EMPLOYMENT BILL

HL Deb 10 June 1980 vol 410 cc261-422

House again in Committee.

Lord WEDDERBURN of CHARLTON moved Amendment No. 38: Page 7, line 13, at end insert ("but it shall be for the employer to prove that he acted reasonably.").

The noble Lord said: I shall move this amendment as briefly as is consistent with its importance. It concerns one of the most important points in the Bill in the opinion of my noble friends and myself. It relates to the question where the burden of proof should lie in a case of the unfair dismissal of a worker. In any unfair dismissal case there are three stages under the law as it now stands in Section 57 of the Employment Protection (Consolidation) Act 1978, and there have always been three stages in an unfair dismissal case since unfair dismissal was introduced.

The first stage is that the employee must prove the dismissal. The burden of that rests upon him. The second stage is that the employer has the job of showing one of the principal reasons which are in the list of reasons which may justify a dismissal, sometimes called "the OK reasons"—a nomenclature used by the right honourable friends of the noble and learned Lord in the other place—such as misconduct, dismissal for lack of capability for lack of qualifications, redundancy, statutory requirements or some other substantial reason justifying a dismissal; and it is quite clear that the burden of showing that reason is of course upon the employer.

It is to the third stage of the unfair dismissal case that this part of the clause and this amendment relate, for in the third stage the final and ultimate test of the unfairness of a dismissal is whether or not it is reasonable, and the question which arises is where the burden of proof should lie in respect of the reasonableness of a dismissal. Pausing there, I believe it to be uncontroversial to say, in the law both of England and Wales and of Scotland, that there is a distinction between the legal burden of proof (or, as some authors and judges have it, the persuasive burden of proof) and, on the other side, the evidential burden of proof. All lawyers know of this distinction, the evidential burden being the question of the need to bring evidence to show a prima facie case on a point but the legal burden of proof being the burden which rests upon the party in respect of whom the issue will be decided contrary to his side of the case if the evidence is evenly balanced.

It is on this matter that, in view of the (in my opinion) extraordinary statements of the Government in respect of their new clause, I have taken opinion, both academic and practical. It is, in the view of all the authors I have been able to consult and all the practitioners I have been able to consult, a manifest requirement of any judicial system that there be a legal burden of proof on one party or the other. In the words of the Vinerian Professor at Oxford, as he was when he wrote it, Professor Cross, in his book on evidence—and I quote: It is a fundamental requirement of any judicial system that the person who desires the court to take action must prove his case to its satisfaction"; and he follows it with the tag (which, as your Lordships' Committee is not too crowded, I might dare to put in the original) of ei incumbit probatio, qui dicit, non qui negat. The burden of proof, therefore, as to reasonableness or unreasonableness, must lie upon either the employer or the employee.

The practitioners with whom I have had discussion, including noble and learned friends and others—those of very different political persuasions from myself—regard that as obvious. In fact, one of them put it back to me by saying, "Surely you are not suggesting that there can be such a thing as a neutral burden of proof". I said, "No, I am not suggesting that; the present Government appear to be suggesting it". Because what the Government want to do is to take out of Section 57(3) the requirement that the employer should prove the reasonableness of the dismissal, and merely leave the words that question shall be determined in accordance with equity and the substantial merits of the case".

Indeed, the Government's working paper of September 1979 stated that the Government's proposal was that the onus of proof as to reasonableness should be made—and I quote— neutral as between employer and employee". On the basis of the authorities, the books and the practitioners whom I cited just now, there is no such thing as a neutral legal burden of proof. It is possible to discuss the question of a neutral evidential burden of proof, but not a neutral legal or persuasive burden of proof. All along, the Government have said that (if I may quote the right honourable friend of the noble and learned Lord during the Committee stage in another place on 26th February, at col. 653, when speaking of the burden of proof): It will be, as it were, in the middle"; and at another place he repeats that it will be "in the middle or neutral".

I am tempted to say (but it would be impertinent) that if law were taught in schools this would be a schoolboy howler. There is no such thing as a neutral burden of proof in the sense of the persuasive burden in court. If the evidence is balanced 50–50, one party loses and one party wins, and the party who wins is the party upon whom there is not the legal burden of proof. So merely to leave the matter to the circumstances of the case "in accordance with equity and the substantial merits" is in fact to transfer the burden of proof as to reasonableness from the employer to the employee. That is the first error that the Government make in their argument.

The second error which the Government make in their argument, and the reason for this amendment, is that on this point it is right that the burden of proof should rest upon the employer. It was suggested in some of the debates in another place—and, to save time, if I may, I will not refer to the actual quotations, but will summarise them—that the burden of proof of an issue in civil proceedings can really never lie on the defendant or respondent. Of course, that is not the case. If one takes the case of a bailee who has lost goods, the onus of proof in legal terms is upon him to prove why. If one takes the case of redundancy, the onus of proof is on the employer, under the Employment Protection (Consolidation) Act as it now stands, to prove that the dismissal was not by reason of redundancy.

Indeed, in this very Bill there is in Clause 11, in the new Section 56A, subsection (4), about the woman's right to return to the same job, a burden put upon the employer to show that it is not reasonably practicable for her to return to roughly the same job. That burden is quite rightly distributed, because that is a matter which is within the employer's special knowledge; and it is right that the burden be put—for it has to be put somewhere—upon the employer in an unfair dismissal case to prove that the dismissal is not reasonable. This is particularly the case because in many of the unfair dismissal cases the question will be determined in accordance with that which is within the employer's knowledge, and not within the employee's.

Perhaps I may refer very briefly to three recent judicial pronouncements. In the case of Weddell v. Tapper recently in the Court of Appeal—and this is not a dictum of the Master of the Rolls; it is Lord Justice Stephenson—Lord Justice Stephenson summarised the previous line of cases by stating a matter which is central to the argument on this question. It was the case of a meat salesman dismissed by reason of suspicion of dishonesty. Lord Justice Stephenson said (on page 100 of the 1980 Industrial Relations Law Reports): First, there must be established by the employer the fact of that belief, that the employer did believe it; secondly, that the employer had in his mind reasonable grounds on which to sustain that belief; and thirdly, that the employer at that stage when he formed that belief on those grounds, at any rate at the final stage at which he formed that belief, had carried out such investigation into the matter as was reasonable in all the circumstances of the case". Those are matters which the employer can prove. The lack of such belief, the lack of such grounds, will rule out many a complainant unless he is lucky in having a good lawyer—and we do not want more lawyers in the tribunals—in the course of cross-examination.

Obviously, the employer is the person who knows about such matters. As Lord Denning said in a previous case, the tribunal must consider the employer's reasons and the employer's state of mind. The matter is put equally well in a Scottish case of Low v. MacCuish where the employment appeal tribunal under Lord McDonald in Scotland approved the same test.

How, then, can it be wrong not to put on the party who knows—just as he knows the reason for the redundancy, just as he knows the reason why the woman cannot return to her old job and just as he knows the reason and beliefs he had for the dismissal upon which the issue is to turn—the onus as to whether or not it is fair or reasonable? It must, in justice, be placed on the employer. The experience of the last six years, in which that burden of proof has been placed on the employer, has not been that the employer has been unduly disfranchised of his rights. Finally, the Government's case is not only bad in law and wrong in legal logic, it is wrong in social fact; because in the working paper and in their subsequent pronouncements the Government have said on a number of occasions and in different ways that a lot of businessmen complain that they are guilty until they are proved innocent. Of course, the Government complain that these are not criminal proceedings; and I understand the point.

When one looks at the research that has been done on this matter in a number of surveys quite independent of either side of industry, the facts do not stand up to the Government's allegation. The survey which is most respected in all quarters is the Industrial Relations Research Unit survey of Warwick University in 1979, where they surveyed not just all employers but a random sample of employers who had been respondents in unfair dismissal cases at industrial tribunals—and some of them on appeal. Of those employers who had been in these cases—some had won and some had lost—only 25 per cent. said that the system felt to them to be biased against them. But, much more significantly, of that 25 per cent., only 5 per cent. mentioned the problem of burden of proof or, in ordinary language, being guilty until proved innocent.

The survey records show that the Government working paper complaint that there has been a widespread feeling among employers that they were guilty until proved innocent is not true. It was stated at a time when the Government had not reflected upon the survey evidence of which the Warwick University survey is only one, but the leading case. Therefore, we on this side of the Committee say that the argument that the burden of proof will become neutral is a sham and is wrong; we say that the burden of proof should remain where it has remained with justice all round in the last six years, on the employer in the final stage of a reasonableness argument on an unfair dismissal claim; and that the social facts are that there is not the widespread complaint among employers that the Government allege.

On that ground, this amendment should be acceptable to all sides of the Committee as being a system now tried and tested for some years, which has given workers some security in their jobs (and which in future years will be even more needed), and that it is a security of which they will be unjustly deprived if the burden of proof at this particular point of the proceedings were put upon them as complainants. I beg to move.

8.15 p.m.

Lord DE LA WARR

I must confess that I was amazed just before the Committee adjourned to find the noble Lord, Lord Wedderburn of Charlton, saying that this was one of the most fundamental parts of the Bill. Furthermore, I fear that unless we do something about it we might be about to enter upon a lengthy and profound series of legal arguments. I can only approach this as a businessman who has been involved, directly or indirectly, in unfair dismissal cases. I find this amendment (and I will say briefly why in a moment) to be a cosmetic and of very little practical importance. I have to say that, although I welcome the change that the Government have made, in practice—and I have been advised of this by a number of personnel directors—it is not really going to make very much difference to the way the case is conducted. Therefore, I find that this amendment is not an amendment of great legal profundity but a cosmetic, political amendment designed to keep the Bill looking right from the point of view of the party opposite. No doubt the lawyers will say that I am wrong—and they may say that on this side too; I do not know. I am talking as a simple fellow who has had a lot of time wasted on these things. I hope that the noble Lord opposite—and I do not mean to be rude—will not take himself too seriously over this but will leave it as it is.

Lord MACKAY of CLASHFERN

I do not intend to be lengthy and I do not know that I shall necessarily be profound. I must say that I agree with my noble friend that this is not an amendment of great practical importance, because I do not believe that, to practising lawyers, the onus of proof is often important. I believe that in most cases the court has sufficient evidence not to rely on onus; and I think that I can back that by statements of great authority from practising lawyers through the years. This is so even in the ordinary courts; and the industrial tribunals are special in this respect because they have much more opportunity for an inquisitorial role than has the ordinary court. The fact that the onus has been expressed until now in the way that it has—the "guilty until proved innocent" point that the noble Lord, Lord Wedderburn referred to—is, in our view, important.

It is true that when a person goes to the tribunal, he may find once he actually gets to it, the atmosphere more genial than the onus aspect would lead him to expect. But it is the attitude of those who have never been that is perhaps more important. I agree with the noble Lord's analysis of the first two stages in the application for an award for unfair dismissal. As far as the third stage is concerned, in my view it is not so much a question of fact as a question of judgment in relation to the facts on the particular reasons given. I, personally, do not see that there is need for an onus of proof there. It is a question that the tribunal are asked to determine. They are asked to determine whether the dismissal is reasonable or not on the basis of the evidence that they have. There is nothing to prevent the tribunal from asking some further questions. Accordingly, I do not believe that this will have the effect of putting any greater onus on the applicant, on the dismissed employee, than in practice exists at the moment. Indeed, that is what the results of the survey tended to show. The employers, when they actually go, find that this frightening looking onus is not as frightening as it looks. Accordingly, I respectfully submit to the Committee that where the tribunal, as here, have a duty to determine the question and the facts at that stage have been ascertained, the duty to determine the question makes onus of no importance; and to neutralise the onus, as it has been called, or take away the onus altogether, is a perfectly possible thing to do and a perfectly apt thing to do in this situation. I invite the noble Lord to withdraw his amendment and, if he is not prepared to do that, then I invite the Committee to reject it.

Lord UNDERHILL

It was not my intention to speak on this amendment, but in view of the remarks that have been made about this amendment wasting the time of the Committee, frankly I felt compelled to do so. We are talking about the position of a dismissed employee in relation to a tribunal. It seems to me most unfortunate that whenever a question is raised from this side of the Committee, the balance is always shifted in one direction. That is what is happening on this occasion.

One must recognise the difference between an employee who is bringing a case and an employer. The TUC regard this as important. I hope that they do not think that they are wasting their time. This was in the 1971 Act, was then taken out and is now going back. There must be some reason why we have this shifting of balance. I am sorry that the Members of the Committee should consider it a waste of time. Maybe this side of the Committee are wrong; but I believe we are thoroughly right in raising this issue because an employee often finds it very difficult to get fellow employees to come as witnesses, for obvious reasons. The imbalance is often against them. I hope that the noble Lord will realise that there is a case here which needs to be answered far better than the Government have answered it so far.

Lord ALLEN of FALLOWFIELD

I, too, regret having to prolong the Committee's discussion on this Bill and this particular clause. Like my noble friend Lord Underhill, I have been provoked to intervene because I see this as a layman, not as a lawyer. I see this, too, not on the basis of burden of proof but of introducing a new concept in industrial relations: that to assess whether an employee is dismissed fairly or unfairly, the guiding principle, according to the Government's proposals, will be the size of resources of the business. Each Administration that has come to power in this country in the past decade or so has expressed, understandably and feelingly, its desire to do something for the low paid in this country. If this Government's proposals are established in the manner in which they are projected, then they will do precisely the opposite.

