§ 6.32 p.m.
Lord WALLACE of COSLANY
My Lords, I beg to move that the draft Code of Practice on Disclosure of information to trade unions for collective bargaining purposes, a draft of which was laid before the House on 3rd May, be approved.
The need for legislation requiring employers to provide more information to trade unions for collective bargaining has been one of the persistent themes in British industrial relations over the past decade. This theme runs alongside the development of ideas of democratic behaviour in general, and has remained a common element in the legislation of both Conservative and Labour Governments. Thus, the Employment Protection Act's main provisions on the subject 1244 first appeared in substantially their present form in the Industrial Relations Bill 1970 and subsequently in the Industrial Relations Act 1971. Yet, despite the consensus that disclosure, and indeed democracy, is advantageous, it is generally acknowledged that at the present time most company practice in this respect is at best varied and uneven, and at worst non-existent. The key finding of a 1975 survey carried out by the British Institute of Management, for example, was that only about 25 per cent. of United Kingdom companies regularly disclose information to unions on general performance indicators and future plans. Actual or proposed legislation now exists in the field of pensions and health and safety. But, so far as collective bargaining generally is concerned, there is clearly a need for a code of good practice. The Government have delayed the implementation of the Employment Protection Act's disclosure provisions to allow for its preparation. I am, therefore, very pleased indeed to move this Motion for approval by your Lordships.
In order to gain the maximum degree of co-operation from both sides of industry, and thus to facilitate the smooth working of the Act's provisions, the Government entrusted the task of preparing the Code to the Advisory Conciliation and Arbitra- 1245 tion Service. I shall now refer to it as ACAS; I hate these short descriptions, but noble Lords will now understand what ACAS means. ACAS is now the expert body in the field of industrial relations. It is independent of Government and it is supported by both sides of industry. When drawing up a Code under the Act, ACAS is, moreover, required to publish a first draft for consultation and to consider the comments made before submitting a draft for the approval of Ministers and, subsequently, of both Houses of Parliament. These procedures have been followed in the preparation of this draft Code. It thus represents a consensus of the views of the two negotiating parties, and for that reason I believe it will be far more valuable than a set of recommendations drawn up by a third party.
The draft Code is divided into seven sections. The first two sections give the legal framework and the details of the Act's requirements. The third section gives advice on what information should be disclosed. The fourth section gives guidance on the Act's restrictions on the duty to disclose. The fifth and sixth sections list the responsibilities of the two negotiating parties, and the seventh recommends the setting up of joint arrangements on a systematic basis. The Act requires employers to disclose to the representatives of recognised independent trade unions, information which it would be in accordance with good industrial relations practice to disclose and without which those representatives would be, to a material extent, impeded in conducting collective bargaining. The draft Code says that there could be material impediment particularly if the information requested would influence the formulation, presentation or pursuance of a claim as well as the conclusion of an agreement. In determining what is relevant, negotiators are to take account of the subject matter and level of negotiations and the issues raised during them, and the size and type of companies.
The Code rejects the idea of providing a comprehensive "shopping list" of items to be disclosed as of right. It points out that both the relevance of the information and the depth, detail and form of its presentation will depend on the scope of the specific bargaining involved. Examples are listed under the following headings: pay and benefits, 1246 conditions of service, manpower, performance, and financial; but it is an important qualification that the Code emphasises that they are neither exhaustive nor intended as a check list.
The section on restrictions concentrates on the reference in Section 18 (1) (e) of the Act to information whose disclosure:… would cause substantial injury to the employer's undertaking",and provides helpful examples of the type of information which this provision might cover. Such matters as cost information on individual products, detailed analysis of proposed investment, marketing and pricing policies, and price quotas or the make-up of tender prices are listed as being capable of leading to a loss of customers or supplies, or impairing a company's ability to raise funds. The other restrictions in Section 18 of the Act are self-evident, and I will not touch on them further.
