to plan as far ahead as possible, but that cannot always be done. If an employer had not decided which of the men he was going to keep on and which he would have to release, it might well be that, although a man was taken on again, merely because the contract had not continued from the point where it had left off without any interval at all, the redundancy payment would become payable. That is in spite of the fact that the man was going on working for the same employer, in spite of the fact that he had suffered no loss, and in spite of the fact that he might never become redundant at all after that and would get his pension in the end. It seems odd. I should have thought that it would be better to have only the one case and to give a four weeks' interval. That is why I have put down the Amendment, and would ask the noble Lord to explain the position of the Government upon it. I beg to move.

Amendment moved— Page 4, line 3, leave out from beginning to ("the") in line 11.—(Lord Drumalbyn.)

LORD LINDGREN

I most gladly give the best explanation I can of the clause. In doing so, I must advise your Lordships not to accept the Amendment, and I hope to persuade the noble Lord that it was not necessary for him to move it. Let me first of all make clear what the effect of the Amendment would be. Subsection (2) of Clause 3 deals with cases where a worker's existing contract is terminated by his employer, but before the termination takes effect the employer offers to reengage the worker and the worker accepts re-engagement. This situation might arise where after the worker has been given notice, the situation changes and the employer finds that he can keep the worker on, either in his old job or in an alternative job. Paragraph (a) of the subsection says that where in these circumstances the terms of the new contract which the worker accepts are the same as the terms of his previous contract, then the re-engagement must take effect immediately if the worker is not to be treated as redundant. Paragraph (b) says that where the terms of the new contract are different from those of the previous contract, the worker will not be treated as dismissed provided the re-engagement takes place within four weeks.

The effect of the Amendment would be that this four weeks' grace would be allowed in the first case—that is, where the terms of the new contract are the same as those of the old—as well as in the second case, where the new contract is different. But these two cases are essentially different. The first case is where, in effect, the worker is re-started in his old job. But keeping a worker without work for up to four weeks and then re-starting him in the same job is really, as the noble Lord himself suggested, lay-off and has always been considered to be lay-off. It should not involve any termination of the worker's contract. When a worker is laid off, his contract is not terminated. It is right that, if an employer intends to keep a worker idle for a short period, he should not be encouraged or allowed to terminate the contract for that purpose. What he should do is to lay the worker off. We have ensured in Clauses 5 to 7 that if he does lay men off for periods of less than four weeks he will not be obliged to make payments under this Bill, and that is his guarantee. His proper course in the circumstances we are discussing is to lay the worker off, and thus avail himself of the protection of the clauses relating to lay-off.

I should like to make it clear that where the subsection talks about re-engagement taking effect immediately on the ending of the worker's employment under his previous contract, this does not necessarily mean that the worker must actually start work on the day following the expiry of his previous contract. It means that his new contract must begin to run from that time. He does not have to be at work. He may be laid off for some time, provided always that his new contract allows for lay-off; and the situation as regards any entitlement to a redundancy payment would then be governed by the provisions of the Bill relating to lay-off in Clauses 5 to 7.

It may be said that under some contracts—for example, where employees are on a fixed salary—the employer has not got the right to lay people off without pay, and he could not therefore avail himself of the protection of Clauses 5 to 7. But the whole point of such contracts is that they give a certain guarantee of security against short-term fluctuations in the work. The effect of the Amendment would be that even where the employee has a contract of this kind, it would still be open to the employer to keep him idle for up to four weeks without incurring a redundancy payment. The employer could terminate the existing contract, and offer re-engagement on exactly the same terms as before, but starting only after an interval of up to four weeks. For all practical purposes, that would be a lay-off, despite the fact that the worker's contract is designed to safeguard him against such breaks in employment.

I suggest that the right course for an employer who wants to re-start a worker in the same job after a short interval is to lay him off, where the terms of the contract permit this, and the position would then be governed by the lay-off provisions in the Bill. The Amendment would permit what would in effect (though not in form) be a lay-off, even where the worker's contract did not permit lay-off. I must therefore advise your Lordships to reject the Amendment. But, rather than that we reject the Amendment, I hope that the noble Lord will in fact not press it.

LORD DRUMALBYN

I am grateful to the noble Lord for his explanation, and I certainly take the point that this would have the effect of enabling employers to, so to speak, provoke a gap in the continuity of employment without there actually being a gap from the point of view of a redundancy payment, but at any rate enabling them to lay men off and re-engage them "ad lib." I would agree that that is not desirable. The only point I should like to put is this. I am still not quite certain why it is necessary to include the provision that the contract of renewal should be identical in order to comply with paragraph (a). It might be a better contract of employment. Why must there be the provision that it must be identical? I do not quite understand that.

LORD LINDGREN

In those circumstances it would not. It is hardly redundancy if you get a rise; an improved contract would be a rise. It is a safeguard for the worker for re-engagement on the same terms and under the same conditions—not less than that. It could be more, and there might even be certain variations in conditions which would not really amount to a lessening of the value of the contract.

LORD DRUMALBYN

These are complicated provisions. I am grateful to the noble Lord for making them so clear. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Employee anticipating expiry of employer's notice]:

On Question, Whether Clause 4 shall stand part of the Bill?

7.41 p.m.