The principal casualties, if this proposal goes on to the statute book, will be the people who are low paid. To remove the onus of proof on the employers to show that they acted reasonably is in my view totally unfair. More than that, I believe that it is totally alien in the real life of industrial relations in this country. Taken separately, I believe that these provisions are highly objectionable, not on whether it is right to establish the burden of proof in the manner indicated from the Government Front Bench, but merely to ask that it is sufficient to justify reasonable dismissal by pleading extenuating circumstances.

I wonder what the big and medium-sized employers say about the special dispensations given to those who are alleged to employ small numbers? Nothing could be more unfair. We hear a lot of talk about "small". I have listened to this debate throughout and I have heard no one yet define what is small. Many attempts have been made in one form or another to try to define what is a small business. I believe the manner in which this is projected in the Bill is, to say the least, a novel provision. It is novel because there is no employer in this country—however small or whatever his or her financial problems are—who can escape from other legal obligations as a citizen of the United Kingdom—for example, to escape from paying his bills or from fulfilling his contracts. To afford to him or her a special dispensation in the manner in which he dismisses—fairly or unfairly—those he employs is in my view totally wrong.

The Government of the day and Governments who have preceded them—and quite rightly so—have alleged that they wish to help small businesses. I submit that this will not help small businesses. More than that, it will create a substantial differentiation between their rights and those who employ medium sized businesses and large businesses, no matter how we define them. I believe the effect of the proposal of the Government is such that it will create far more problems than it solves. It is an affront, in my view, to the low paid of this country.

My noble friend Lord Mottistone spoke earlier in this debate about his experience in the retail trade. He will know, as I know, that this is a trade which employs an immense number of low paid people. It is a very substantial industry in the United Kingdom employing about one-eighth of the working populace. Are we to afford to the measured proportion of that trade a special dispensation because they are small or because their resources are not as good as those of someone else? I hope that the Government will think again about this proposal, because it is totally unfair and alien to the whole concept of good industrial relations.

8.28 p.m.

Viscount MASSEREENE and FERRARD

Does the noble Lord want more unemployment?—because what he has said would create a great deal more unemployment. If, as I said previously, small businesses had to pay the same compensation as big businesses, it would probably mean that quite a few of them would go broke and their employees would then be all unemployed. That argument does not seem at all practicable. When courts of law award damages, if they are awarding them against a millionaire they award far larger damages than if they are awarding damages against somebody who is receiving national assist- ante. In fact, in that case they would not award any damages at all. I do not think that the noble Lord is being logical in any way.

Why should employees—who are, after all, in the majority—have statutory protection and the employer, who is in the minority, not have statutory protection? If these amendments are carried, the employer would have no statutory protection.

Lord MACKAY of CLASHFERN

May I say that this amendment applies to businesses large or small; it is exactly the same in all situations. I do not think that in this particular amendment these considerations are relevant.

Lord HOWIE of TROON

I had not intended to speak, but I was provoked by the noble Lord opposite who described this as a trivial matter. I do not think that it is. I speak as an employer who has had the experience of sacking a recalcitrant and unruly member of staff who was so recalcitrant and unruly as to take me to the tribunal. He did not do badly as it happened. But the point is that as an employer I was totally outraged by the fact that the onus of proof was upon me, and at that point I diverged slightly from my Front Bench colleagues. I felt this very keenly until I thought about what we are talking about—I thought about my commercial convenience as an employer and his livelihood. At that point the scales fell from my eyes and it became quite clear that, important as my commercial convenience was and indeed crucial as it still is, it was not as important to me as that man's livelihood was to him.

Therefore it is right and just that the onus of proof should lie upon the stronger, and there can be no doubt at all that in this kind of confrontation between employee and employer the employer is the stronger of the two. My Front Bench colleagues are right. This is not a trivial matter and this is an amendment which should be pressed.

Lord MOTTISTONE

Very briefly, it seems to me that we are not finding it easy to follow this argument, because the Government, quite rightly, have only quoted from subsection (3) of Clause 57 of the 1978 Act, which is the only one they wish to amend. But if you read the whole of Clause 57 and see how subsection (1) calls upon the employer to give reasons, and you then read the amended Clause 3 in the context of the whole of Clause 57, you see why it is just a minimal change to make the balance even at the onus of proof stage.

There was a lot in the speech of the noble Lord, Lord Wedderburn, and he quoted from the law about the need to give reasons. All that is there. Subsection (1) requires an employer to give reasons, and all we are left with is the tribunal making a decision. With the Bill as it now is, when they make that decision they will make it on an even basis, and that seems to me the whole point about it. But, taking the statement of my noble friend Lord Allen, I think that if you must look at the Bill and at bits of it you might get the wrong impression that employers are not required to give reasons. They are: that part has not been changed at all. Therefore I think we are slightly off context in arguing on this narrow front.

Lord WEDDERBURN of CHARLTON

I hope the noble Lord, Lord Mottistone, will not think ill of me if I say that I do not think he was in the Committee when I began my speech on this amendment. I then said that the burden of proof has to lie on someone, and in an unfair dismissal case it lies upon the employee to prove the dismissal. It lies upon the employer to prove one of the what are sometimes called "OK reasons", such as conduct, capability, qualifications, to which he was referring as regards that subsection.

Therefore the first two stages are, as the noble and learned Lord, the Lord Advocate, said, uncontroversial and clear. The employee must prove the dismissal, which is not always easy in constructive dismissal cases, and the employer must get within the very broad gateways, which include the phrase "some other substantial reason", which might justify dismissal.

Then comes the crunch. Having had, as it were, one goal each to score, the question is: who then has to prove the reasonableness or otherwise of the dismissal? I entirely agree with my noble friends Lord Underhill, Lord Allen and Lord Howie, who spoke as an employer, that it is surely right that the employer, who is, as my noble friend Lord Howie said, the stronger and, as I said, knows the facts which the employee can frequently not know—it is surely right that he, who is dismissing someone and thereby getting rid of hs livelihood, should have to prove his point. The noble Earl, Lord De La Warr, talked about wasting his time on these things. I can assure the noble Earl that those workers who were dismissed did not regard him, by paying attention to their problems of losing their jobs when there were not many more around, as having wasted his time in caring about his workers. It was their livelihood at stake and their families at stake.

Unfair dismissal law exists in this society not in order that workers should not be dismissed—they are frequently and properly dismissed—but that they should not be unjustly dismissed. In the last resort, the justice of the matter is something which the employer can and must prove. The noble and learned Lord and I must agree to disagree about whether there can be such a thing as a neutral burden of proof. I repeat that there cannot be such a thing. That is my belief and the belief of many practitioners in industrial tribunals with whom I have discussed the matter.

This does matter: in forensic terms it matters in a sufficiently sizeable number of cases to mean that, if this Bill is enacted as it stands, workers will be unjustly deprived of their jobs. We will not press this amendment to a Division but we shall come to a Division on the Question of Whether the clause shall stand part?

On Question, amendment negatived.

On Question, Whether Clause 5 shall stand part of the Bill?

8.35 p.m.

Lord WEDDERBURN of CHARLTON

This is a clause upon which your Lordships will realise that my noble friends and I feel strongly and upon which our honourable and right honourable friends in another place spoke with some feeling. I should like to quote the Scottish president of the industrial tribunals, or the equivalent in Scotland of the president, in 1978: Mr. McDonald. He summed up all the complaints of employers that you could not sack people after the unfair dismissal laws had been brought in and revised after 1974 as meaning this: All you need to do is follow some simple guidelines. You should not dismiss people without thinking about it. That is what the legislation sets out to do. The objective is to have more rational and more civilised industrial relations, and I think there has been an effect in that direction. It has led to an improvement of standards". That was the president of the industrial tribunals in Scotland, and Mr. Sealey, his counterpart in that year, made similar remarks. So have many other industrial tribunal members.

What then does this clause seek to do? In my submission, it reduces the level of civilisation which had been introduced into industrial relations by this law, which one had hoped by now was almost a bipartisan matter. First, as many of your Lordships have noted, it brings in a special consideration of size and special consideration for small firms. The first point about that is that the tribunals consider the size of the enterprise anyway. In the case of The Royal Naval School v. Hughes in 1979, the Employment Appeal Tribunal expressly said that you must look at the size—in that case of a school with 40 members of staff—in considering what was reasonable.

The noble Earl, without referring to the case, referred to the principle. What is he doing? He says: "This is a statutory underpinning of good practice." Throughout Clause 3 we were begging the Government to underpin their clause and get rid of its obscurities by under-pinning it by means of amendments which we moved. They said: "Not a bit: it will all 'come out in the wash' and it will all be done reasonably." If the tribunals already regard size as a factor, they are now being told to regard it as the pre-eminent factor.

More than that, they are being told to look at administrative resources. Not a word has been said in the debate so far as to why those words are there. They are not the same as size. Even a big firm, when the court comes to look, will say, "We are very sorry we did the dismissal in this uncivilised way perhaps, but we did not have the administrative resources to do anything else." The court will be pressed with that argument, whether it is a big or small firm: otherwise why are the words there? Inside small firms with bad administrative resources what a precedent it puts forward! It is an invitation to a firm not to build up its personnel and administrative resources which can protect workers by good procedures.

The question has been put again and again to the Government: what evidence is there in any case for special consideration for size in this matter? The noble Lord, Lord Allen, has made the case against it. Every single survey which exists shows that it is not the case that recruitment of labour is inhibited by the employment protection law. The noble Earl shakes his head and I, therefore, have to cite it. The Department of Employment survey published in 1979 by Clifton and Tatton Brown shows quite clearly that only 4 per cent. of those given unprompted questions cited employment protection legislation as in any way a difficulty in running their business. The Policy Studies Institute survey in 1969 showed that only 2 per cent. of the sample as a whole gave that as a main problem for their business, and only 6 per cent. of those who had in fact not recruited more labour in the recent past. The Department of Employment survey showed that only 6 per cent. of respondents even mentioned employment legislation at all, and the smaller plants dismissed one in every 58 employees during the year in question compared with only one in 200 with larger plants.

It is quite clear that the research which has been done both by those two surveys and also by Dr. Stanworth in his business unit at the North London Polytechnic has shown, for example, that among small employers it is knowledge of the employment legislation which is lacking. Only 24 per cent. of them knew the length of the qualifying period for unfair dismissal. They do not know. The shop steward knows and the workers know, but the employers do not know, and the Government are encouraging them not to know. The Government are encouraging them to remain in a position of ignorance, or, as the research surveys have suggested, in a position of fear, because the small businessman is afraid, and he is quite unnecessarily afraid, of the unfair dismissal law.

The Warwick workplace survey found that the respondent employers whom they surveyed in firms employing fewer than 10 compared very badly in their practices and their procedures with the larger firms, and concluded, as did every other survey, that what was needed was an educational effort by the Government to explain to smaller employers that this, as Mr. McDonald put it, is merely a law which requires civilised dismissal. The small employer is frightened of a bogey, and in putting this new Bill forward the Government are encouraging the bogeyman.

As far as the onus of proof is concerned in this clause, the case has already been made, and, if I may conclude with a remark totally agreeing with my noble friend Lord Allen, the evidence is clear in all those surveys that two-thirds of the applicants to industrial tribunals who make claims, and often successful claims, for unfair dismissal are the low-paid workers of Britain. The low-paid workers of Britain are the workers whose rights are going to be trampled on by this clause. It is a serious matter. It is not a matter which noble Lords opposite should find amusing. It is something which affects a family in a society where policies are causing unemployment to soar to levels undreamed of since the war and which none of us thought we would see.

A noble Lord: Rubbish!

Lord WEDDERBURN of CHARLTON

To reduce in those circumstances the rights of workers not to be unfairly dismissed in a society which faces 2 million and more workers unemployed is something the Government cannot do without deep shame. We shall divide the Committee on this clause.

Viscount HANWORTH

It really surprises me that in these days of unemployment, in view of the fact that we have not enough small firms compared with other countries and that most of us recognise the importance of small firms and their difficulties, we should have an attack on that sort of scale from the Opposition.

Several noble Lords: Hear, hear!

Viscount HANWORTH

It is surely desirable that small firms should be able to take on people, not that they should not be able to do so because of the fear of not being able to dispense with them when things do not go as well as they are going. This is a very small area, and to have an attack on the scale that we have had it from the Opposition seems utterly unreasonable, out of context with the importance of the subject and wholly against employment by small firms.

The EARL of GOWRIE

I had hoped, when we debated Amendment No. 37, to save some of the time of the Committee by not trading surveys and statistics with the noble Lord, Lord Wedderburn. The reason I wanted to do that, other than saving time, was not because I have anything to fear in these figures or that my very competent department has not supplied me with them, but because I agree with the noble Viscount, Lord Hanworth, that this is to some degree a small matter. It is a matter of rectifying a psychological balance.

A noble Lord: You could be dismissed.

The EARL of GOWRIE

It is curious that I rather agreed with the noble Lord,

Lord Wedderburn, when he said the small man is frightened of a bogey. I think there is some truth in that assertion. What we are trying to do in a small matter, as the noble Viscount, Lord Hanworth, said, is to calm him about the bogey, because our view is that no amount of statistics, surveys or opinion polls in the world can measure the deterrent effect of not taking somebody into employment. That is the point about which we are anxious. I endorse the view of the noble Viscount, Lord Hanworth, that the noble Lord, Lord Wedderburn, whose phrases were rolling in a fine frenzy, like the poet, is really making much too much of an issue about this matter; and therefore I suggest that probably the best way for him to let off steam is to divide on this matter and then we can move to something more important.

8.46 p.m.

On Question, Whether Clause 5 shall stand part of the Bill?

Their Lordships divided: Contents, 107; Not-Contents, 55.