In the section on trade union responsibilities unions are enjoined to identify and request information in advance of negotiations, and to say as precisely as possible why they consider it to be relevant. Two small but important provisions are added as a result of consultation, recommending, first, that they keep employers informed of the names of authorised representatives, and, second, that where several unions are recognised requests should be co-ordinated so far as possible. The recommendations to employers are that their general approach should be as open and helpful as possible. They should meet requests as soon as possible and pay attention to form and presentation. A refusal should be explained and be capable of substantiation. Finally, the draft Code recommends that negotiators from the two sides should endeavour to arrive at a joint understanding of such matters as the information likely to be required, its availability, form, presentation and pattern over time. They should also agree procedures for resolving disputes on disclosure.
Noble Lords will be familiar with the earlier draft, published for consultation last July, so I should say a word about the changes which have been made. I understand that ACAS received a total of 142 written submissions. Many of them indicated general agreement with many aspects of the draft. Their criticisms were 1247 constructive and the draft has been modified to meet them as far as possible. The Code now sets out the legal framework in detail at the beginning, together with the Employment Protection Act provisions grouped together rather than scattered throughout the text. The arrangement of the remaining material has also been improved. The text itself is generally more precise. There are several new provisions: paragraph 2 which defines the Code's scope; paragraph 12 which emphasises that the list of items is not prescriptive; the provision in paragraph 16 that trade unions should justify their requests for information; paragraphs 17 and 18 on trade union responsibilities to keep employers informed of the names of authorised representatives and to co-ordinate requests from several unions; a footnote on Stock Exchange requirements, and paragraphs 22 and 23, which replace the more formal concept in the earlier draft of information agreements.
The draft Code, if approved, will have a status equivalent to that of the Highway Code. It will impose no legal obligation on an employer to disclose any particular item of information. The Act simply provides that the guidance contained in the Code should be taken into account by employers in their responses to requests for information by trade unions. If a complaint about non-disclosure is made to the Central Arbitration Committee, that body is also to take into account any provisions in the Code which appear to be relevant to the complaint.
To my mind, the Code constitutes a helpful aid to the Employment Protection Act's provisions on the disclosure of information for collective bargaining purposes. It sets out clearly the main responsibilities of negotiators and provides guidelines for determining what information should be provided. It is now for the House to judge. If both this House and another place approve the draft, the Government will bring it into force, together with the Act's provisions on disclosure, after allowing a month or two for both sides of industry to become familiar with the recommendations as approved.
I have no doubt that together the Act's provisions and the Code will lead to more 1248 informed and objective collective bargaining, and this alone could in time help to transform the industrial relations climate. No one is saying that "disclosure" will be a panacea. One of the reasons it has been a relatively non-controversial subject in the abstract is that people have different motives in supporting it. Each side believes it will improve industrial relations to its own advantage. Practice is uncertain; "disclosure accounting" is in its infancy; the complex network of levels and practices in bargaining will not itself lead to neat and tidy development. Disclosure will not make the pluralist nature of the system disappear. Nevertheless, in effect the parties are being invited to pursue a new style of collective bargaining. It is a style which flows naturally from participative management. It is an international trend and it is crucial to the sharing of decision-making—democracy—in industry.
I submit this draft Code for the approval of the House and I trust that approval will be given without dissent, because in my view this is a very important, albeit not a major, lead to better feelings in industry and an improvement in the system of collective bargaining. I beg to move.
§ Moved, That the draft Code of Practice on Disclosure of information to trade unions for collective bargaining purposes, laid before the House on 3rd May, be approved.—(Lord Wallace of Coslany.)
§ 6.46 p.m.
§ Lord LYELL
My Lords, on behalf of all Members of the House I should like to thank the noble Lord, Lord Wallace of Coslany, for introducing this draft Code and for explaining it so well. It seems that the noble Lord understands it very well and, as a result of his efforts, I believe that the whole House has a much closer understanding and insight into the contents, which are both important and detailed, of this Code.
The noble Lord can be assured that everyone shares the belief that good communications are vital for good industrial relations. That, of course, was recognised very early on, even by Donovan; and this particular precept was found in the document, In Place of Strife at paragraph 48. It is worth recalling that the Code would have fitted very well into Section 56 of the Industrial Relations 1249 Act 1971, as indeed it does into the Employment Protection Act 1975 at Section 6.