LORD DRUMALBYN

May I raise a point on this clause? The point I have in mind is in relation to the question of the run-down of a factory's work. Could the noble Lord make this clear to me, for I am not clear about the interpretation of this matter? As I understand it, the longer the notice of the run-down given, the better. One may have, for example, a decision to close a factory in a year's time and to reduce employment at, say, staggered three-monthly intervals. What this clause has to deal with is the employee's giving notice before the employer's notice expires. I take it that the intention here is to encourage planning; and as part of planning, if one is having a phased rundown, the employer has to be able to depend on the employee's remaining until his time comes to go I take it that the object of the clause is to encourage that. There is what is called the obligatory period, which is the period of normal notice. The idea here seems to be that the employee may be able to give notice of termination during the obligatory period, and there can then be an adjustment about his redundancy payments. That is reasonable, because he may get the offer of a job which will not stand open until his time comes to be discharged.

It is important to try to get clarification on this matter, because it is a difficult clause. I hope that my understanding is right; that a redundancy payment is not payable to an employee if he goes during a period of long notice, except during what is called the obligatory period, the period of statutory notice, the four weeks or two weeks before the time when he is scheduled to go. Then, within that period, he can give notice and some adjustment may in consequence be made in the redundancy payment. He will get the redundancy payment if he stays till the end of his notice, and can get a modified payment if he goes during the obligatory period. Is my interpretation of the matter correct?

LORD LINDGREN

I rather anticipated that the noble Lord might raise this point on Clause 4. If I understand the noble Lord aright, he has asked whether the provisions of Clause 4 (which protect the rights of workers who leave before their notice expires) should operate only during the "obligatory" period of notice, as this is defined in subsection (5) of Clause 4. The meaning of "obligatory period" can be illustrated by an example. supposing under his contract a worker is entitled to two weeks' notice, but his employer chooses to give him two additional weeks ex gratia, making a total of four. Then the last two weeks of the total four weeks' notice would be the obligatory period—that is the period to which the worker is entitled under his contract. It is necessary in the provisions in this clause to hold a balance between the interests of the worker, on the one hand, and those of the employer, on the other. The worker may have excellent reasons for wanting to leave before his notice expires—for example, he may have been offered a job elsewhere. On the other hand, the employer could be greatly inconvenienced by a worker leaving in advance of the expiry of his notice: if he were a key worker, for instance, the employment of other workers might depend on his staying on.

We have therefore thought it right in a case where the employer gives longer notice than he is strictly required to, that he should not be penalised for doing this, in the sense that his workers would have a right to leave at any time during the extended notice and still appeal to the tribunal for the whole or part of a redundancy payment. If the provisions in Clause 4 applied throughout notice, whether it was notice as required by the contract or ex gratia notice, we think the effect would be bound to be to discourage employers from giving their workers any more notice than they were required to by the terms of the contract. This would be most undesirable. As the noble Lord said, employers should be encouraged to give the longest possible notice of redundancy, and the value of long warning and notice in resettling the displaced workers has been repeatedly demonstrated in recent experience. I am sure therefore that it would not be desirable to extend the provisions of Clause 4 so that they applied throughout notice and not just during the obligatory period of the notice.

As the noble Lord has said, in present circumstances, where redundancy is likely to occur, the greater the length of notice, the better. This is so for two reasons, not only from the point of view of the employee, and his opportunities, but also because the Ministry of Labour are given time to put in experienced teams and, in consultation with the men, to make arrangements for other suitable employment.

Clause 4 agreed to.

Clause 5 [Lay-off and short-time]:

LORD DRUMALBYN moved, in subsection (2), after "reason of" to insert "absence of or". The noble Lord said: This is a comparatively simple Amendment which I can explain quite easily. As subsection (2) of the clause stands, it says: Where by reason of a diminution in the work provided for an employee by his employer (being work of a kind which under his contract the employee is employed to do) the employee's remuneration for any week is less than half a week's pay (calculated in accordance with Schedule 2 to this Act), he shall for the purposes of this Part of this Act be taken to be kept on short-time for that week. This, of course, is for the purpose of calculating short-time. Under the Amendment subsection (2) would read: Where by reason of absence of or a diminution in the work provided… and so on. Many contracts of employment provide for guaranteed minimum wages. The guarantee may be half or more, possibly three days at the normal rate of pay. That being so, it looks to me as if this clause would tend to debar people who have this kind of contract of a guaranteed minimum wage from taking advantage of the lay-off provision.

I realise that these guaranteed minimum payments are made in order to cater for "lay-offs" in industries which are rather liable to "lay-offs", and the noble Lord's answer may be that this is, as it were, part of the bargain. On the other hand, if "lay-offs" occur very frequently, quite obviously the employees will not relish having to live on what may be very much less than half of their wages. Although from the point of view of the calculation for the purpose of redundancy payments they will be getting half the normal wage, they will not be getting half the total earnings. I wondered whether there was not some reason to include provision for allowing people who are being kept for pretty long periods, or perhaps for too frequently recurring periods, on a guaranteed minimum wage, to have also the advantage of the lay-off provisions in the Bill. I beg to move.

Amendment moved— Page 6, line 18, after ("of") insert ("absence of or").—(Lord Drumalbyn.)

7.52 p.m.

LORD LINDGREN

I rather assumed that the noble Lord's Amendment was directed at the case where an employee does no work at all during a particular week, but nevertheless gets some pay under a guaranteed-week agreement. Most of the guaranteed-week agreements are for half pay or more, but if the pay is less than half a week's pay, as defined in Schedule 2, we want the worker to be treated as being on short-time for the purposes of Clause 5. That means to say that a guaranteed-week payment which operates in many industries at many times should, at least for the purposes of the Bill, be for half a week's pay or more. If it is less than half a week's pay, then we want the case to be dealt with on a short-time basis.