CONTENTS
Abinger, L.	Fortescue, E.	Montgomery of Alamein, V.
Airey of Abingdon, B.	Gisborough, L.	Mottistone, L.
Amherst of Hackney, L.	Glenkinglas, L.	Mowbray and Stourton, L.
Ampthill, L.	Gormanston, V.	Moyne, L.
Auckland, L.	Gowrie, E.	Murton of Lindisfarne, L.
Baker, L.	Gray, L.	Newall, L.
Barrington, V.	Greenway, L.	Northchurch, B.
Bellwin, L.	Gridley, L.	Nugent of Guildford, L.
Belstead, L.	Grimston of Westbury, L.	Orkney, E.
Bethell, L.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Orr-Ewing, L.
Boothby, L.		Rawlinson of Ewell, L.
Boyd of Merton, V.	Halsbury, E.	Renton, L.
Boyd-Carpenter, L.	Hampton, L.	Rochdale, V.
Bradford, E.	Hankey, L.	Salisbury, M.
Bridgeman, V.	Hanworth, V.	Sandford, L.
Brougham and Vaux, L.	Harvington, L.	Sandys, L. [Teller.]
Burnham, L.	Hatherton, L.	Savile, L.
Burton, L.	Henley, L.	Selkirk, E.
Buxton of Alsa, L.	Hives, L.	Sempill, Ly.
Caldecote, V.	Home of the Hirsel, L.	Sharples, B.
Chelwood, L.	Hornsby-Smith, B.	Skelmersdale, L.
Cockfield, L.	Hunt of Fawley, L.	Spens, L.
Cottesloe, L.	Killearn, L.	Stamp, L.
Cullen of Ashbourne, L.	Kilmany, L.	Strathcona and Mount Royal, L.
de Clifford, L.	Kilmarnock, L.	Sudeley, L.
De La Warr, E.	Lindsey and Abingdon, E.	Swinfen, L.
De L'Isle, V.	London, B.	Torphichen, L.
Denham, L. [Teller.]	Long, V.	Tranmire, L.
Donegall, M.	Lucas of Chilworth, L.	Trefgarne, L.
Duncan-Sandys, L.	Lyell, L.	Trenchard, V.
Dundee, E.	Mackay of Clashfern, L.	Trumpington, B.
Elliot of Harwood, B.	Macleod of Borve, B.	Vaux of Harrowden, L.
Elton, L.	Mansfield, E.	Vivian, L.
Exeter, M.	Massereene and Ferrard, V.	Wise, L.
Faithfull, B.	Merrivale, L.	Wynford, L.
Ferrers, E.	Mills, V.	Young, B.
Ferrier, L.
NOT-CONTENTS
Allen of Fallowfield, L.	Irving of Dartford, L.	Ponsonby of Shulbrede, L. [Teller.]
Birk, B.	Kaldor, L.
Blease, L.	Kirkhill, L.	Rhodes, L.
Boston of Faversham, L.	Lee of Newton, L.	Ross of Marnock, L.
Brockway, L.	Leonard, L.	Sefton of Garston, L.
Caradon, L.	Llewelyn-Davies, L.	Stewart of Alvechurch, B.
Cledwyn of Penrhos, L.	Llewelyn-Davies of Hastoe, B. [Teller.]	Stewart of Fulham, L.
David, B.		Stone, L.
Davies of Leek, L.	Lovell-Davis, L.	Strabolgi, L.
Donaldson of Kingsbridge, L.	McCarthy, L.	Taylor of Gryfe, L.
Elwyn-Jones, L.	MacLeod of Fuinary, L.	Taylor of Mansfield, L.
Gaitskell, B.	Maelor, L.	Underhill, L.
Glenamara, L.	Milner of Leeds, L.	Wallace of Coslany, L.
Goronwy-Roberts, L.	Morris of Kenwood, L.	Walston, L.
Gregson, L.	Noel-Baker, L.	Wedderburn of Charlton, L.
Hale, L.	Parry, L.	Wells-Pestell, L.
Hatch of Lusby, L.	Peart, L.	Whaddon, L.
Houghton of Sowerby, L.	Phillips, B.	White, B.
Howie of Troon, L.	Pitt of Hampstead, L.	Wynne-Jones, L.

Resolved in the affirmative, and Clause 5 agreed to accordingly.

Clause 6 [Dismissal relating to trade union membership]:

8.54 p.m.

The MARQUESS of SALISBURY moved Amendment No. 38A:

Page 7, line 14, at beginning insert— ("(1) Section 58 of the 1978 Act (dismissal of employee for non-membership of a union to be fair where there is a union membership agreement unless he objects to membership on grounds of religious belief) is hereby repealed.").

The noble Marquess said: In talking to his amendment, it may be to the convenience of the Committee if I include in the discussion Amendments Nos. 38B, 39 and 40. I have consulted my noble friend Lord de L'Isle, who has put down the last two amendments, and he is perfectly agreeable to this course.

In talking about Section 58 of the Employment Protection Act 1978, one is, of course, dealing very largely with the question of the closed shop and it is in an effort to cover this issue that I have drawn Amendment No. 38A as widely as possible. This question is likely to arise in some form or another, as a result of the report of the Commission on Human Rights which has recently been published. I shall say no more about that, because that is to be covered by other speakers later in this discussion, except to say that, presumably, if, when it goes to the court, a decision which runs contrary to the law as set out in Section 58 of the 1978 Act is seen to be correct, then as signatories of the convention Her Majesty's Government will need to move amendments.

Indeed, at this stage the Government are obviously not fully satisfied with that section, because they have decided that in future no closed shop arrangement can be enforced unless 80 per cent. of the work force is in favour. Of course, at the same time, this proposal propounds the view that Her Majesty's Government are in favour of the closed shop. If that is so, one is surely entitled to ask why it applies only to future closed shop proposals, because if it is wrong at any time, it is wrong for previous arrangements as well as for future ones.

I should have thought that any steps that they proposed to take should cover the whole field, so that everyone is treated in a like manner.

There are other aspects of Section 58 which I should like to mention. First, if a member is expelled from a union it would seem that he has, under certain closed shop agreements—not all of them—no prospect of being re-employed. This was, as your Lordships will know, touched on in a secondary form in our discussions on Clause 3 this evening. But it still seems to me to arise under this clause as well, and it is surely unacceptable that someone in a free country should be denied the right to work.

Membership or not of a union will depend, very largely, if there is any dispute, on a decision of the officials of the union. To me, at least, they are in the position of being prosecutor, judge and jury, all at the same time. However fair they may intend to be, it is extremely difficult to envisage that they do not start from some preconceived stance. The appeal procedure has already been touched upon, but I should have thought—and I am making no accusations against anyone—that however fair these members of the tribunal will be, they should not be associated with one side. This, surely, is a fundamental proposition of the laws of this country and should be extended to the tribunals which deal with appeals.

Finally, I should like to touch briefly on the position of the trade unions today, as against the past. I have always thought that there was a need for trade unions, and the last thing I should like to see is anything that makes the operation of their work more difficult. Indeed, their performance over past years shows how well they do their job and how it justifies their existence. However, the question is: how much power do they need to carry out these functions? This seems to me to be the crux of the whole issue of the closed shop. Their function, surely, is to look after the interests of the workforce which they represent, and that should be carried out to the full extent that is required. The question is, how much is required? Clearly this is a matter of opinion on which there will be many differences, but it seems to me that it is necessary to strike a balance between the requirements of the trade unions to carry out their functions properly and the obligations of a democracy to protect the freedom of the individual.

Section 58 of the 1978 Act goes too far towards tipping the balance in favour of the unions. It is weighted heavily on their side at the expense of individuals. Its purpose is to give greater power to the trade unions and to support their power with the full force of the law. In the longer term, there must be a grave danger that the unions will be able to deny work except on their own terms, which may not be acceptable to many individuals. It is for this reason that I raise this issue tonight and beg leave to move the amendment standing in my name.

The DEPUTY CHAIRMAN of COMMITTEES (Lord Nugent of Guild- ford)

Before I put to the Committee Amendment No. 38A, as the noble Marquess has been speaking also to Amendments Nos. 38B, 39 and 40, I should explain that if Amendments Nos. 38A and 38B—Amendment No. 38B in particular—were carried, the subsequent amendments on page 4 could not be moved.

9.2 p.m.

Viscount DE L'ISLE

I hope it will be for the convenience of the Committee if we discuss the amendments mentioned in one debate. I referred at Second Reading to the report of the European Commission on Human Rights which has been published since the debate on Second Reading—in fact, on 5th June. From that report we have some very valuable leads which will assist us in considering the contents of the Employment Bill which is before us, and in particular the clause now under discussion.

In the opinion of the commission, the Government of the United Kingdom violated the rights of the three railwaymen, James, Young and Webster, whose rights were assured to them under Article 11(1) of the convention, because the legal system, for which the commission hold the Government of the United Kingdom responsible, allowed interference with their right to form and to join trade unions. The railwaymen prevailed before the commission, despite the strenuous efforts of the present Government as well as those of their predecessor to have their complaints dismissed.

May I take the liberty of reminding the House that the European Convention on Human Rights has nothing to do with the EEC? The United Kingdom adhered to the convention in 1953, under its membership of the Council of Europe. We are by treaty bound to observe and give effect to decisions of the Court of Human Rights.

A number of Ministers have claimed during debates in both Houses, and elsewhere, that had the present Bill been in force when the three railwaymen were dismissed they would have had an effective remedy which would have barred any application to the commission. I shall seek to persuade your Lordships' House that that is not so.

In reciting Article 11(1); namely, that everyone has the right to freedom of peaceful assembly and the freedom of association, including the right to join and form unions for the protection of his interests, the commission says this: As regards the individual to whom the rights mentioned in Article 11 are guaranteed, these words imply that a worker must be able to choose the union which in his opinion best protects his interests and, if he considers that none of the existing trade unions does so effectively, to form, together with others, a new one". This is certainly one of the points by which we are required to test the Employment Bill: Does it in fact permit a trade union monopoly which the commission, in its report, specifically excludes?

Furthermore, the commission says that Article 11 safeguards the occupational interests of trade union members, depending, as it does, on the qualifying words: "for the protection of its interests". The individual may, they say, form, together with others, a new union. They add, and I quote again from the commission's report: This is particularly important since unions, as these cases show, may have political affiliations. It is not in dispute that the applicants joining the particular union available will have had to sign declarations which they could consider, in fact did consider, to have clear political implications". This, then, is a further test of the Bill before us. Does it allow an individual threatened with dismissal for refusing to join a particular union because its affiliations are contrary to his convictions and opinions—those are the words of the report—a specific method of expressing a conviction and opinion of his own?

The report deals as well with the definition of the word "association" in Article 11(1). It states that the term "association" presupposes, and I quote: a voluntary grouping for a common goal". It states as well that the relationship between workers employed by the same employer cannot be understood as an association in the sense of Article 11 because it depends only on the contractual relationship between employee and employer. The commission therefore rejects the Government's argument. Indeed, it was the argument of both Governments that a finding according to which the applicant's rights under Article 11 were violated would not respect the right of association of those workers who object to working alongside non-unionists.

Lord ELWYN-JONES

I am most grateful to the noble Viscount for giving way. Would he think it helpful to inform the Committee of the powerful dissenting opinion of the British member of the Commission, Mr. Fawcett, which disagrees quite fundamentally with the view, it is true, of the majority on which the noble Viscount has been relying?

Viscount DE L'ISLE

I rely on a majority and I hope the House relies on a majority still. If Mr. Fawcett, the President of the Court, dissents, then the Court will be able to consider his judgment. If, as the noble and learned Lord suggests, I must give equal weight to the minority, I hope that he will do so in the case which I am bringing before the Committee.

Lord WEDDERBURN of CHARLTON

I am grateful to the noble Viscount for giving way in order to save time on the point. Following my noble and learned friend's question, would the noble Viscount also not agree that the Commission decided the case on the facts before it? In paragraph 165 it said that the situation might be different where a worker entered into a contract of employment with an enterprise where a closed shop agreement already existed, in which case it might perhaps be said that he consented to join a specific union when taking up employment. In paragraph 166 the Commission states categorically that according to the Commission's interpretation (and again this is the majority) Article 11 neither prohibits nor allows the system of closed shops in general. They decided a particular case.

Viscount DE L'ISLE

I think it would be convenient for the Committee if the noble Lord would make his speech in turn. I am making my speech on the assumptions that I have given to the Committee and noble Lords must judge. I understand the noble Lord's anxiety, but he must restrain himself until I finish.

Lord WEDDERBURN of CHARLTON

I was asking a question.

Viscount DE L'ISLE

It is courteous for the noble Lord to wait. It was not a question but a statement, and I listened to the end. I resume. The Commission therefore rejected the argument of both Governments that a finding, according to which the applicant's rights under Article 11 were violated, would not respect the right of association of those workers who object to working alongside non-unionists. Thus the argument so often given as a reason for upholding the closed shop in its present form is rejected. This, then, is the third test as to whether the present Bill, as now drafted, conforms with the convention. Does it meet the Commission's definition of an association, including a trade union, as a voluntary grouping for a common goal?

I ask these questions because on several occasions Ministers have spoken of their very different approach to the railwaymen's case from that of the last Government. In the words of the noble Earl, Lord Gowrie, they claim that when the present Bill becomes law we shall be meeting the standards of the convention. I suggest that it is the task of your Lordships' House to see whether the Bill before us in its present form complies with the authoritative opinions of the 15 of the 18 Commissioners of Human Rights who have given long and careful consideration to the railwaymen's case. The Commission's approach surely supports the view that the concept of the will of the majority has no base in the systematic protection of individual human rights. It is the dissenting individual or minority—not the majority—which the convention is designed to protect. I must emphasise that. It is surely the case that the Bill before us continues to permit a trade union monopoly. The right to form an alternative union, which the Commission regards as essential, is not provided for. As the Bill confirms the monopoly powers, particularly to coerce individuals, the Government find themselves in the position of having to include tests of conscience in the definition of "unfair dismissal". Without coercion, no test of conscience would be needed.