We on this side of the House are committed to the principle of disclosure. Nevertheless, we are of the opinion that disclosure should be limited to matters of legitimate concern among employees and management. I should like to ask three brief questions—they might even be rhetorical. First, would the commercial interests of the company be adversely affected by any aspects of the Code? Secondly, is it not possible that the Code will be used to extract and to obtain information which could be collated and then used for purposes which would be very far removed from collective bargaining, even in its broadest sense, and even as set out in the Code? Lastly, will the confidentiality be maintained? I believe that this last precept is absolutely essential as the employment of many—even of thousands—could hang on confidential information which is in the possession of the employer or which could be obtained by him.
It is, indeed, pleasant that some notice seems to have been taken of the comments and criticism which followed the publication of the first draft of the Code. We believe that four aspects are especially noteworthy. First, the provisions of the Act are far more clearly explained and are very easily understood. Secondly, a clear balance is expressed between the duty to disclose and the restrictions on disclosure. Thirdly, the word "relevant" is much in evidence. I think that it appears six times in four paragraphs and, indeed, is very useful and an added benefit. Lastly, the original draft seemed to many to be a mite lopsided in favour of the employees. But certainly everybody, even on the management side, feels that the Code is more balanced. There are individual blemishes, but we certainly believe that the version of the Code now before us is a considerable improvement on the first draft.
The problems of small businesses are also of concern to the whole House. Perhaps the noble Lord, Lord Wallace, could explain whether he thinks that paragraph 10 will be sufficient to protect the interests of small businesses which may—and, indeed, I believe will—find it hard to obtain information which the trade 1250 union negotiators might see fit to request. There could possibly be quite sharp disputes between what might be requested and what the small business might be able or feel it relevant to disclose. It could and, indeed, should be that the subject matter of negotiations would be drastically different from the larger businesses or companies. Nevertheless, there is a risk that this important Code will have gone through your Lordships' House without adequate discussion and perusal. It is reasonable to suppose that flexibility will appear in all talks, both in this House and throughout business and industry generally.
Coming to some minor details in the Code, paragraph 19 presents a small problem. As is recognised in paragraph 19, the use of information is of paramount importance. I know of much essential information which causes difficulties to management and indeed to outsiders, let alone to employees. I believe that this paragraph could, with benefit, be included after paragraph 23, since the use of information is in no way one-sided. The trade union negotiators will come under pressure to declare their intentions which are, as the Code indicates, relevant.
I should like to quote a comment from the Dairy Trades Federation which, as noble Lords may be aware, represents many small, scattered dairies. I believe that many of them are highly unionised. In relation to paragraph 19 the Federation has this to say:To this end, we consider Clause 19 to be quite inadequate and incorrect in assumption that the trade unions alone should deal with the necessary information effectively. We urge a change of principle to ensure that employers and trade unions share a responsibility to develop understanding on the part of employee representatives where a programme of disclosure is planned".
§ Lord LYELL
My Lords, paragraph 19 in the Code that I have. I think it is the same one: Code of Practice 2.
Lord WALLACE of COSLANY
My Lords, paragraph 19, as I have it, says that a trade union should review existing training programmes, et cetera.
§ Lord LYELL
My Lords, if the noble Lord would read on to the last part, it says:to understand and use information effectively".It was this use of information that many of us felt—and this was one small example—should be a communal concern; not just of concern to the trade unions but, above all, to management and to everyone concerned with the business.
Then there is the vexed question of paragraph 11, and in particular sections (iv) and (v). Here confidential information will come into the hands of trade union negotiators, and any tiny breach of this confidentiality could cause disaster to the firm's commercial interests. I do not think that this is extravagant language at all, because there is a great risk when one is dealing with confidential information. Even many employers are loath to allow information beyond the hands of a limited number of people.
When trade union negotiators are entering this field I believe that they will recognise that they are playing with something that could be explosive and dangerous. I certainly consider that in almost every case the trade unions and their negotiators will show a responsible attitude, but there is still this risk, and it is right that trade union negotiators and, above all, employee negotiators should recognise this.
In section (v) the mention of "transfer prices" is, to my mind, a trifle risky. It is a trifle dangerous since the provisions of paragraph 11 seem to us to be in the nature of a shopping list. I think the noble Lord, Lord Wallace of Coslany, was suggesting that it would not necessarily be taken as a minumum list; but we believe there is a risk that when one looks through here, and then one sees the saving hits at the end of "other relevant information", it may be taken as a check list, a minimum list of requirements.