May I say, first, that this situation is not likely to arise very often? It would be very rare for a guaranteed-week agreement to provide for less than half a week's pay—excluding overtime, of course—and still rarer for the situation to continue for four weeks or more. I think, however, that I can reassure the noble Lord, in that the effect which he wishes to achieve with this Amendment is already achieved by the subsection as drafted. I am advised (and I must rely on the advice I am given) that the word "diminution" in line 18 is wide enough to cover cases in which the employee is provided with no work at all during a week. In short, the total absence of work is an extreme case of "diminution".

LORD DRUMALBYN

That, I am hound to say, is rather an unexpected interpretation of "diminution." It is a a sort of dolce far niente. But I think the assurance which the noble Lord has given amply covers the point, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 agreed to.

Clause 7 [Supplementary provisions as to redundancy payments in respect of layoff or short-time]:

On Question, Whether Clause 7 shall stand part of the Bill?

LORD DRUMALBYN

May I ask the noble Lord how long he expects the tribunals to take to give a decision? The length of time is very important when considering the procedure under this clause for dealing with "lay-offs" and short-time, with the employee giving notice, and the employer giving a counter-notice that work is expected to resume shortly and last for at least thirteen weeks and so forth. There is quite a pile-up of time. Before the employee can give his notice, four weeks have to elapse; then there is a week in which the employer can give his counter-notice; then there are the four weeks which might elapse during which the short-time or lay-off might continue. Then there is the question of the tribunal giving its decision—taking into account the further four weeks—and then there are another three weeks in which the employee can actually serve his notice. I wrongly said "serve his notice" beforehand, and I should have said "gives notice of intention to claim". This is a very long period, and I think that a good deal depends here on how long it is expected that the tribunals will take to give a decision.

I wonder whether the noble Lord could also say exactly how he envisages that the test of whether an employee is to be eligible for redundancy payment will be conveyed to the tribunal. As I see it, in the normal way there would first have to be the four weeks, then a period of intention to claim, then the employer's counter-notice, and then he would have to wait for another four weeks before the case would even get near a tribunal in the usual way. It is a long time for the employee to be laid off or put on short-time, and I wonder what comfort the noble Lord can give on this point. I quite understand that in the early days a tribunal may be somewhat flooded, until it gets a rhythm of working and so forth, but it would be helpful if the noble Lord could give us some idea of the time involved.

LORD LINDGREN

We all hope that the numbers of these cases will not be excessive. It is hoped that the tribunals will not be unduly overworked, and that they will give their decision within a few weeks. But, of course, the rights of the worker, or of the employer, for that matter, will not be in any way affected by delay in the tribunal arriving at their decision. We hope that a decision will be arrived at in a few weeks, at the maximum.

LORD DRUMALBYN

It is not a question of the worker's rights being affected. The fact remains that the possibility of his getting a redundancy payment is quite a strong incentive for him to wait for the conclusion. I think this is the way that things are quite likely to work. If a man is laid off, he wants to know whether he is going to get the redundancy payment, and he will not go unless he is sure of it.

LORD LINDGREN

To put it in colloquial language, a bird in the hand is worth two in the bush. But if there is unemployment there is unemployment pay, so there is a certain amount of sustenance coming in. The tribunal's decision arises more in the difficult cases, and we are hoping that those will be comparatively few. But the obvious course is to get to the tribunal as quickly as possible.

Clause 7 agreed to.

Clauses 8 to 10 agreed to.

Clause 11 [Exemption orders]:

On Question, Whether Clause 11 shall stand part of the Bill?

7.59 p.m.

LORD DRUMALBYN

I have what I regard as a rather important point to raise on this clause. This is the clause which deals with exemption orders, where employers already have, or subsequently make, redundancy agreements of their own. The clause allows the Minister to make an order excluding the operation of Clause 1 of the Bill where an employer makes, or has made, an agreement for redundancy payment, if he—that is, the Minister—is satisfied that it ought not to apply. I should like to ask the noble Lord some questions on this.

First of all, may I ask him what will be the criteria—apart from willingness to submit differences as to entitlement to the tribunal, in accordance with subsection (3)(b) of this clause—on which the Minister will judge whether or not to exclude the operation of Clause 1? I take it that one obvious example is that the payments provided for in the agreement should be not less than those provided for in the Bill. Are there any others?

Secondly, may I ask him: what happens in the case of an existing agreement which is less advantageous to the employee than that provided for in the Bill? Is it the Government's intention that this Bill should supersede agreements that do not measure up to the standards laid down in the Bill, and that such agreements should be discontinued? Is this the Government's intention? Then, what consultation has there been with employees' organisations on this aspect? Does the noble Lord know whether any of them are likely to expect redundancy payments both under the Bill and under the private redundancy agreements which already exist? Here, I am talking, first of all, of those agreements whose benefits are not equal to the benefits in the Bill.

Then, thirdly, what happens if one of the parties (presumably the employees' organisation) refuses to join in the application for recognition of a private scheme which is better than a public one? Because the Minister cannot act on this at all unless it is—to quote the words of the Bill: …on the application of all the parties to the agreement… All the parties to an agreement—both sides of the industry involved—have to agree to such an approach, and I am asking what happens if one of the parties does not agree. Here, may I ask the noble Lord, is it expected that in such a case the employer should modify the private scheme, whether by agreement or not, so that the payments under the public scheme and the revised payments under the private scheme will equal the present payments under the private scheme?

One can quite easily envisage that this kind of arrangement could be made if there is in existence a fairly generous private scheme. What would happen in such a case would be that, while maintaining the total level of the private scheme, the employer would make up the benefits that he has to pay under the public scheme to those of the private scheme. Is that what the Government envisage should happen in a case of this kind, where the Government do not recognise the scheme, or where there is not such an application—or even where there is? Is this the sort of arrangement that the noble Lord envisages should be made?