Once again, measured by the opinions of the Commission the Government have failed to comply with the convention. Can it be justly claimed that the provision of compensation for unfair dismissal complies with the Government's obligation to guarantee—and the word "guarantee" is used several times—the rights assured to the individual by the convention? In my opinion the answer to that question is clearly, "No". If I promise or guarantee to do something, or not to do so, I cannot claim to have honoured my obligation by offering monetary compensation.

I have tested the Employment Bill and particularly Clause 6 against the opinions of the Commission advanced in their report. With the indulgence of the Committee, I should now like to explain why I believe the terms of this amendment, if accepted, would do something positive to bring the Bill back into line with the convention by removing that element of coercion of the individual which is contrary to the fundamental freedoms protected by the convention.

By omitting the word "genuinely" and "on grounds of conscience or other deeply-held personal conviction" the liberty of an individual to choose whether or not to join a trade union is restored. The amendment does not deal with the matter of compensation, to which I have just stated my objection of principle, but I am seeking to be as practical as I can. To amend the Bill so as to remove this feature would, I believe, be impractical at this stage. But besides restoring a measure of freedom of choice to the individual, my amendment removes what I believe to be the most objectionable feature of the Bill; that is, the investigation under the 1978 Act of a man's conscience or personal convictions. An individual does not have to give any reasons to justify his wish to form or to join a trade union. Why should he be compelled to give reasons, whether deeply held belief or otherwise, to justify his desire not to join a union?

Let me illustrate my point by referring to the House of Commons report of Standing Committee A, which considered the Bill before us. I turn to the Hansard of 28th February last, col. 793. The Minister, Mr. Mayhew, said this: It is in each case a question of fact for the tribunal to determine whether there is a deeply held personal conviction… and he proceeded: If one can show that one has been a member of whatever church it is, that says that no one must be yoked with the ungodly, and that one goes there every Sunday—or every Saturday, or whenever it is—that is probably the highest chance that one has of establishing it". The Minister later said this: On the question of how the tribunals decide the depth of conscience, I entirely take the right honourable gentleman's point—that this involves looking into hearts and minds." [col. 795.] Then he added that he disagreed with the note submitted by the Association of British Chambers of Commerce saying that this is a great departure. He went on: The vast majority of cases under the criminal law involve taking account of what is or was in the heart and mind of someone at a given time—often long ago." [col. 795.] Is it not revealing that a member of an Administration which so often proclaims its devotion to the ideals of a free and open society should see nothing wrong in submitting an employee who does not wish to join a trade union to a procedure identical to that obtaining in the criminal courts? Is it not a striking example of the consequences of abandoning principle and embracing expediency? Finding themselves in toils, rather than retreat, Ministers go blithely on their way downhill, but, my Lords, we have no need to accompany them.

Lord McCARTHY

So far as I understand the amendments that have been moved, they are in fact ruling out any form of union membership agreement at all. The Government's position is that they want to narrow the circumstances in which union membership agreements are lawful. It shall not just be, as it is at the moment, an exception for those who have genuine religious convictions. There should also be exceptions for those who have deeply held personal convictions and there should also be exceptions for those who are existing members. There should also be an ability for individual employees to say that they object to joining particular unions.

The Government, in other words, we shall be arguing subsequently, are making a series of breaches in the principle of the union membership agreement. So that, as we shall be arguing later tonight, for all practical purposes existing union membership agreements can be undermined and future union membership agreements will be virtually impossible to negotiate, because the Government are specifying all kinds of quite impractical demands in terms of votes and the numbers voting and the majorities required. Nevertheless, if you can trace your way through all these gateways, the Government are leaving open a small hole for the union membership agreement. As I understand it, the object of these amendments is to bolt that hole, to close that way through, to say in fact that no form of union membership agreement whatever should be lawful. That is the issue that we have to address ourselves to.

There are many arguments which could be made from this side of the House in favour of union membership agreements. At this time of night I merely wish to put forward two. The first might be said to be the emotional argument—the argument which many practising trade unionists feel and which, in fact, is the basic argument which generates most union membership agreements or, as they would call them, closed shops. I am referring to what has been termed the common obligation argument, the "free ride" argument, the argument by which trade unionists feel that if they are using their own industrial action, their own industrial strength and their own financial resources in order to improve the conditions of their associates at the workplace, there is a common obligation on those people to play their part in this effort—and not simply to play their part by giving money or support, but to play their part actively in the things required in order to improve wages and conditions.

Nothing makes a group of workers turn towards a closed shop and nothing makes a group of workers more concerned over the position of non-unionists than being involved in the kind of industrial relations situation in which trade unionists are on strike and non-unionists are going in to work and at the end of the dispute will expect to receive the benefits of industrial action. That is the common obligation argument. It is deep and long and has been around in trade unionism as long as trade unionism has existed.

It does not exist just in this country. Noble Lords are very fond of telling us what the legal position is in other countries. I say, with great respect, that, whatever the legal position may be in a particular country, if a group of workers are gripped by the forces of the common obligation argument, as printers are in Germany, as miners are in France and as all kinds of industrial workers are in all types and conditions of countries, they will enforce the closed shop. Moreover, whatever the constitution of the country, or indeed the European Convention, may say about it—and it does not say as much as some Members hoped it might say against the closed shop—nevertheless the closed shop will exist because of the deeply felt common obligation argument.

But, in practice—and this brings me to my second argument—the closed shop is not demanded by trade unions simply because workers feel this way. Trade union officials, on the whole, try to limit their demands for the closed shop to circumstances in which union membership agreements are relevant to the strength and position of the union. The fact is that there are many situations in which effective collective bargaining is not possible without the aid of union membership agreements. There are many situations in which problems of recruitment and retention, problems of entry control and problems of discipline are not possible in the trade union movement without the assistance of the union membership agreement.

Therefore we are being asked tonight whether or not we wish, irrespective of all the qualifications which the Government place upon the closed shop, to accept a situation in which there are no conditions whatever in which union membership agreements will be lawful. I say that this will be a foolish and an immoral thing to do and I ask the Committee to oppose it.

9.23 p.m.

Lord HARRIS of HIGH CROSS

May I, from the Cross-Benches, support the amendments in the name of the noble Marquess, Lord Salisbury, and the noble and gallant Viscount, Lord De L'Isle. As I understand it, the purpose of these amendments is to unlock the padlock on the door of the closed shop. The fact that the door will not immediately fly open in every case does not deter me from advancing these amendments, because the door would at least cease to be barred and bolted against the freedom of the individual.

I believe that there must be simpler or more effective ways of devising amendments that would accomplish the intention that I think is widely shared in all parts of the House. I suspect that that in the end will be a matter for lawyers to dispute, and after listening to the proceedings of this Committee for two days I am not too hopeful that our lawyers will reach a unanimous agreement. But thankfully the merits of ending a closed shop do not rely upon legal pleading—I shall not say "special pleading"—at which the noble Lord, Lord Wedderburn, has proved himself such a formidable past and, I say alas! present master. For however narrowly one tries to interpret the Convention on Human Rights and Fundamental Freedoms as advanced by my co-sponsor of the amendment, it surely must be repugnant to people of broad liberal sympathies to deny the individual a right to work because he declares a simple, unqualified objection to belonging to a trade union. That seems to me to be a proposition of such fundamental priority that it should be displaced only on the most exceptional grounds of public interest, like compulsory national service in time of war. It is certainly not sufficient to argue that the closed shop may be convenient for the conduct of union business in the way that the noble Lord, Lord McCarthy, has said this evening.

Against this towering principle of the individual's right to join or not to join an organisation, we have a variety of special pleading, and the noble Lord, Lord McCarthy, has touched upon two grounds. The first is the plausible, but often phantom, argument of the free rider; the argument that because all benefit from the activities of the union, all should be made to contribute to the costs of the union. Even if it were true that all members benefited, there would be no compulsion that you should require membership of the union. There are a great many organisations that confer benefits very widely among the general public without supposing that they have the right to impose membership and contribution. I dare say that noble Lords on both sides of the Committee might believe that membership of their party was beneficial to the entire nation. None of them would dream of supposing that he should conscript members and make them pay for these benefits. It would be absurd to say that someone must join this or that party unless he "genuinely objects on grounds of conscience or other deeply-held personal convictions".

There are a large number of voluntary organisations that scatter benefits generously around the community. There are organisations like the Automobile Association, which in a hundred ways may benefit all motorists and many others without supposing that it has a right to compel all owners of motor cars to belong to it. There are more mundane organisations, like the Royal Society for the Prevention of Cruelty to Animals, the National Society for the Prevention of Cruelty to Children, and others for various other deserving causes. There are tenants' associations and churches that would claim, and whose members would believe, that they benefit others, and yet would not dream of trying to impose their charges on non-joiners.

However, in my view the truth is that workers do not necessarily get a free ride from trade unions. There is an increasing understanding that unions can seriously damage your wealth. In an ORC poll reported in The Times in January this year 84 per cent. of the population thought that trade unions are: to blame for the country's problems of low productivity". A total of 84 per cent. of the general public supported that proposition. When one singles out trade union members only, I admit that the number falls—as they know about it from their own experience. Only 74 per cent. of trade union members agreed that trade unions are to blame for the country's problems of low productivity! It simply is not true that trade unions invariably provide a free ride to perpetual prosperity and higher living standards. Rather, they often enforce a march towards relative impoverishment through restrictive practices or even to premature unemployment through unrealistic wage claims.

In my view one can see the results of trade union closed shops in the decline of the London Docks, in the tragic decline of the great British shipbuilding industry, in printing and in other industries that are part of the Labour Party's story of "de-industrialisation". Trade union obstructions to manning and demarcation have often, it is true, brought short-term gains for their members but at the expense of long-term prosperity on which their jobs depend.

Then we have the argument that the bosses want the closed shop. I agree there with the noble Baroness, Lady Seear, who at the Second Reading said that when the bosses and the trade unions gang up together the rest of us should beware. It is true that the CBI was at one time ambivalent on this matter, but more recently, I think at the end of last year, it voted at its conference against the closed shop. Some of the bosses say in public that they support a closed shop, but they do that often because they prefer to gain a quiet life by saying that kind of thing.

The proof that companies can flourish, and their workers flourish along with them, in the absence of a closed shop is demonstrated by the fact that many of our outstanding companies do not have closed shops, or indeed any burden from the trade unions. There are remarkable companies like IBM, Beecham, Black and Decker and many others that have no trade union negotiations and yet whose members, in matters of living standards and conditions of work, are certainly well ahead of the field.

Above all, there is the evidence from other countries. The noble Lord, Lord McCarthy, says you cannot operate these industries, or firms, without union membership agreements. I have to keep on telling him—because I think he does not like it—that from other countries we see evidence that large industries and companies can be operated without closed shops and indeed with quite modest union membership. The noble Lord, Lord Wedderburn, said, I thought rather artfully, on Second Reading that we could always learn from other countries but we should not import their methods—we should not import their methods except when it happens to suit, say, the Bullock Committee. Germany shows a picture of a wide spread of union membership in its leading industries ranging, it is true, from 90 per cent., at the top in the mining industry right down to 10, 20 and 30 per cent. in many other industries.

Another argument used here is that trade union leaders want the closed shop. We still hear that argument, but there was a time when an earlier generation of trade union leaders abominated the closed shop. If challenged, I have a number of impressive quotations from earlier generations of trade union leaders who were anxious to dissociate themselves altogether from any suggestion that a closed shop was part of the great tradition of the British trade union movement.

If we can now prevent union leaders dragooning members into closed shops, then it seems to me that we shall make it more necessary for union leaders to be responsive to their rank and file and not to rely upon conscript armies. From the economic viewpoint the most objectionable feature of closed shops is that they are always, everywhere the instruments of monopoly, and they are of course periodically the instruments of tyranny as well. So I would argue that the closed shop is a disfigurement of a free society. It would not be justified by its theoretical utility, and it is doubly damned by its practical inutility.

9.34 p.m.

Lord ROCHESTER

I think perhaps it is the turn of someone from these Benches. I should like to make plain at the start in the plainest possible terms that I and my noble friends detest the illiberal philosophy underlying the imposition of the closed shop in its most pitiless form. I assure the noble Marquess, and the noble and gallant Viscount, Lord De L'Isle, that they could not feel more strongly on this than I do. I recall the seething anger I felt against the tyranny of those responsible in 1976 for the dismissal of people who had been faithful employees of British Rail for many years. The question of the closed shop, as I see it, is indeed a matter of conscience, and in what I say I shall speak only for myself; my noble friends are quite capable of expressing their own opinions if they wish.

It seems to me that the main point in all this is how best to move at this stage in the real world of industry towards a more open industrial society in the interests of improved human relations and performance. I am convinced that this is not to be achieved by confronting the closed shop head on, and as I speak I am recalling cases I have actually had to deal with at the sharp end on the ground. Although I say it, who should not, such situations call, in my experience, for qualities in management of judgment and coolness under fire, and they are not best handled by issuing ultimatums or taking precipitate disciplinary action.