The transfer prices, or other complex financial information that may be required, are dangerous, in that there is some information that could not possibly be of interest to trade union negotiators who are fixing wages and conditions, and this could become available to them with the added risk. I believe that there is a grave lack of awareness that financial information is a matter presenting great 1252 difficulty not merely to employees but also to management. That is why I believe there is all the more reason that paragraph 19 and, above all, some of the provisions of paragraph 11(v) should become a matter for joint discussion and joint training.
In conclusion, this Code is a compromise, but we believe that it represents something that all of us in this House, and outside, desire. We believe that it should be given a fair run, with the reservation that there are these major risks of breach of confidentiality that I mentioned; and there is a possibility that people may be keen on using various aspects of the Code with the attitude, which I might use to the noble Lord who has just left the Chamber—the noble Lord, Lord Wigg—of a barrack room lawyer. I hope that that will not be the case. But I think that he would understand and the House would understand. In all branches of industrial relations, here and elsewhere, co-operation will come about but only as a result of mutual trust and confidence. We believe that this Code goes a long way, if not the whole way, to help this attitude of trust and confidence, and that is why we would support the Code, and thank the noble Lord, Lord Wallace, for explaining it so well.
§ 6.56 p.m.
§ Lord ROCHESTER
My Lords, we on these Benches would also like to thank the noble Lord, Lord Wallace of Coslany, for the clear way in which he has explained to us this draft Code of Practice. It stems, as has been said, from the provisions of the Employment Protection Act. I am bound to say that our feeling is that this Act has contributed to the widespread feeling that there has been an excessive amount of legislation in the industrial field in recent years. Indeed, I recall, in the debate on Second Reading of the Employment Protection Bill as it then was, speaking on behalf of my noble friends, and saying that the ordinary British manager could be forgiven if he wondered whether he would ever again be able to concentrate his attention on what should be his prime task of producing and exporting the goods and services on which the future of this country depends. However, this is not the moment to criticise the provisions of the Act.
1253 At the Second Reading we welcomed Clause 6 of the Bill which authorised ACAS, if I may use the same term as the noble Lord, Lord Wallace, to issue Codes of Practice containing practical guidance, among other things, concerning the disclosure of information by employers to trade unions for collective bargaining purposes. That remains our general position. Indeed, looking back there may be many people, for all I know including members of the Government and trade union leaders, who now wish that more attention had been paid, more emphasis placed on Codes of Practice rather than on legislation in the industrial relations field. For my part I am sure that there are lessons to he learnt from this for the future.
The reasons why we on these Benches favour disclosure of as much relevant information as practicable to employees and their representatives, whether or not those representatives are trade unionists—and I do not want now to dwell on that distinction—are that in recent years as a nation we have suffered greatly from militant industrial action to obtain higher wages and salaries regardless of the damage that this has caused in industries that are profitable only marginally, if at all.
We have also suffered from the belief that employing organisations will usually survive, if only because the Government in the last resort will step in, and we have suffered from mistrust of employers and a lack of understanding of the need for businesses to earn a surplus if they are to remain viable. For that reason we welcome very much paragraph 20 of the Code which says:Employers should aim to be as open and helpful as possible in meeting trade union requests for information".Indeed, we go further and suggest that it is up to employers gratuitously to offer that information in appropriate cases. Beyond that, we should like to see trade union representatives making use of information they receive in this way not simply for collective bargaining purposes—and here I very much agree with the noble Lord, Lord Lyell—but in joining with management in the training of shop stewards to give them a better understanding of what might be called the economic facts of industrial life.