As I see it, the employer will in any case have to pay his contributions: there is no exemption. And he will have to pay the redundancy payments under the Bill as well as continuing the private scheme. One can envisage that happening, but it does not seem very likely that employers would be willing to do that if the private scheme were already more generous than the new public scheme, the scheme in the Bill. I should have thought that the Minister might have taken powers to make regulations about this matter similar to the powers he has taken to make regulations under Clause 14, which deals with the exclusion or reduction of redundancy payments on account of pension rights, which is a different matter altogether.

There is one other question I should like to ask the noble Lord. Here we have the position, as I understand it (I cannot find anything in the Bill to the contrary), that, whether the Minister recognises the scheme or not, the employer has to continue making his redundancy payment contributions. The only benefit that he would get from recognition of the scheme, as I understand it, is that the Fund would pay the public share of the redundancy payment, up to the amounts that will be paid under the Bill—but no more—and the rest he would have to find himself. These are points on which I think it is very important the Government should at least express an opinion, and say whether they can give any guidance. Where there is an existing scheme, should that scheme be continued in addition to the public scheme and, if not, how should it be adjusted in order to take account of the public scheme? I hope that the noble Lord will be able to give us some enlightenment on this, because it is an important matter.

LORD LINDGREN

I made a note of most of the noble Lord's points, and I hope to be able to deal with them; but if I miss any then I hope he will intervene. As to the question of the criteria for exemption, the main safeguard will be the fact that the trade unions have agreed to it. In the case of this Bill, we are relying very largely on the agreement of the trade unions to the scheme. I had been prepared to deal a little more fully with this point on the Question, Whether Clause 14 shall stand part of the Bill?—where, as the noble Lord says, we in fact deal with the question of superannuations, in particular; but I think it is quite useful to deal with it here, and that it may be helpful if I explain the position now.

All employers will be required to make lump-sum payments to redundant workers not less in amount than is required by the Bill. The only other payments which may reduce an employer's liability under the Bill will be superannuation payments in cases which will be prescribed by regulations under Clause 14. A great variety of payments for redundancy are provided in the private sector and the nationalised sector under existing schemes. They consist of ex gratia lump sum payments, continuing weekly payments, contingent on the man being unemployed, and, in some cases also an element of pension provision. Where payments under existing schemes are of precisely the same character as those required by the Bill, it would be reasonable to expect that the amount of payment under the Bill would be offset against the payment under the scheme. But it would not be possible to provide in the Bill a satisfactory legal definition of the kind of payments which could be offset which would be comprehensive enough to cover all varieties of payment and equitable as between employer and employee. If one were to attempt it, it might prove to be narrower and more restrictive in scope than would be desirable.

We consider it preferable that employers themselves should, where appropriate, provide in their schemes that payments under them will be in fulfilment of their liabilities under the Bill. This is a more flexible arrangement, and will avoid the many disputes and anomalies that might arise. The noble Lord did not suggest it in his speech, but it has been suggested that the trade unions might not be willing to give up the rights that their members already have under existing agreements and that they might insist on having them as well as the rights under the Bill. I would not expect this attitude to be taken where payments under existing schemes are precisely the same in character as the payments required by the Bill. But, in view of the great variety of existing schemes and the many conditions attaching to payment under them, I think it must be a matter for negotiation.

The Bill creates a new situation and existing agreements must be looked at in the light of it. It would be very difficult for the Bill to anticipate the results of these negotiations by saying precisely how the arrangements should be altered; and that, in effect, is what we should have to do. I hope that that explanation meets the main points raised by the noble Lord. He referred to the question of consultation. There was consultation with the trade unions during the compilation of the clause in the Bill.

LORD DRUMALBYN

I am grateful to the noble Lord. Of course, in his reply he has reverted to the point of the Amendment of my noble friend, because, if my memory serves me aright, in the coal industry you have this type of redundancy arrangement which is relative to the weeks of unemployment. It is tied to that, at least, for a certain period. So there you get a totally different kind of redundancy payment; and it may be that there will have to be some modifications, as the noble Lord said, of these agreements. I understand his point that where there is the same kind of redundancy payment as is provided for in the Bill, no doubt the redundancy schemes can be treated more or less as one and merged administratively. I do not know how publicity is going to be given to this, but a certain amount of education about it will have to be given. There are going to be points of difficulty, teething troubles, in regard to this Amendment and we want to smooth them out so far as possible.

LORD LINDGREN

The safeguard is in the main that there are existing redundancy schemes and that they are in industries which have a strong trade union tradition and in which employers have looked at the problems of redundancy ahead of the Government. They have shown the way for what the Government are now doing. This Bill makes a national standard; it is up to the trade unions, whether in the electricity, gas, coal or railways industries, which have existing redundancy agreements to renegotiate in the light of the Redundancy Payments Bill and of its effect on their schemes. It is far better that there should be negotiation between the employer and the employee in the light of this Bill, than that there should be any interference on the basis of the Bill. If I may put it colloquially, in these industries the employer is not likely to take advantage of the worker. There are strong and experienced trade union movements in them, trade union movements which have experience in negotiating redundancy agreements.

Clause 11 agreed to.

Clause 12 agreed to.

Clauses 13 to 26 agreed to.

Clause 27 [Contributions to fund]:

On Question, Whether Clause 27 shall stand part of the Bill?

8.15 p.m.