Similarly, in my view, it will not help in the political field to take legislative action that goes a step further or faster now than is acceptable to the general body of trade unionists. It may be deplorable, but in 1971 the attempt to outlaw the closed shop did not work in practice; it went underground. I am satisfied from first-hand experience that if the Bill is altered in some of the ways suggested in these amendments, it will do so again with effects—because they will be hidden from view—that might result in even more illiberal and arbitrary practices than those that now obtain.

What is the point of passing laws that cannot be enforced? Even if they could be, I assure the Committee that that would not solve the problems of human relations in industry. I believe that progress in that field, apart from improved communication and consultation, is more likely to be made not through the law but through the operation of codes of practice, of which one is promised by the Secretary of State to cover the question of the closed shop.

In particular, it could, I believe, deal better than law with the question which is to be raised in a later amendment to which we shall come, of how best to review the level of support for existing closed shops. It does not seem to me, I say with respect to the noble and gallant Viscount, that the finding last week of the European Commission of Human Rights affects the present situation in this country, deeply though I continue to feel for the men involved in the British Rail case. Depending on the conclusion that the European Court may later reach, a different situation could arise which might call for further action on the part of the Government. Indeed, I see this as an additional reason for not taking action now because, if we wait, it may, by the time action is opportune, be the case that that action will have more widespread support and thus be more generally accepted than it would be if it were taken now.

For my part, I could not vote for the amendments that are before us, and for me it is just as much a matter of principle that I should not vote for them as it may be for others to do the opposite. In this matter I cannot be untrue to my industrial knowledge and experience. Should these amendments be pressed to a Division, my noble friends will of course determine for themselves how they should vote, if indeed they decide to vote at all.

9.40 p.m.

Lord DAVIES of LEEK

I have listened with care to the debate and I am grateful for the speech made a few moments ago by the noble Lord. This Chamber is supposed to have a modicum of wisdom, as has been proved at various times in our history; but this clause, if it is completely understood, is nothing more nor less than crude union bashing. I do not mind the shaking of heads, but let us see what we have done. Does this—

Earl De La WARR

Will the noble Lord allow me to intervene for one moment? Which amendment is he talking about?

Lord DAVIES of LEEK

I am talking about the amendment of the noble Marquess, Lord Salisbury, and the other two can come in quite logically. The amendment says—

The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone)

I think that the confusion arose from the fact that inadvertently the noble Lord referred to the "clause" rather than the amendment. I think it was a slip of the tongue, and I believe that that was where the difference of opinion arose.

Lord DAVIES of LEEK

I am referring to the amendment, but it has an effect on the clause. The amendment asks your Lordships to look at Section 58 of the 1978 Act; and we shall take the time to do that. The amendment put down by the noble Marquess reads: Page 7, line 14, at beginning insert— '(1) Section 58 of the 1978 Act '"— I shall leave out what appears in parenthesis— 'is hereby repealed'". That is what it says. The amendment proposes that the entire Section 58 of the Employment Protection (Consolidation) Act 1978 should be repealed. Am I incorrect? No, I am not.

Noble Lords sometimes rush in where angels fear to tread because they know nothing about industrial relations. What have we done up until now? First, we have already taken away the maternity "job back" rights of women working in small firms. We have changed the unfair dismissal laws to exempt new firms with fewer than 20 workers for the first two years of trading. We have limited the employers' obligation to provide guaranteed pay, and we have repealed all or part of Schedule 2 to the Employment Protection Act. We have done nothing but bash the trade unions all along the line—in the hope of what?

I now come to the foolishness of all of this, as quoted (in a way) during the Committee stage in another place, where reference was made to what a Conservative Member said in a letter to The Times: I believe you overestimate the effectiveness of law in curbing trade union power"— human relations are much more important than is law in this area— Do you suppose, for example, that the removal of legal immunity from all secondary action or the recourse to trade union funds in damages would provide anything other than a militants' charter?… Do you suppose that the imposition by statute of a requirement for secret ballots in key internal decisions would be the best way to encourage the trade union rank and file to demand such procedures from their leaders?… Surely our experience with the ill-fated 1971 Industrial Relations Act leads us to believe differently. Of course it does.

It is completely wrong to believe that the application of the law will make a tidy job of the legislation that noble Lords are at the moment trying to push through this Chamber. I say with all due respect to Members on the other side of the Committee that they have not read Section 58 of the Employment Protection Act, or they are not bothering to read it, and that therefore they do not understand the implications of the amendment of the noble Marquess. I do not want to delay the Committee—and on the other side of the Chamber there is an intelligent audience who know what they are doing for their own voters. All I am saying is, "Study Section 58". The noble Earl, Lord Gowrie, is a first-class Minister—of course he is—and I believe that in his heart he knows that this amendment is sheer bunkum.

Lord GISBOROUGH

I find this clause extremely complicated and very difficult to understand, and I have a suspicion that I am not the only one. The wording is difficult enough without all the references to the 1978 Act; and I should like to start by asking the Minister whether it might be considered possible that at Report stage there might be a consolidating section to put them both together, because it may be intelligible to lawyers but it is unlikely to be intelligible as it is to the layman.

The incidence of closed shops has increased dramatically during the last few years. At the same time, the intolerance of union members to non-unionists in those closed shops has also increased. In fact, I think the figures given in one of the reports show that in 1964 there were 3.7 million workers involved in closed shops, whereas in 1979 it had gone up to 5 million. The noble Lord, Lord McCarthy, made a point about free-riders and those people who are not members of unions not striking and causing dissent from the union people who are striking. But I think that in many of the strikes none of the unionists or the non-unionists in fact want to strike, but very often they are led by a very small minority of people who have them by the neck.

The protection of the non-union minorities and consideration for their freedom of choice as to whether or not they join a union has therefore become increasingly important. I should accordingly like to support this amendment in its effort to further widen the protection of those who do not want to join a union, and to protect them in their jobs. There can be imagined many perfectly valid reasons why a man may not wish to become a member of a union other than on religious grounds. For example, the political motivation of the union may be anathema to him and to his own political views, and this has become an increasingly likely occurrence. He may disapprove of the conduct of a union or the objects for which a union is pressing. As the Bill stands he will have to attend an inquisition to determine the strength of his conscience, which is an unheard-of procedure. I think there is a great deal behind the amendment, and I think it deserves serious consideration.

The Earl of HALSBURY

In rising to support the amendment moved by the noble Marquess, Lord Salisbury, if he chooses to stick to it, failing which the amendment of the noble and gallant Viscount, Lord De L'Isle, and Lord Harris of High Cross, I should like to begin by reading a sentence from a leading article in the Standard. By "the Standard", I do not mean the Evening Standard of today but the old Standard newspaper, the High Tory organ of 140 years ago, of which my great-grandfather was editor. The occasion of this leading article which he wrote was the passage of Lord Ashley's second Factory Bill, the first Factory Act, the first having been defeated. It said: …had not the mill-owners of Leeds excluded Mr. Sadler from the last Parliament, Lord Ashley's Bill would have been carried and a year of unspeakable misery to the factory children, a year of indelible infamy to the name of England, been obviated". That sentence voiced the conscience of the nation, in this context expressed by the High Tories of that time. I have always been pleased that the head of my family in those days was fighting so manifestly on the right side, among the leaders who carried on the fight and won, and I have always regarded that connection as my passport to friendship with the unions, who have carried on the battle since. Hungry Time has made a glutton's meal of the affiliations and party names of those days. The High Tories have gone with the wind and their names will mean nothing now. The Liberals and the Whigs and so on have been transformed; and I am going to deal, with all the time that is allowed me, with the transformation in trade union practice. If I am critical, I do no more than follow the path trodden by the noble Lord, Lord Houghton of Sowerby, last week in a remarkable speech which earned him the commendations of every side of the House since nobody would suppose him to be an unfriendly critic—and no more than I.

The founding fathers of Marxism predicted that capitalist society would undergo a phase change due to the contradictions that it generated and would thereby become transformed, in a revolutionary manner, into a socialist society. To account for why this did not appear to be happening, Lenin postulated an intermediate phase change through an intermediate structure characterised by what he called monopoly imperialist capitalism which would eventually lead to the delayed revolution. This he proved by arguments based on the very best dialectical materialism.

Apart from a few card-carrying comrades who gather round the party pole on May Day chanting, Lenin is icumin in Loudly sing OGPU"— or words to that effect, I do not think that anyone now takes dialectical materialism as seriously as they did when I was young and when Harold Laski and J. B. S. Haldane were putting it forward as a universal metaphysic for science. But there is a striking parallel between Lenin's prediction and certain characteristics that have developed within the trade union movement. They have embarked upon empire building; they have been fighting battles with one another; and we had two of them falling to fisticuffs only a fortnight ago; and they have embarked upon monopoly practices. The less this parallel owes to theoretical Marxism and the more it expresses the common failings of our common human nature, the less excuse we have for humbug in finding fault with our neighbour instead of with ourselves.

I would ask your Lordships to follow a conversation I had with an old friend and colleague a few days ago at a lunch which the directors of a big company give to their old boys, their old directors. He was at one time the personnel director and deputy chairman of a company notable for having as good labour relations as the law allowed it to have. I asked him: "As between old boys, what do you think of the latest in Employment Bills?" He replied: "The usual Tory wish-wash! They never have understood and they never will." "But the closed shop," I asked. "Surely we must do something about the equity involved in that!" "You know very well," he answered, "that I like the closed shop. It enables me to do my job. I know where I am." I said: "But surely you can't justify removing a man's employment for that reason. It is contrary to any idea of freedom that I ever had." "Confound your ideas on freedom," he said. "You're a born trouble maker. I don't want you on my payroll." He continued:" I like the closed shop for the same reason that I like Clive Jenkins. He is a disciplinarian and so am I. If I do a deal with him, it sticks."

Underneath that good-natured chaff between two old boys in retirement, there lies a reality: two monopolistic bureaucracies in their local swimming pool doing a deal with one another at the expense of the individual. And it is all quite unnecessary. The unions got along very well for a hundred years without any closed shop at all. Other nations get along, as the noble Lord, Lord Harris, has told us, without it. It does not mark the triumph of the trade union movement; it marks the decadence of the trade union movement. As a good friend of them, I am trying to persuade their representatives in this House to see that and to believe that if only they would get rid of it, it would be the best thing that could happen to them. In Germany, they have a structure recommended to them by the trade union movement of this country—which cannot impose it upon themselves because of all the squabbles that are going on. The German structure manages this vexed question of differentials in a way that they alone can do and manages it in a way better than we do. That is the constructive work that the unions ought to embark upon.

The noble Lord, Lord Houghton of Sowerby, in that remarkable speech that I referred to last week, believed that we ought to leave the unions alone to find their way home by their own efforts. They have been left alone to find their way home by their own efforts for rather a long time now and they have not found it. We are not playing at Finnegan's Wake, where a bottle booze will be sufficient to revivify the corpse for an allsinging, dancing act. The new monopoly phase will not go away to oblige us. It needs a push. When I reflect upon these things, I remember the admonition of the Almighty to Mephistopheles in the Prologue to Goethe's Faust: Initiative too lightly goes to sleep, And life becomes an after-luncheon snooze. Therefore I grant man freely, win or lose, Companion devils to prod, to tempt to each creative leap". It is that kind of a companion devil to the trade union movement that I am trying to be tonight. I admit that I am using the stick of vexation to the rump of complacency but it is time that stick was used. The closed shop has served us ill. Germany, France, Italy and the USA all get along better than we do without it. It is time to be done with it and to kick it away and kick the movement from today into tomorrow, squawking and bawling like a new-born babe, no doubt, but at least inhaling the breath of life into its lungs and ready to confront the future rather than funk it. In that spirit, I believe that the amendment of the noble Marquess is the kindest thing that the trade union movement can have.

Several noble Lords: Order!

Lord PEART

May I intervene here? No doubt the noble Earl who has just spoken has been listened to but that was a Second Reading speech. This is against all the traditions of both Houses. I hope that noble Lords opposite will approve of what I have said.

The EARL of HALSBURY

On every Question, That the clause shall stand part in both the Heath and Carr Bill and every other Bill since—

Several noble Lords: This is not "Clause stand part".

The EARL of HALSBURY

The party of opposition has read— Several noble Lords: Order!

The LORD CHANCELLOR

It is not for me to intervene but I think we are discussing three particular amendments and although the eloquence has been splendid, I think that we have strayed a little.

9.58 p.m.

Lord WEDDERBURN of CHARLTON

There are two things to be said on this amendment and I address myself to them strictly. First, when I hear noble Lords speak of workers being illiberal in trade unions I note that they forget that the worker acquires his freedom from organisation and the worker who sells his labour is weak. The worker who organises begins to acquire freedom. The reason that this amendment and those like it are so misguided is that they do not understand that because of the need for organisation there therefore arises a conflict of rights and claims at work which can be put in a single sentence: the claim of the worker who says, "I want to work without joining in".

When the noble Lord, Lord Harris, speaks about special pleading, I shall listen to his pleading more clearly when he tells me about a worker's right to have a job; but the worker's right to say, "I want to have a right not to join in", and the individual people who are members of trade unions—squawked about as though they were tyrannous mobs—who say, "I want to work with those who join the common obligation"—

Several noble Lords: Second Reading speech!

Lord WEDDERBURN of CHARLTON

The noble Lord, Lord Rochester, is surely right, it is a matter of judgment to draw a line between those two claims that logically cannot be distinguished one from the other as a priority. As a matter of judgment, it is a debate between the Government and the Bill it is amending. That I understand. But the ideas put forward in this House, which would in effect take away workers' rights to organise, belong to the last century.

10 p.m.