1254 With that in mind, we welcome also paragraph 19, which says:Trade unions should review existing training programmes …".Of course, a key section in the Code is paragraph 5, which, as the noble Lord, Lord Wallace of Coslany, said, states:The information to be disclosed is that without which a trade union representative would be impeded to a material extent in bargaining and which it would be in accordance with good industrial relations practice to disclose for the purpose of collective bargaining".It is perhaps a pity that in defining what is in accordance with good industrial relations practice, more explicit reference is not made to the criterion of what is actually done by companies generally recognised to be exponents of good industrial relations, rather than to relevant provisions of the Code, since those provisions are based largely on clauses of the Employment Protection Act which, in some cases, particularly those relating to information that might be financially sensitive—Lord Lyell referred to this—were the subject of a good deal of controversial discussion when this subject was debated during the passage of the Employment Protection Act.
Paragraph 15 states:The burden of establishing a claim that disclosure of certain information would cause substantial injury lies with the employer".Paragraph 20 makes it plain:Where a request is refused, the reasons for the refusal should be explained as far as possible to the trade union representatives concerned and be capable of being substantiated should the matter be taken to the Central Arbitration Committee".What happens thereafter will of course depend on how far arbitrators show a realistic understanding of employers' difficulties. But in the end, as the very last section of the Code appears to recognise, success in achieving the avowed purposes of the Employment Protection Act—that is, in promoting an improvement in industrial relations—will be measured not by the quality of arbitration, for which the Code provides in the last resort, but on the extent to which employers and trade unions, in the words of paragraph 22,… endeavour to arrive at a joint understanding on how the provisions on the disclosure of information can be implemented most effectively".It is because we on these benches fervently wish to foster this spirit of joint endeavour 1255 in British industry that we, too, are prepared to give our general approval to this draft Code of Practice.
§ 7.6 p.m.
§ Lord DRUMALBYN
My Lords, the main purpose of this Code should in my view be to ensure that a true and fair state of the company's affairs is presented to the employees, in just the same way as it is presented to the shareholders. It may not in all cases be exactly the same information, although many companies circulate their reports to the shareholders; it may be that the reports to the shareholders will contain more than they do now and that the reports to the shareholders and to the employees will become more and more similar. Be that as it may, the main thing is that the employees should get a true and fair statement and be able to understand it.
There should be confidence between the two sides that it will be explained fairly and honestly, which I am sure is the intention in all cases, and that the employees on their side will not use the figures selectively to suit their own cases. it is this that has caused employers in the past to be reticent about the information they have passed; they felt that they were being asked for particular items which could be selected and used in evidence against them, so to speak. That is what we want to get away from and I think the Code gives us a fair chance that we shall.
I do not think we can expect very speedy results from the Code; it is a question of getting experience together in working for the health, prosperity and survival of the companies concerned. If we can get a common purpose there, then of course everything will work out quite easily. I should be surprised if employers were to refrain from giving all possible information that is not sensitive from the Stock Exchange point of view. What they are concerned about is that all the information given is used and understood. If it is used and understood, then it will be possible for the two sides to be talking together instead of talking against each other. That is the importance of this document.
The Code seems to give an entirely fresh approach, an approach which, perhaps inevitably, was rather absent 1256 when the Act was passed, when it seemed that new burdens were being placed on the employer and in some cases burdens which would be very difficult to bear. It seems to me that the Code removes that impression and, in doing so, it performs a very useful purpose. It is not the case, in my view, that employers will be unwilling to give information which can serve the common purposes of the company—from the point of view of the shareholders and the employees—and indeed, in the long run, of the national interest.
It is for those reasons that I welcome the Code. It gives an earnest for the future of the way in which industrial relations can he improved and of the way attitudes on both sides of industry can come together in a way that has not been possible in the past.
§ Lord CULLEN of ASHBOURNE
My Lords, I want to ask only one simple question. I entirely agree with the remarks of other noble Lords who have spoken about this Code. My only worry is whether the short footnote about the Stock Exchange Listing Agreement is really adequate, and whether it should not have been put slightly more strongly into the Code. We do not want insider trading troubles.
§ 7.11 p.m.
Lord WALLACE of COSLANY
First, my Lords, may I say that I am very pleased indeed at the generally temperate reaction from noble Lords. I think that noble Lords have captured the ideal behind the Code. It is, of course, to achieve a better and fairer system of collective bargaining and to put an end to some cases of what I can only call nonsensical industrial strife.