LORD DRUMALBYN

This clause provides for contributions to the Fund and for those contributions to be varied or revoked by a subsequent order under subsection (4). May I ask the intention under this particular clause? Of course, the contributions are, I understand, 5d. additional on the National Insurance stamp for men, and 2d. for women. What I feel is that there is a good deal of uncertainty of what the actual cost of the scheme is to be to start with. That is indicated by a later clause which has a fairly wide span of drawing possibilities to finance the Bill. How does the noble Lord envisage that these orders will be made, and in what circumstances? In the normal way, National Insurance contributions are varied only when changes in the National Insurance scheme are made; and one would not expect that the Government would, if I may use a colloquial expression, "mess about" with National Insurance stamps for this comparatively small amount of an extra penny or so. even though it would be required.

I think the noble Lord, if he would, ought to say a little about the finance of this scheme. We hope his estimates will turn out to be right, that it will not be necessary to alter the National Insurance stamp after the first year and that his present estimates will hold. But one never knows when National Insurance rates will have to be varied. Is it the intention, by and large, of the Government not to make variations except in line with National Insurance variations on this matter?

LORD LINDGREN

As the noble Lord has said, the payments intended at the commencement are 5d. a week for men and 2d. a week for women. Also, as he said, they will be included within the National Insurance contribution. The normal method is that a stamp is pur chased from the Post Office and stuck on the card. I believe that in these modern days many employers frank the cards. All those things will proceed as at present. The extra yield of the contribution is expected to be about £18 million per annum. This should be sufficient to cover the Fund's commitments for a substantial period ahead. Estimates of expenditure are, of course, open to a considerable margin of error and provision is made not only to vary the contribution in either direction but also, under Clause 35, for advances to be made from the Consolidated Fund to cover any temporary shortage.

It is not intended to vary these contributions unless it is absolutely necessary. It will be the intention to vary the surcharge if the income of the Fund is much greater or much less than is needed. Changes would be aligned with changes in the National Insurance contribution, as the noble Lord has suggested. We must hear in mind that all these additions to the contributions for social welfare, National Insurance and the rest impose a very heavy charge on industry in regard to administration and clerical organisation. Everything will be done to minimise any fluctuations and changes that might be necessary. Of course, there will not be variation other than within the National Insurance contribution.

Clause 27 agreed to.

Clauses 28 to 33 agreed to.

Clause 34 [References and appeals to tribunal relating; to payments out of fund]:

8.20 p.m.

LORD DRUMALBYN moved, in subsection (2), to add to paragraph (a): whether or not a payment has been made to the employee under subsection (2) of section 32 of this Act.

The noble Lord said: The clause states: Where any such claim or application is made or such prior notice is given— this is a reference to the tribunal— there shall be referred to a tribunal, in accordance with regulations made under Part III of this Act,—…any question as to the liability of the employer to pay the employer's payment. My Amendment would add: whether or not a payment has been made to the employee under subsection (2) of section 32 of this Act.

Under Clause 32(2), the Minister may make a payment on the application of an employee if he is satisfied that a payment is due. Subsection (4) of that clause gives the employer the right to appeal if the rebate is reduced, but it is not clear that the employer may appeal against his liability where the Minister makes a payment, so to speak, on his behalf—because the employer has not made the payment—and then tries to claim the money back. It is not clear that an employer can appeal against the Minister's claiming back the money and can deny liability. The Amendment would make clear that there is a right of appeal against being "dunned" by the Minister for a payment which the employer feels that he does not owe.

If the employer succeeds, presumably the Fund would have to meet the payment made to the employee in error. I should like the Minister to tell me what would happen in such a case. This does not seem to have been provided for in the Bill. Will the Fund have to bear the expense of the Minister's error, or will the Minister reimburse the Fund under Clause 55 as expenses? I beg to move.

Amendment moved— Page 29, line 20, at end insert the said words.—(Lord Drumalbyn.)

LORD LINDGREN

I hope to be able to reassure the noble Lord that the result which the Amendment would secure is already achieved by the Bill. The type of case to which the Amendment is directed is one in which the Minister has already made a guarantee payment to the worker out of the Fund because he is satisfied that the payment was due and the employee has been unable to obtain it from his employer. As I understand it, the Amendment seeks to put it beyond doubt that the fact that the Minister has already made a guarantee payment of this kind should not prevent an appeal to the tribunal on the question whether the employer was liable for the payment in the first place. I am advised that under the clause as it stands there is nothing to prevent an employer from making an appeal in these circumstances. The fact that the Minister was satisfied that the employer was liable and acted by making a payment himself would in no way prejudge the issue; any more than if the worker was dissatisfied with the amount paid by the Minister and appealed to the tribunal.

In the normal way, any question about the employer's liability would be cleared up before the Minister made any payment to the worker, usually by reference to the tribunal; but such a question could arise after the Minister had made a payment—for example, because the employer decided to contest the liability—or because fresh evidence had come to the attention of the Minister casting doubt on the worker's entitlement to the payment. If this happened, it would be open to the employer or the Minister to appeal to the tribunal, and the issue would not in any way be prejudged. The Amendment, therefore, does not add anything of substance to the clause. The noble Lord asked what would happen if the Minister paid in error. Of one thing we may be certain, he would have to chase for a long time before he got the money back. The Fund would have to stand the loss if the Minister paid in error.

LORD DRUMALBYN

I am obliged to the noble Lord for his explanation. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 34 agreed to.

Clauses 35 and 36 agreed to.

Clause 37 [Continuity of employment in case of strike]:

On Question, Whether the clause shall stand part of the Bill?