Viscount CALDECOTE

The closed shop is clearly a very emotive issue. I must make it clear from the start that I dislike it intensely. I do not accept a word of what other noble Lords have suggested: that employers want the closed shop in order to have a quiet life. I do not accept that it gives them a quiet life; and if it did, I would not want it because I think it offends against a fundamental principle. I will not follow the noble Viscount, Lord De L'Isle, on the legal issues of the European Commission on Human Rights. I speak from a purely practical point of view—the point of view of one who has worked in industry and has participated in taking decisions on these exceedingly difficult issues.

We have to accept facts as they are and not as we would like them to be. The first fact is that when the Government of noble Lords opposite was in power they greatly encouraged the closed shop, and strengthened the power of the trade unions to have a closed shop when many of their members did not want one, to the great detriment of industry and to the great detriment of the rights of the individual.

The second fact is that the closed shop exists in industry today, however much we may object to it; and some noble Lords opposite may like to consider whether, if we have closed shops, we should not also have "open shops" where by law those who work in them could say that they want no trade unionists among them. But that is another issue. We have to deal with the situation as it is, and in my view it is impracticable and unwise at present to ban the closed shop, though of course it is perfectly possible in theory. However, we must make the establishment of the closed shop more difficult. We must protect the right of individuals who are working in a normal shop where there is no union membership agreement. We must protect the rights of those who have worked there, not being trade unionists, for many years.

I accept that many noble Lords think we should stand on a matter of principle and should fight to maintain the principle of individual human rights, whatever that may cost. I would just remind those noble Lords of the principle successfully followed by the late Field-Marshal Lord Montgomery. He would never attack unless he was 80 per cent. sure of success. A vital principle of this Bill is that its provisions are workable and enforceable, and I believe that is one of the important facts we should take into account when considering these amendments.

Clause 6, as drafted, accords with those principles, as I see it. It is sensible; it deals with the principle of making the closed shop more difficult to establish. Indeed, the noble Lord, Lord McCarthy, said a few minutes ago that it would make the establishment of new closed shops virtually impossible. That is a very good thing. It does not, on the other hand, outlaw the closed shop, which I believe would be totally impracticable in present circumstances. Therefore, in my view, it achieves the optimum balance between idealism and the practical facts of life as we know them in industry today. I therefore oppose these amendments.

10.4 p.m.

The Earl of GOWRIE

Some of your Lordships may feel, after listening to this important debate, that I am caught between the devil and the deep blue sea with these amendments concerning the closed shop. I want to make it quite clear that I prefer the deep blue sea; and I listened to my noble friends Lord De L'Isle and Lord Salisbury with considerable sympathy. Like them, like the noble Lord, Lord Harris of High Cross, and like my noble friend Lord Caldecote, in a forceful and brief speech just now, the Government dislike and disapprove of the closed shop and very much regret that our history has seen to it that it has become so institutionalised and so deep-rooted in our industrial society.

Like my noble friends, we are committed to reform—in our case, and at this particular time, to reform the situation with respect to basic individual human rights in the context of this closed shop which the Labour Government withdrew. This, as my noble friend Lord De L'Isle quite clearly demonstrated, in the view of the Commission on Human Rights, has put this country in breach of the European Convention, and towards the end of my remarks I will return to that point.

I must say at this point that I listened to the speeches of noble Lords opposite, particularly those by the noble Lord, Lord McCarthy, and the noble Lord, Lord Wedderburn, with the deepest pessimism. It is astonishing, and it surely bodes ill for human rights in this country, that there should still be that lack of understanding of the essential distastefulness of the closed shop—what the noble Lord, Lord Harris of High Cross, called its disfigurement of our society. If that kind of lack of understanding gets hold of the Labour Party again it bodes ill for us all, but I suspect that the major unions will tell the Official Opposition to drop their objections to our reforms before election time comes round again.

A noble Lord: Nonsense!

The Earl of GOWRIE

Noble Lords opposite emphasised the industrial relations aspect of closed shops rather than the effects on individual rights. In our view, that really is not good enough. What pressing industrial relations cause was furthered when in 1976 British Rail sacked some 40 or so of its employees, many of whom had years of loyal service? If most union agreements provide for conscientious objections why should the law not expect that all agreements make such provision? Our view is that noble Lords opposite seem content to acquiesce in and even applaud deficiencies in the law and therefore in the rights of individuals. We refuse to do so and that is why we are proposing the changes in this Bill.

We have a clear mandate for our reforms, not only in terms of the last general election—though that, of course, is the most important authority—but in terms of every kind of survey of popular opinion, both inside and outside the trade union movement. I myself by nature am sceptical of opinion polls and surveys. So much depends on when they are taken and on the rhetoric of the questions that are asked and the forms in which they are put. I prefer Governments to outline a programme and campaign upon it, put it into effect as nearly as they can and then await the electorate's overall judgment at the next election.

Be that as it may, there is clear evidence that the union movement itself is far from being insensitive at present to public unease and the unease of members of unions at closed shop abuses and the deep resentment that these occasion. The joint statement issued by the TUC and the Labour Government last year admitted that there were aspects of the closed shop principle that caused concern. The movement is surely right to be worried and that is why I said at Second Reading that there is much tacit as well as overt support for these reforms. It is the reputation and efficacy of the movement itself which suffers when virtually every right not to join a trade union is removed from individuals when a closed shop is set up in a firm.

What I am saying is that there is a clear consensus and a clear mandate for reform. Why, then, not go further and abolish the closed shop; that is to say, why not make illegal agreements between unions and management on the issue of who works in a given place of work? Your Lordships should make no mistake about it. That is the logical end and aim of noble Lords opposite and those who support them outside. That is the essence of the difference which we regret exists between us. We both dislike this institution, my noble friends are saying to me: it may be unconstitutional, they are saying—at least unconstitutional in respect of a signed undertaking and international agreement; you, the Government, they are saying, have a large parliamentary majority and four years before you need seek re-election and you can therefore get rid of this problem at a stroke with a relatively simple amendment to the law.

If only the law in a free society could move like a kind of Pentacostal spirit through the land, spreading sweetness and light as it goes. We could legislate away inflation, or, at least, the ill-effects of wage inflation upon levels of employment. We could legislate away strikes, and also injustice and oppression, or shortages or waste. Most useful of all in the context of our society, we could legislate away the number of trade unions. We could take 112 major trade unions and reduce them to 12. Think what that would mean for the kind of productivity that the noble Lord, Lord Harris, mentioned. But all that is, I am afraid, a matter for the Government of what the Americans call "Rock Candy Mountain".

Our view is that the law can and should protect individuals from harm, and that the law can and should deter individuals from causing harm, wherever humanly possible. But the law is less effective—and we have to admit it—as an instrument governing collective endeavours, although subtly framed and applied it can help these. It is also a cultural, as well as an ethical, phenomenon—here I am perhaps getting on to the Second Reading area of the noble Earl, Lord Halsbury—and it has to take into account the history and development of the people it serves.

With great respect to him, does a radical thinker, like the noble Lord, Lord Harris, take historical consciousness into account? I have to, but then I am Irish. If we abolish the closed shop in theory, the practice of the closed shop will go on. There is no law on earth in a free society that can compel people to work beside those they do not choose to work beside. What the law can do, what the present law does not do—and I may at this point dampen a little the enthusiasm of noble Lords opposite—and what the law will do under this Bill is to provide that those who suffer as a result of one form of free association are themselves made free to seek redress and remedies for that suffering.

We do no service to such victims if we do not face—to use the phrase of my noble friend Lord Caldecote—the facts of British industrial life. We must not let our libertarian response to the closed shop as an objectionable practice dictate our legislative response, to the extent that the very individuals suffer whose rights it is vital for us to protect. That is what will happen if this Bill does not go through. That is also what will happen if, as happened between 1971 and 1974, the closed shop goes underground.

Research has shown that by persuasion, by the techniques of the recruitment interview, by induction or by a variety of other methods, managers set out to frustrate the intention of the 1971 law and largely succeeded. So we are determined to frame the law in such a way as to face the realities of this experience and create practical safeguards against the abuse of the closed shop. That is what the Bill does. It is what it sets out to do. It is what we ourselves set out to do before and during the general election. We presented our proposals for change in a detailed passage of our manifesto last year. The policy proposed then is the policy embodied in this Bill.

It is quite wrong to suggest, as one or two articles and, I should say, a rich crop of cartoons in the press have suggested, that we are in some way failing in our manifesto commitment. I must say that it is one thing for some of your Lordships, with a rich fund of industrial experience, to criticise us on the closed shop. It is quite another thing for some sectors of the press to do so, who have a record of appeasement on this issue which makes Mr. Chamberlain's umbrella look like Goliath's club.

By contrast with this carping, we are doing what we set out to do. We are providing new rights for those individuals arbitrarily excluded or expelled from a trade union. We are giving rights of compensation to existing employees and to those with personal convictions against union membership, who might lose their jobs as a result of the closed shop, and the sums involved here can reach over £16,000 at present. The employer must pay this sum, but he may join the union for his own financial redress.

We are providing for secret ballots for new closed shops, and later this year we shall be providing, through the code of practice on the closed shop which the noble Lord, Lord Rochester, commended and upon which we have to consult widely, further advice and guidance on good practice. Surely that is the right mixture of the voluntary principles, which are inevitable when you are dealing with anything involving 5 million people, and the statutory absolutes that you need to protect the solitary individual person. That is not pussyfooting but a coherent philosophy of good government.

We are all aware that British industrial relations have features which can only be understood in terms of our peculiar history, and we do not need an academic even of the undoubted distinction of the noble Lord, Lord Wedderburn of Charlton, to tell us that. In particular, the structure and the number of British unions generate huge problems. This weakens attempts by some people to get unions to operate in concert and to respond collectively to initiatives from employers or Governments.

As I have said, the multiplicity of our unions fragments our collective bargaining and generates restrictive practices. It denies to us the tripartism which some of our overseas competitors have found so mutually productive. These problems are recognised by the sensible and moderate union leaders and by employers who have to live with these kinds of deficiencies. In showing, ourselves, a proper concern for individual rights, we should not lose sight of this aspect of the problem in any solution which we propose. We do not wish to undermine present efforts to rationalise union structures or to create new industrial relations problems for employers. That is the answer to the point which the noble Lord made—taking up a witty sentence from the noble Baroness at Second Reading, although she should have known better, I dare to say—that one must be suspicious of collusion between employers and unions.

Finally, my noble and gallant friend has referred to the report of the Commission on Human Rights on the British Rail case which was published last week. Other speakers in the debate have also wondered whether, in the light of the report or, indeed, any future court decision on that case, this Bill goes far enough. I cannot speculate about future and hypothetical events but, as to the report itself, our contention is that the Bill does meet the point raised in the case. The applicants in this case were existing employees who were required by the British Rail closed shop agreement in 1976 to join a union or to be sacked. The Bill, in Clause 6(2), provides a new protection for just such employees and just such situations. The relevant part of the clause is the new subsection (3)(b) to Section 58 of the 1978 Act, dealt with in lines 26 to 36 on page 7 of the Bill. While I acknowledge the nuisance in Bills of having to refer to previous legislation, I must tell my noble friend Lord Gis- borough that it should not tax a man of his ability to carry two pieces of paper at the same time.

This provision, I should stress—because there has been some confused comment on the case—is additional to protections given where an employee has genuine conscientious objections to union membership or where a new closed shop is introduced, after the Bill is enacted, without the requisite ballot support. My noble friend Lord Orr-Ewing, whose persuasive tones on the "Today" programme of the BBC woke me at 6.45 this morning, seemed to imply that conscientious objection is not catered for. But it is. It is for all these reasons that the Government are confident that the Bill meets the point raised in the case.

Clause 6, amendments to which we are discussing, amends the unfair dismissal law, and the remedies it offers a person unfairly dismissed are those provided by that law. Normally, this is compensation. The common law and, since 1971, statute law as well, has always recognised that compensation has to be the ultimate remedy. The law has never sought to force employers to take somebody back, any more than it forces attempts to make one person work for another. For any breach of contracts or statutory rights, the only practicable remedy in such cases is compensation, because in a democracy unwilling partners cannot be forced to work together. In its report on the British Rail case the commission did not rule that compensation was an inadequate remedy. The fault with this case, it said, lay in the terms of the 1976 Act—the Act of the noble Lords opposite—which made the dismissal of the applicants fair. The fault therefore was not in the remedy of compensation, and in fact the commission found in this case that there had been no violation of Article 13 which deals specifically with the question of remedies.

In rehearsing the Government's position on this case, I hope I shall not be accused of smugness, as one newspaper described our attitude last week. No one can take any satisfaction from the treatment that these unfortunate individuals have suffered. On our side we have always been sympathetic towards them and we can demonstrate this by the fact that we have had their specific case very much in mind when drafting the Bill. No one therefore should be surprised if, as a result, we feel confident that we have met the point raised by the case.

With great respect to my noble and gallant friend, he is wholly wrong when he says that the present Government made strenuous efforts—and I quote him— to have the railwaymen's appeal to the commission dismissed". It was quite the reverse. As I said, we designed the Bill to meet their case and believe that we have done so. Nothing in industrial relations, indeed nothing in the whole field of law itself, is static and if it proves that we are wrong we can take remedial action. The noble Lord, Lord Rochester, made that point, but at present we do not think that we are wrong.

As I said earlier, we dislike the closed shop and we are determined to protect basic individual rights in this context. No responsible Government can deceive themselves in the face of experience that the closed shop, covering as it does over a fifth of the working population of this country, can simply be legislated out of existence. As my noble friend Lord Caldecote said, we have to deal with the real industrial situation and the practical realities of protecting individual rights against abuse. That is what we promised the electorate and that is what we are determined to do. I hope that, in the light of what I have most earnestly said, and said with the greatest consideration over many days, my noble friends will not seek to press their amendment.