A number of points have been raised to which, in fairness, I should reply. The noble Lord, Lord Lyell, was concerned as to whether commercial interests would be affected by the Code. That is a matter for the employer; he must have regard to his commercial interest before he discloses information. In any case, if the trade union is not satisfied that it is getting enough information, the matter can go to arbitration. I do not believe that commercial interests will be affected by the Code.
1257 That leads on to the question of confidential information. The two matters are lined up one with the other. So far as confidential information is concerned, the problem is probably somewhat exaggerated because, let us face it—and not all noble Lords will be very strongly in favour of trade unions as a principle—the unions have always recognised that issues may be confidential, and a union may be prepared to allow confidential information to be restricted to a few representatives and with limits on reporting back. Where a union is not prepared to do this, the employer will be able to refuse to give the information if he can show that it will cause substantial injury. Procedures for dealing with commercially sensitive information can be worked out in joint agreements as recommended in the Code. So this is a question of mutual trust between the unions on the one side and the employer on the other. I do not believe that there have been cases of serious leakages of information gained by trade unions in the course of negotiations.
A very important point was raised on the position of small businesses. So far as small businesses are concerned, where disclosure infringes directly on a small company there is a safeguard provided by Section 18(2)(b) of the Act itself. This rules out the provision of information that would involve an amount of work and expenditure out of all reasonable proportion to the value of the conduct of the collective bargaining concerned. I believe that that would cover that point.
As regards joint training, there is a point of difficulty. It has been claimed that training should be a joint responsibility. But the training of union negotiators must ultimately be the responsibility of the unions. The Code recognises that. I have some experience of the facilities available for training union negotiators and, of course, when we talk about union negotiators, we are usually talking about professional union negotiators. Quite a number of unions have training courses at colleges and other schemes and some, including the Transport and General Workers' Union, have available university courses for their officers. Their objective is to have their officers trained at Oxford.
There is nothing to stop individual unions or, for that matter, the TUC from 1258 co-operating with managements in training programmes. It is implied that management has an educational role, as indicated in paragraph 21 of the Code on the presentation of information. There is nothing to stop management co-operating with unions which are willing to have management co-operation, and I believe that it would be a good thing. However, the unions already have very extensive training schemes. If noble Lords would like further information it can be provided. One does not become a professional negotiator these days without considerable experience and training. For the union's sake, let alone that of its members, they must be capable, professional people in every sense of the word.
I can see that there is still a little anxiety over the question of the sensitivity of information given. The noble Lord, Lord Cullen, referred to the Stock Exchange. Representations were received from the Stock Exchange and ACAS recognised the problem. The reference is put in as a footnote but, footnote or not, it is part of the Code. There is no argument about that. The problems associated with price sensitive information were gone over at length and several times during the passage of the Employment Protection Act. A number of Amendments were put down, some of which were rejected and some accepted. There is no point in dwelling upon that again, but I shall briefly repeat the Government's reasons for rejecting special conditions in the Act. They apply equally to the Code although it refers to the problem and gives guidance on examples which could cause substantial injury.
Some employers are already voluntarily disclosing a considerable amount of information to unions, as the noble Lord, Lord Rochester, pointed out. They have not found price sensitive information to be a problem. There have been no insider scandals involving trade unionists. This was a point of worry that one or two noble Lords have raised. On the rare occasions when information judged to be price sensitive is to be legitimately disclosed to trade unionists—that is information which would not be likely to cause substantial injury on commercial grounds but which would meet the test of material impediment—there is nothing whatever to prevent the employer from informing the shareholders, the 1259 Stock Exchange or anyone else. Furthermore, he can inform them before informing the trade unions. The assessment as to what is or is not price sensitive can only be made by the board. Therefore, the Code has done all that is necessary in the footnote at the bottom of page 5 referring to the Stock Exchange. The Stock Exchange concern that employers should consider any obligations which they may have under the Listing Agreement is met. It is in the Code although it is in a footnote.
I do not believe that there is any further point that can be made now except to thank noble Lords for the interest they have shown in this debate. It is unfortunate that there was no debate in another place. Somewhere, something in the machinery went wrong, but at least your Lordships have had the opportunity of a debate, and, in so doing, have probably set an example to another place, though had better not go into that. I thank noble Lords for all the assistance I have been given.