VISCOUNT FALMOUTH

As I understand it—I hope that the Minister will be able to throw some light on the matter—Clause 37 says that when an unofficial strike takes place in breach of a contract of employment, the continuity of service of an employee for the purposes of calculating redundancy payments is not broken. If this clause remains part of the Bill, I fear that it may be taken that unofficial strikes in breach of a contract of employment are counternanced by the Bill. We all know that all sections of industry speak against the follies of such strikes and the great harm done to the good industrial relations which we are trying earnestly by this Bill to improve.

The argument will be put forward that because an employee took part in an unofficial strike, without perhaps fully realising or considering the implications of his action, he should not be deprived of the right to redundancy payments, as he might have given years of most loyal service to his employer. That is a strong argument; but, equally, the employer is expected to carry on his business in a law-abiding and reasonable fashion. Should not an employee, in turn, be expected at law to exercise reasonable responsibility, knowing that by taking part in an unofficial strike as distinct from an official strike he would be breaking his continuity of service? I therefore think the clause should be deleted.

VISCOUNT FALKLAND

I wish to support the deletion of the clause. I think that the amendment to the Contracts of Employment Act, 1963, should be deferred until the Royal Commission has reported. I understand that their Report will include the question of contracts.

LORD LINDGREN

There has been a considerable amount of discussion about this clause, both in your Lordships' House and in another place. In a way, that is entirely right and proper, because the problem involved, taken at its widest, presents a difficulty. But, on looking at the whole content of the redundancy scheme, I think that any impartial observer would be bound to say that a disproportionate amount of time had been given to this comparatively minor aspect of it. And I think that, despite this, the debates held on it have been neither very constructive nor very conclusive; they have been conducted throughout on a narrow Amendment which makes no positive contribution to the solution of these difficulties.

I would direct your Lordships' attention to the precise effect of this Amendment. It amounts to saying that the previous Government were right when they introduced a penalty clause into the Contracts of Employment Act, under which any strike in breach of contract broke continuity of service and, furthermore, that this should be the pattern in the case of redundancy payments as well. I submit that these propositions are quite untenable. I will not detain your Lordships by recalling the arguments with which my colleagues and I opposed the original provision in the Contracts of Employment Act, but we thought then that it would do no good to industrial relations and we certainly have not qualified our view in the light of experience since the Act was passed. In the Second Reading debate on this Bill noble Lords accused my right honourable friend the Minister of Labour of inconsistency in, on the one hand, saying that he would be reluctant to propose major changes in the law relating to industrial relations before the Report of the Royal Commission on Trade Unions and, on the other hand, making this particular change. This is really a somewhat misleading account of the actual situation with regard to the law in this field.

The fact is that the general understanding of what constitutes a strike in breach of contract has been thrown into such uncertainty as to constitute in itself a serious and important change. This clause is largely necessary because of that change, which has made the penalty clause in the Contracts of Employment Act a much wider one than was ever intended. Since the decision in Rookes v. Barnard, it has been more than ever clear that a strike in breach of contract embraces far more than the kind of irresponsible action which employers and good trade unionists alike want to discourage. It is quite likely that the great majority of all strikes, official or not, responsible or not, could be held to be in breach of contract. It was certainly assumed at the time the Contracts of Employment Act was passed that, if workers gave due notice before going on strike, they would not be in breach of contract, but since Rookes v. Barnard great doubt has been cast on that proposition and a distinction between strikes in breach of contract and other strikes can no longer be assumed to depend on how much notice of the strike is given. The Trade Disputes Bill which we have discussed this week in this House in no way affects this.

In this position of complete uncertainty, it is wrong to retain the provision to which I have referred in the Contracts of Employment Act and, still more, to extend it to this Bill. I must confess that I am surprised that some noble Lords have thought that this sort of penalty clause is appropriate to this Bill. I do not think that such an approach has much regard to the realities of everyday industrial negotiation. It amounts to penalising all workers, it may be to the extent of several hundreds of pounds, at the time of redundancy, when relations in the firm are already tense, on account of a strike that happened five, ten or fifteen years before. It is easy to imagine the bitterness and resentment this could cause, particularly if workers had gone on strike, as they might well have done, on the instructions of their trade union. I suggest that it is unrealistic to think that the majority of employers would want to impose a penalty years after the event in this way.

The Amendment would also create considerable difficulty for employers. Most employers when they came to make redundancy payments would want to disregard strikes in the remote past. But the Redundancy Fund would not be able to do so. If it came to be known that a strike had taken place—and your Lordships will recall that the scheme will be administered through the offices of the Minister of Labour, who will often know about these things—a rebate could not be paid in respect of the period before continuity was broken. The employer would have to meet all pre-strike payments out of his own pocket. The Redundancy Fund carries only a twenty years' guarantee. I have been on strike only once in my life, and I am very proud that I went on strike in 1926 in support of the miners, but that is more than twenty years ago. But if a man had been on strike only nineteen years before, he would be liable to this penalty. To bring these matters up again in a difficult period makes it, as noble Lords who are associated with industry will know, easy for things to flare up when redundancy is in the air. Tension is high and to aggravate it by having a clause which penalises workers for having been on strike, whatever the reason, some long time ago is unnecessary. I hope that noble Lords will not press the Amendment.