Lord RENTON

I am sure that the whole of your Lordships' Committee have listened with admiration to the candid statement made by my noble friend Lord Gowrie. I took particular note—because before he spoke I was hoping briefly to address your Lordships on the matter—of what he said about the effect of the opinion so far expressed by the European Commission on Human Rights. But there was one very important point which was brought out in that opinion with which he has not dealt and I should be grateful if he would do so. In giving the reasons for their decision the commission said that no man should be forced to join or to remain in a union whose political affiliations he does not accept. That was really the crux of the case. They accepted as a fact of life, as so many noble Lords have done, the fact of the closed shop, but they said that the question of political affiliations had to be considered. It so happens that some 11 million trade unionists are affiliated to the Labour Party.

May I put my question to my noble friend? It is this: in referring to other deeply held personal convictions as a ground for objection to being a member of any trade union whatsoever, or of a politically affiliated trade union, is the fact of political affiliation something which the tribunal is going to acknowledge or is that not contemplated in that phrase?

The Earl of GOWRIE

My noble friend Lord Renton said that 11 million unionists were affiliated to the Labour Party. They may be affiliated to it but it is questionable whether they always vote for it. On the question of whether that would be in contradiction of the European Convention, I think not. What we are dealing with here is what happens to people who are unreasonably or unfairly excluded, and our aim in this Bill is to give people redress and protection when their human rights in that way are violated. My reading of trade union rule books, which I have done—though I acknowledge that I am in no sense the expert the noble Lord, Lord McCarthy, is in this area—is that most of them are prefaced be general statements of intent and general aims, very often politically expressed, and with which many of their members would, either all the time or from time to time, in my submission, disagree. But that would not, in my view, constitute a violation of their rights, unless they were unreasonably excluded or expelled as a result of not subscribing to them.

Lord MONSON

May I put one very brief point to the noble Earl? He said that there was no law in a free society that compelled people to work alongside those they do not want to work with. Does not the most recent Race Relations Act do precisely that?

The Earl of GOWRIE

No.

The Marquess of SALISBURY

I think everyone has had their say and it remains for me to wind up. The noble Lord, Lord Davies, asked whether we had all read Section 58. Well, of course it deals purely with unfair dismissal, and the closed shop on which so much of our discussion is centred comes under that heading.

The LORD CHANCELLOR

I think my noble friend would be wise if he read the section himself and realised that his real object in his amendment—I do not want to be pedantic—is to repeal subsection (3) of that section.

The Marquess of SALISBURY

I am grateful to the noble and learned Lord. The noble Lord, Lord Rochester, supported by the noble Earl, Lord Gowrie, suggested that it would be a mistake to drive the closed shop underground. There may be a very good case for it, as it seems to me that this is a matter of tactics. At the same time I think one should bear in mind that there is a danger in strengthening the position of the closed shop by giving it the full support of the law. It is a matter of which method is likely to achieve the result that both he and I are agreed we desire to obtain.

The noble Earl, Lord Gowrie, has said that in the Bill we are honouring our obligations in the party manifesto. I wonder whether that is really so, because under paragraph 2, the closed shop, it says that people arbitrarily excluded or expelled from a union must be given a right of appeal to a court of law. The existing employees and those with personal convictions must be adequately protected. I think the second part is so, but I wonder whether the first is entirely covered in this. Later in the same paragraph the manifesto says: We will not permit a closed shop in the non-industrial Civil Service and will resist further moves towards it in the newspaper industry. I do not think this is covered in the Bill. I wonder whether the noble Earl is correct in what he said.

However, having regard to everything that has been said this evening, I would not intend to press my amendment at this stage, although I would hope, in view of what I have just said, that the noble Earl will have second thoughts and will see whether some further amend- ment could be obtained. I should like to reserve my position for Report stage. In the meantime, I ask leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 38B not moved.]

10.30 p.m.

Viscount DE L'ISLE had given Notice of his intention to move Amendment No. 39: Page 7, line 23, leave out ("genuinely").

The noble Viscount said: I have listened carefully, as is my duty, to the speech of my noble friend Lord Gowrie. As usual it was skilful and eloquent and I shall read it with great care, but he did not persuade me that he had paid attention to the details of the argument I had advanced. In his reply to the last intervention, he seemed to me to controvert directly the opinion of the Commission. I give notice that on the question of the Convention of Human Rights I shall return to the issue at Report stage.

[Amendment No. 40 not moved.]

Lord HOWIE of TROON had given Notice of his intention to move Amendment No. 40A: Page 7, line 23, after ("conscience") insert ("or on grounds of a possible conflict with the practice of his professional institution, provided that membership of that institution is limited to persons who have or are seeking a qualification appropriate to the practice of the profession concerned").

The noble Lord said: We had a good run earlier on Amendment No. 21A which I moved. As this amendment covers more or less the same or very similar ground, I think it would meet the convenience of the Committee if I did not move it.

Lord UNDERHILL moved Amendment No. 41: Page 7, line 23, leave out ("other deeply-held personal") and insert ("religious").

The noble Lord said: I am pleased that in the latter speeches we have brought the Committee back to the reality of the situation, because the purpose of the amendment is to deal with the real situation on the shop floor and with industrial relations as they actually exist. I say at the outset that we on this side recognise that there must be exemptions on the grounds of conscientious objection. It is my purpose to try to outline exactly what we mean.

If our amendment is carried, the phrase would read: genuinely objects on grounds of conscience or religious conviction". In the 1978 Act, the law as it now is, the phrase is: genuinely objects on grounds of religious belief". We regard that as far too narrow. There are grounds of conscience which are not necessarily of religious belief. The proposal in the Bill brings in the question of conscience, in my view quite rightly, but for some reason takes out "religious belief" or "religious conviction". Although the Bill specifically excludes grounds of religion, it introduces something totally new—that is, deeply-held personal conviction. It would be most unfortunate if this issue became bogged down on semantics, but that could easily be the situation.

Turning up my copy of The Concise Oxford Dictionary, I find that "conscience" is defined as: A moral sense of right and wrong", which I believe all simple people like me can understand. "Conviction" is stated to be "a settled belief", which is something entirely different. I have no doubt that when I have sat down, all the noble and learned legal luminaries in the Committee will argue that point and that will indicate the problem which may be facing the tribunals which have to deal with this matter, because what is implied by "deeply-held personal conviction"? As "settled belief", it could cover many things. I have a settled belief that the free play of market forces is wrong, but that is not conscience. I have a conviction that monetarism is wrong, but that is not conscience. I have a very settled belief that the Employment Bill is wrong and will do nothing to help industrial relations, but that is not conscience.

Most of your Lordships will have deeply-held personal convictions on political and other issues, but political issues are not necessarily conscience; they are political convictions. The clause differen- tiates between grounds of conscience and deeply-held personal conviction, because the word "or" is inserted, so the Government appear to recognise that conscience and personal conviction are different things. With that I agree, and that is where I believe the difficulties will arise. In my view, personal conviction is not religious conviction, neither is it conscience. To leave the clause in its present form would open the gates to considerable problems and difficulties. All kinds of argument will be used to justify "deeply-held personal conviction". I believe that it will be difficult enough for tribunals to assess conscience, but when we come to ask them to assess "deeply-held personal conviction" they will find it an immense task.

What will be the criteria? I have pointed out already that I believe there to be a considerable difference between conscience and personal conviction. In the context of the Bill "personal conviction" could be a disagreement with the unions as such and an acceptance of an "each man for himself" philosophy. It could be a boss's mentality and the attitude that unity and loyalty to one's fellows is nonsense. Selfish and anti-social aims can be deeply-held personal conviction and have nothing to do with conscience. It could cover quite a number of other things—dislike of personalities and particular trade unions and disagreement with particular decisions of the union; objection to paying union dues and objection to paying increased union dues.

I should like to say, in conclusion, that the Under-Secretary of State for Employment in Committee in another place, said: The proposal is not intended to cover those with trivial, superficial or transitory objections to union membership". But if the words: "deeply-held conviction" are included, then we shall have a situation where the tribunals have to decide this matter and it will be a very difficult task for them.

When we come to another amendment I shall follow up what my noble friends have said about free riders. However, this problem of deeply-held personal conviction can open the door to enmity towards free riders which the factory floor deeply resents. If all sorts of arguments are brought up as to what is personal conviction, we shall have difficulties. I hope that the Committee will recognise that our amendment removes the ambiguous phrase, "deeply-held personal conviction". It retains the grounds of conscience which are absolutely essential and it reintroduces religious conviction which, for some reason, the Government took out of this clause. I hope that the Committee will in its wisdom support this amendment.

Lord ORR-EWING

May I move that we go back to what was in the 1939 Act dealing with conscientious objectors? It merely says that one had consciously to object. It is much simpler than defining religious principles or deeply-held convictions, or anything else. When we were fighting for our very existence in 1939 we were prepared to accept that. The noble Lord shakes his head. Why complicate the matter? Why not do as we did during the war? We allowed a person to go away and not to do National Service and not to serve in our armed forces if he objected. That was enough. He did not have to explain it; he came before a tribunal, but he did not have to justify it in any way. If it were possible for that to go through Parliament in 1939, it should be possible in the case of a trade union, and they should not object to it.

Lord McCARTHY

I was only shaking my head because I thought that if the noble Lord, Lord Orr-Ewing, took that view, he should have put down an amendment to that effect.

Lord ORR-EWING

I did not know how persuasive the noble Lord, Lord Underhill, would be in his argument of the case.

Lord TAYLOR of GRYFE

I hope that there will be some clarification on this particular point. I am glad that the narrow reference to a religious objection has now been departed from, because I happened to be involved in the dismissal of the railway employees. It is an act of which I am ashamed, but as a member of the board I had no option than to operate the closed shop implications and dismissal.

The problem about limiting the provision to religious objection is that many people who are members of religious sects do not have any written constitution as part of their belief. When the tribunal was assessing religious objection it simply asked the question: "Has your religious organisation a prohibition clause in its constitution preventing you or prohibiting you from becoming a member of a trade union?" By that test all the religious objectors failed before the tribunals, and not only was that so, but several of the tribunals also insisted, with co-operation and support from the trade unions which were pursuing the recalcitrants, that the men concerned had been dismissed on account of their misconduct, with consequent further implications on their future careers.

Therefore, I am delighted that at last we have got away from this narrow religious objection and that we are incorporating in the Bill what I regard as a rather precious part of the British democratic Constitution, the right of conscientious objection. It is extremely difficult for a tribunal to assess and perhaps as a result of this clause we may get closer to some guidance for the tribunals. However, I am delighted that the rights of the conscientious objector will be observed in this piece of legislation.

Lord HOUGHTON of SOWERBY

I am sorry that my noble friends on the Front Bench have persisted in this amendment at this time of night and after the debate that we have just had. I want to uphold the right of agnostics to have a state of mind equal to that of conscience or of religious belief. The Opposition Front Bench is full of agnostics, and here they are trying to deprive their kith and kin of the right to hold a deeply-held personal conviction. My noble friend Lord Underhill ignored from the beginning to the end of his speech the fact that we got rid of both conscience and religion from the constitution of the parliamentary Labour Party and substituted "deeplyheld personal conviction". He was probably not around when we did that. I have said in this House before my noble friend came here that what is good for the parliamentaty Labour Party is good for the trade unions in this particular respect. I, personally, regret that we have had to rely on a Conservative Government to rectify the serious flaw in the Labour Government's legislation of 1978.

If you look at the Donovan Report, where this began—we have been talking about conscience for 12 years—you will see that never once did it refer to religious belief as a condition for exception from the conditions of the closed shop. I shall not take up the time of the Committee in quoting three of the paragraphs in the Donovan Report which refer to "reasonable objection" or "strongly-held opinions". There was a a tolerance there which has not been shown in some of the debates that we have had in both Houses on trade union legislation. I think that one must uphold the right to hold a secular opinion with a deep conviction which is equivalent in moral terms to religious belief and conscience.

Let us examine just for a moment the quality of conscience. Conscience is said to be a still, small voice and, if you hear it, you have got it. Religion is a belief which you may not hold, but you still have it if you claim to be a member of a particular religious denomination. But to establish a deeply-held personal conviction on a secular basis is much more difficult than the easier task of saying, "I have a conscience" or "I have a religious belief". Therefore, there is no easy way out here. I think that it should be allowed to go to the test of practical experience. It will not be abused. I am not excusing this as a means of getting out of paying subscriptions, or the equivalent of them. That was fully provided for in the Donovan recommendations.

I must register my own view on this because I expressed this opinion in 1974, but at that time the House was not sufficiently united on the establishment of this principle to make it rewarding to pursue the matter to the bitter end. Now we have something to which we can cling, and I defend what is in the Bill and deplore the attitude of anyone who tries to take it out. Surely, we on these Benches are not going to have the shame of trying to remove from a Conservative Party Bill one of the tenets of civil liberty to which we attach considerable importance.

10.46 p.m.

The LORD CHANCELLOR

After that appeal, I seriously hope that the Labour Party official Opposition will yield to the persuasion of the noble Lord who has just spoken. I think that I am entitled to play a part in this debate. I know that some noble Lords and some noble Baronesses—I can see one opposite—will remember our debates of 1974, 1975 and 1976 in which I fought the then Lord Chancellor and I fought the Labour Front Bench who stuck to religious belief as the only ground upon which, in the closed shop context, a dismissal would not be unfair. Well, we have travelled a long way since then.