LORD DRUMALBYN

I should like to support my noble friend's Amendment. As the noble Lord opposite knows, this is a matter on which we are bound to disagree, and I think that it would be wrong if we did not express our disagreement, as it has been expressed elsewhere. First of all, let us get one thing straight. There is no suggestion at all that every strike would be a break of continuity. I know that the noble Lord did not mean to convey this, but he did so accidentally in the course of his remarks. That is not the proposal. The suggestion is that the position should be left as it is in the Contracts of Employment Act, 1963. I think that I ought to remind your Lordships of exactly what that Act says. Paragraph 7(2) of Schedule 1 says: The continuity of an employee's period of employment is not broken by a week which does not count under this Schedule, and which begins after it has come into force— this is not what happened fifteen years ago— if in that week or any part of that week the employee takes part in a strike except where the employee has, in taking part in the strike, broken his contract of employment". What this clause does essentially is to leave out the words …except where the employee has, in taking part in the strike, broken his contract of employment".

LORD LINDGREN

I assume that the noble Lord appreciates that the breach of contract is completely changed by the Rookes v. Barnard case.

LORD DRUMALBYN

I was coming to that. I am afraid that I can deal with only one point at a time. The purpose of putting this into the Contracts of Employment Act was to try to get throughout industry a fresh respect for contract, which I think we all recognise is exceedingly important in the modern world. The noble Lord talks of the penalty clause. The penalty is that it breaks a period of employment from the point of view of the Contracts of Employment Act so far as the giving of notice is concerned. So far as this Bill is concerned it would, as the noble Lord has said, have broken the period in calculating the redundancy payment, and it might be quite serious. But this is something that people should think of at the time when they are thinking of breaking their contracts. I should have thought it was important that they should have this in mind when they consider, if you like to put it in a rather unmoral way, whether it is worth while to break their contracts or not. This is why we attach importance to this and feel that it should remain in the Bill.

But, again, at this stage we know what the consequences would have been if we had sought to oppose this clause—we should have lost three months while the Bill went back to the other place—and we on this side are just as anxious as noble Lords opposite to get this Bill going. Therefore, although we strongly dissent from noble Lords opposite, we do not think it is right to have a confrontation (I think that is the word) on this particular issue at the present time.

I would say only this further. As the noble and learned Lord the Lord Chancellor said, at the time there were any number of interpretations of the effect of Rookes v. Barnard. I do not think any of us here at the moment are lawyers (perhaps there is just one noble Lord), and we should not like to go into this point, but my recollection is that Rookes v. Barnard was not about actual strikes but about the threat to strike and intimidation. That is not just going on strike and the breaking of a contract. I have difficulty in seeing what Rookes v. Barnard has to do with it. However, having registered our strong dissent on this (as the noble Lord knows, we should have liked to take up a good deal more time with it, but I think we have taken up the minimum we possibly could), I would not advise my noble friends to persist in the Amendment, although I hope it will not be withdrawn.

On Question, Amendment negatived.

Clauses 38 to 45 agreed to.

Clause 46 [Procedure of tribunals]:

8.43 p.m.

LORD DRUMALBYN moved, in subsection (2), after paragraph (f) to insert: () for enabling appeals to be brought from a tribunal to the National Insurance Commissioner or a deputy Commissioner appointed by Her Majesty for the purposes of the National Insurance Act 1946. or to a tribunal presided over by the National Insurance Commissioner or a deputy Commissioner: and the said Commissioner or deputy Commissioner shall be deemed to have been appointed also for the purposes of this Act.

The noble Lord said: This is the last Amendment on the Marshalled List, and even although the noble Lord may not agree with it, I do not think it can be described as particularly contentious, especially as his noble friend Lord Blyton also expressed the view that it would be a good thing if we had some procedure in the Bill for appeal to a tribunal. I think the noble Lord, Lord Blyton, would have preferred some kind of appeal to an umpire.

It occurred to me, for reasons which the noble Lord will appreciate, that possibly the National Insurance Commissioner and his deputies could hear these appeals. There are advantages and disadvantages in such a system if there are to be appeals at all. The advantage is that the National Insurance Commissioners are there as an appeal body. Whether or not it is an advantage that they are already hearing appeals of a similar character, in the sense that they have to hear appeals on unemployment benefit (as to whether a person has left the job voluntarily or through misconduct, and so forth; and generally the question of entitlement to unemployment benefit), or whether it would be embarrassing to have appeals possibly from two directions, so to speak, one from the insurance side and the other from the redundancy side, I do not know. At any rate, I put down this Amendment because I felt there was some opinion that it would be a good idea to have an appeal, other than an appeal on law alone (for which I believe the Bill, in a rather cryptic way, already provides), of the same kind that already exists in regard to National Insurance. As the noble Lord said earlier, substantial sums, particularly to the people concerned, are involved, and it seems perhaps a little hard, whether it is the employer or the employee, that they should have to be content with one decision when they feel strongly that they have a good case. I beg to move.

Amendment moved— Page 41, line 19, at end insert the said subsection.—(Lord Drumalbyn.)

LORD LINDGREN

I have listened with great interest to the arguments which the noble Lord has deployed in favour of this Amendment. I entirely agree with him as regards the potential importance of these tribunals. We see them as responsible bodies who will build up a valuable expertise in labour matters and provide a ready and accessible form of settling disputes. We recognise, too, that they will be concerned with a number of difficult issues and that there is a need for a system which makes for consistency as between decisions of individual tribunals. But we feel confident that the system of the Industrial Tribunals which we propose to use for purposes of the Bill, and to which much thought has been given, will satisfy these tests. Under this system, the Industrial Tribunals are required to give reasons for their decisions, and there is a right of appeal to the High Court (or, as the case may be, the Court of Session) on questions of law. We have carefully considered the need for any further appeal provision, but we believe that the chairmen and members of tribunals will have the necessary qualifications and experience to deal with disputes satisfactorily without this.

As well as chairmen selected from panels of persons with legal experience (appointed by the Lord Chancellor or the Lord President of the Court of Session), and members representative of both sides of industry, there is a President of Industrial Tribunals for England and Wales and Scotland respectively, each served by a central office. We think that this system will prove flexible enough to adjust to the build-up of a work-load which we cannot accurately estimate. We also believe that the existence of the Presidents to co-ordinate the work will make for consistency in tribunal decisions. We have had full consultation with both sides of industry on this form of organisation, and it has also been approved by the Council on Tribunals. A relevant point is that the volume of work and the number of tribunals will not be comparable with that of the local appeal tribunals under the National Insurance Scheme, on which the noble Lord has to some extent relied as a parallel. Those tribunals—of which there are over 200—dealt with some 36,000 cases in 1964. The work of the industrial tribunals will not be on a scale approaching anywhere near this.

The work of the industrial tribunals on redundancy cases will be similar in many ways to the work of the existing compensation appeal tribunals, which is to be transferred to the industrial tribunals under Clause 44 of the Bill. There is no right of appeal (except on questions of law) from the compensation appeal tribunals. We are satisfied on the best expert advice that the tribunals will function satisfactorily without appeals machinery on questions of fact, and that to introduce such machinery would be productive of more litigation without securing any significant advantages. I hope that, in view of this explanation, the noble Lord will not press his Amendment.

LORD DRUMALBYN

I thank the noble Lord for his full explanation. I quite understand the point of view. I personally should doubt whether one could expect to get the consistency in decisions and the building up of Case Law to cover the whole country without a sort of apex to the triangle. The noble Lord relies only on a base. Personally, I think there ought to be an apex, and I rather regret that he does not see his way to having an appeal tribunal on these matters. He said that people with the necessary qualifications and experience would be recruited. But the recruiting of such people is no guarantee that they will reach the right decisions. There will be some that get by which might be caught by an appeal court or tribunal, and I rather regret that there is not to be one. There it is. It is not provided for in the Bill, and we know how it is.

As this is the last Amendment, I should like to thank the noble Lord for the trouble he has taken in dealing with the points. I think our discussions have been of real value, and that when some of these remarks are read people will get a clearer idea of how the Bill will work. I am bound to say, however (I hope that I am not too much out of order in making this remark now: I do so to avoid making it later), that it is the most extraordinary procedure for a Chamber which is supposed to he, at the very least, a Revising Chamber, that it has no opportunity to revise even what it does itself, and has to carry the whole of this complicated Bill through its Committee stage, Report stage and Third Reading, all in one day, at a fairly late hour. It would not be human for us not to protest at this, and I do not think it was entirely necessary. I believe that it would have been possible, and possibly advantageous, to give us a little more time on this Bill, and I hope that the Government will manage their affairs rather better in the future.

Amendment, by leave, withdrawn.

Clause 46 agreed to.

Remaining clauses and Schedules agreed to.

House resumed: Bill reported without amendment; Report received.

Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 22):

LORD SHEPHERD

My Lords, I have it in Command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Redundancy Payments Bill, has consented to place her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purposes of this Bill.

8.54 p.m.

LORD LINDGREN

My Lords, I beg to move that the Bill be now read a third time. This is a substantial and important Bill, which will take its place as a major contribution to our industrial and social legislation. It is both a humane measure and one that can help us to get on with two of the most urgent tasks facing our economy—learning to live with technological change and securing the most efficient deployment and use of scarce manpower resources. For these reasons the main principles of the Bill have already been widely welcomed, both inside and outside Parliament. We have already put in hand the administrative arrangements for launching the scheme at the earliest possible moment. My right honourable friend has said that we hope to do this by the end of the year. Before then there are several sets of regulations to be made and a good deal of other work necessary to prepare and publicise the scheme.

Before we part with this Bill I should like to say a brief word about its effect on labour mobility. It has been suggested in some quarters that one effect will be that workers will be less inclined to leave contracting firms and industries to seek work elsewhere, because they will want to hang on in the hopes of receiving compensation. Obviously, the Bill is not designed to give positive encouragement to voluntary movement of this kind. But I do not believe that it will prove a significant hindrance to movements of labour which are desirable from the point of view of the economy generally. The important thing to ensure is that workers are willing to move to other jobs when they have become surplus in their existing jobs, or when redundancy is in definite prospect. The experience of the many firms who already operate redundancy schemes has not been that such schemes make changes in labour complements more difficult to achieve. On the contrary, the schemes have been invaluable in carrying through the necessary changes. I have no doubt that the provisions of the Bill will similarly help forward the changes that have to be made in industry.

There has also been the suggestion that the expense of redundancy will cause employers to hang on to labour longer than they should. But I think the present funding arrangements, which provide for rebates of about 70 per cent. of payments from the Redundancy Fund, dispose pretty effectively of that point. My own conviction is that the Bill will go a long way towards creating a more co-operative attitude to the process of modernisation and more efficient deployment of labour with which we must urgently come to terms.

I commend the Bill to your Lordships, and thank noble Lords opposite for the assistance they have given in the Committee stage of the Bill.

Moved, That the Bill be now read 3ª.—(Lord Lindgren.)

LORD DRUMALBYN

My Lords, I had not intended to say anything else, but as the noble Lord has been good enough to say a word on Third Reading I should like to add what will be a very brief word indeed. All I should like to do is to welcome the Bill, and express the hope that it will fulfil the expectations which the noble Lord has mentioned. We wish the Bill well, and we hope that the Government will get it going with the least possible delay, and that it will have the effect of improving the general atmosphere in industry, of encouraging modernisation and generally increasing mobility and contributing to the economic welfare of this country.

On Question, Bill read 3ª, and passed.