If I may answer the noble Lord, Lord Underhill, the reason why we do not have the word "religious" expressly in this clause is because conscience and deeply-held personal conviction clearly subsumes religious belief. It has always been accepted on all sides of the House, in our 1974 debates and thereafter, that persons like the Plymouth Brethren who have a religious belief that it is wrong to be, as they would put it, yoked with unbelievers, ought to be recognised as entitled to disregard the provisions of the closed shop. That is why even in the restrictive legislation of the Labour Party religious conviction was still in it.

I can remember saying, not once, but I should think 15 times in the course of those debates, that agnostics have consciences too. Unfortunately, we were told by the then Lord Chancellor, and we were then told by the Labour Government that it was too difficult to define "conscience". When we were fighting for our lives in two world wars we asked men to go to their deaths, but exempted them on the basis of conscientious objection. But we would not exempt them from the closed shop because it was too difficult for the Labour Party. We have travelled a long way since then, and I am glad that the sinners have come to repentance and I hope that the 99 just men I see on this side of the Committee will rejoice with me at their conversion.

I personally am rather attached to "deeply-held personal conviction" I think we borrowed it from the constitution of the Labour Party. But there are worse places to look. They allow one another to have deeply-held personal convictions, but apparently they do not like those who do not want to join a closed shop to have them, too. We rather think that what is good for the Labour Party is good for those who do not want to join a closed shop. In the light of the moving speech of the noble Lord, Lord Houghton of Sowerby, I hope that the noble Lord, Lord Underhill, will have second thoughts.

Lord McCARTHY

I hope that the Committee will accept that I am sorry that I must ask the Committee and my noble friend Lord Houghton to look again at the Bill and look at the amendment. What we are doing is leaving conscience in. What we are taking out is "other deeply-held personal conviction" so that the clause, if the Committee voted for our amendment, would read, if he genuinely objects on grounds of conscience or religious …". In other words, everything which has been said so far, apart from what was said by my noble friend Lord Underhill, has been totally beside the point, totally irrelevant, and the Committee and those who believe in conscience for agnostics can happily vote for the amendment.

Lord HARRIS of GREENWICH

With respect to my noble friend, he has in no way disposed of the case put by my noble friend Lord Houghton of Sowerby and I feel I must comment on this issue. I do so with some regret because my noble friend Lord Underhill and I served at Transport House together for a number of years, but on this matter we certainly find ourselves in total disagreement. I, like many noble Lords on this side of the Committee and no doubt many noble Lords opposite, have been a member of a trade union for a substantial time. However, I am bound to say that at the time when I joined my trade union I would have regarded it as a most extraordinary proposition that a man who had a deeply-held personal conviction should, notwithstanding that conviction, be press-ganged into that trade union. After all, let us bear in mind what we are talking about here. We are talking about unfair dismissal, so that in fact not only could he be dismissed but he would have no redress after that dismissal. That is, after all, what we are voting on tonight, and I say without the slightest hesitation that I shall vote against the amendment.

Lord UNDERHILL

I must disagree with what my noble friend Lord Houghton of Sowerby said because he did not understand what I said. "Conscience" is in and we wanted it in for the very reasons he gave. I stressed that the 1978 Act has only "religious belief" and we thought that was wrong because we wanted to bring in the type of people with a conscientious objection to which my noble friend Lord Houghton referred. He obviously did not listen to what I said.

Lord HOUGHTON of SOWERBY

I object to being told, first, that I did not understand my noble friend and, secondly, that I did not listen to him. I understood him perfectly and I replied to him, so will he please stop it!

Lord UNDERHILL

I will reply to people in the same way as they talk to me, be they noble friends or opponents, and I replied to my noble friend in like manner. What, frankly, we are mainly concerned with is industrial peace, and having made certain that we have "conscience" in and having made it clear that "religious belief" is in, we go on to deal with the question of a deeply-held personal conviction. Nobody has dealt with the fact that "deeply-held personal conviction" is so sweeping and wide that all sorts of meanings could be attached to it, and instead of industrial peace we should have trouble on the shop floor. That is our concern, and I thought the whole Committee was concerned to do something to promote industrial peace.

The whole Committee has, I think, agreed that we must have "conscientious objection", so it is a question of defining what it should be. Our amendment brings in conscience and religious belief, but it takes out this very vague phrase "deeply-held personal conviction". We regard this as so important that if it were not nearly 11 o'clock we would divide the Committee, because we have here the germs of industrial trouble. Noble Lords must consider how people on the shop floor think. I may not have as many years membership of your Lordships' House as some, but I am in my 49th year of trade union membership with a life membership badge to come at the end of it, so I know a little of how people in the trade union movement and on the shop floor react. Having said that, we believe that our amendment is right. We will not withdraw it but we will not press it to a Division.

On Question, amendment negatived.

10.55 p.m.

Lord McCARTHY moved Amendment No. 42: Page 7, line 25, leave out from ("whatsoever") to end of line.

The noble Lord said: The object of this amendment is quite simple. The present position in this regard, without the Bill, is that the objection must be to joining any union whatsoever; in other words, the person concerned must have what might be described as a conscientious objection to joining trade unions. The clause would create a situation in which people could object to joining a particular union. We are saying in the amendment that this is a disruptive proposal, that it is very difficult to square conscientious objection or deeply-held personal convictions with the notion of objecting to particular unions, whereas it makes a certain amount of sense if a person says that he objects to unions on principle—that he will not join any union. That is the rationale behind the existing Act.

We are saying that there should be accepted by the Committee an amendment which leaves out the words from "whatsoever" to the end of the line referred to, and which would restore the position to what it is at the moment, in so far as the objection has to be to joining trade unions on principle. That is the issue from the point of view of both conscientious objection and deeply-held personal conviction.

There is also an argument against the proposal from the point of view of both practicality and industrial efficiency and peace. The noble Earl said recently that he did not want to fragment collective bargaining, that he did not want to undermine agreements. He has said on several occasions this evening that he respects the TUC Disputes Committee and the TUC disputes procedures. We are suggesting that it follows from that general position that one would not wish to create a situation in which people could object to joining particular unions, in which they could say, for example, that they did not want to join the GMWU but wanted to join the ETU. If they have that kind of right, and if it is built into the Bill, it will be one more bomb placed under Bridlington. I beg to move.

The LORD CHANCELLOR

I must say that I do not understand why the noble Lord who has just spoken should regard it as legitimate that in a closed shop situation a person should be dismissed without compensation if he objected on grounds of religion or conscience, or a deeply-held personal conviction to joining a particular trade union. Some trade unions are better than others. Some are following policies with which one profoundly disagrees and with which one should not at all wish to be associated. While I was practising the law I belonged to my professional association, but if it had been pursuing immoral policies—which at one time I thought it was likely to do by imposing a closed shop—I think that I would have withdrawn my subscription rather than have belonged to it.

The fact of the matter is that one is just as much entitled to object on grounds of religion or conscience, or a deeply-held personal conviction, to a particular union as one is to trade unions in general. All we are saying is that if a person is dismissed because he follows his conscience rather than his interests, he should be entitled to compensation. It seems a very modest suggestion to make, and I cannot exactly see why noble Lords on the Front Bench opposite should think it even proper to disagree with us on this particular point.

I wish to revert for a moment—but only for a moment—to the arguments which were presented on an earlier set of amendments. I must point out to noble Lords, as I pointed out to the noble and learned Lord on the subject of conscience in general in the Labour Party's legislation, that they are absolutely bound to fall foul of the European Convention on Human Rights if they press the amendment and pass it into law. In the light of the debate that we had a few moments ago I cannot advise the Committee to pass the amendment, because it is quite clear, whatever the Commission may have decided and whatever the court is going to decide—and it is what the court is going to decide which will ultimately decide the case—that the right to associate with those whom one chooses to associate with but not to associate under pressure with those one does not choose to associate with in the case of a particular union or any association which is committed to policies with which one pro- foundly disagrees, is one which is deeply embedded in the European Convention. I have no doubt whatever that if noble Lords insisted on trying to omit the words which this amendment would seek to omit, they would be flying in the face of the universally accepted international obligations of the United Kingdom of Great Britain and Northern Ireland.

Lord McCARTHY

I am not convinced by the noble and learned Lord. We are trying to say that there is a very clear difference between people objecting to trade unions per se and people objecting to particular unions. Of course they can object to particular unions on particular grounds, but we do not regard that as a matter of conscience. Nevertheless, since it is so late at night I propose to withdraw this amendment.

Amendment, by leave, withdrawn.

11.2 p.m.

Lord McCARTHY moved Amendment No. 43: Page 7, line 25, at end insert ("but such grounds shall not include objection to the amount of any subscriptions payable by the members of any trade union").

The noble Lord said: I do not think that even noble Lords opposite could say that this was a matter of conscience. We are suggesting that on page 7, line 25, there should be inserted at the end: but such grounds shall not include objection to the amount of any subscriptions payable by the members of any trade union". In other words, we are saying that it is very difficult for anyone to have a deeply-held personal conscientious objection to paying the money. We are saying that if the only objection you have to belonging to a union is that you do not want to pay the subscriptions, then that cannot be said to be a deeply-held personal conviction. I know the answer that we shall be given by noble Lords opposite. We shall be told yet again: "But, of course, no industrial tribunal could conceivably be so silly as to think that this was a reason of deeply-held personal conviction". Nevertheless, we say that since we have spent a considerable amount of time today reinforcing the psychological fears of small businessmen, let us reinforce and help some of the psychological fears of small shop stewards and support this amendment. I beg to move.

The LORD CHANCELLOR

This is really a very extraordinary amendment. Having tried to take out the words "deeply-held personal conviction", which would clearly exclude the possibility that a person should refuse to join a trade union simply on the grounds that the subscription was too high, and having objected to that on the highest possible moral grounds because it was going to cause so much trouble on the shop floor, we are now being invited to insert this very narrow ground as an exception to the general rule. Such a tergiversation, such a degree of inconsistency, such a departure from logic, has seldom been seen even on the Front Bench opposite and even during the antics to which we have been subjected during the course of this Bill. The fact is that they are only trying to turn what is an obvious question of fact into a question of law, and by doing so they are wrecking the proper phraseology of the Bill. We have insisted, against their attempts, upon retaining the words "deeply-held personal conviction". The size of the subscription is not such a conviction, and therefore these words are both necessary—or, rather, are both unnecessary and deleterious.

Lord McCARTHY

The noble and learned Lord does not seem to know whether they are necessary or unnecessary. I consider that they are unnecessary, and that therefore we should take them out. Of course we tried to do something about other aspects of the Bill, but if you fail to do something about other aspects of the Bill then you try to do something about this aspect of the Bill; and this is the narrowest single area in which we could ask for some reassurance. Indeed, at the Dispatch Box a few days ago the noble Lord, Lord Lyell, said something rather nice about the issue of subscriptions when we were talking about exclusions and expulsions. He said that the Government would think again about subscriptions. What we are saying is that it is quite impossible, even if the Government are right that there are other deeply-held personal convictions which should be put into the Bill, other than religion, that even they could say that a refusal to pay the money is a matter of conscience. Therefore, I do not feel like withdrawing this amendment.

On Question, amendment negatived.

11.5 p.m.

Lord UNDERHILL moved Amendment No. 44: Page 7, line 25, at end insert ("but provided that an employee holding any such objection pays or is prepared to pay to a registered charity the equivalent to contributions he would otherwise make to the appropriate union under a union membership agreement").

The noble Lord said: This is not such a revolutionary proposal. As a matter of fact, an identical amendment was proposed in another place in Committee by a Conservative Member of Parliament. I have to paraphrase what he said: that there are plain practical reasons behind the closed shop—that is, union membership agreements; that the closed shop is introduced because it is genuinely felt in industry that it improves the atmosphere over all industrial relations and the ability to have collective bargaining. He went on to say that anyone with genuine reasons of conscience who feels that he cannot join a trade union and who benefits from the action of the union should make a payment to charity in return for that privilege. He added that such an individual would not be able to negotiate as an individual with the employer and, therefore, no matter what he wishes, the union will be negotiating on his behalf.

When I moved the previous amendment, I referred to free riders and also said that we all want peace in industry; that we are all after that. I ask that noble Lords will accept the position that on the shop floor nothing inflames feelings so much as the realisation that people are getting benefits from trade union activities and not making any contribution towards the union. May I indicate that this goes far beyond wages? Let us take, for instance, the great efforts of the National Union of Mineworkers to get agreement on pneumoconiosis and the benefits that that agreement has brought to large numbers of people. Union negotiations can deal with such matters as safety provisions, voluntary arrangements, toilets and washing facilities, medical care, canteens and meals, protective clothing, holiday arrangements, welfare provisions—the whole field of conditions of work. We are not just talking about wages.

When people on the shop floor realise what efforts are being made to secure these benefits and that there are people making no contribution, there is considerable bitterness. All that the amendment is suggesting is that those who are acknowledged to have a conscientious objection, and are accepted as such, should make a payment to charity in return. There is usually no trouble on the shop floor with regard to a bona fide conscientious objector. That is why we were so concerned about the other definition. But any bad feelings can be removed if there is the thought that those people with conscientious objections are necessarily making a contribution to charity. In the same way as the Conservative Member in another place emphasised this, I hope that the Committee will agree to this amendment.

The LORD CHANCELLOR

I hope that no one will accuse me either of being a free rider or of objecting to subscriptions to charity. I have never been a free rider. Throughout my professional life I have subscribed voluntarily—because it is not a closed shop—to what was the Bar Council and is now part of the Senate. I resisted all attempts to make it compulsory or to impose sanctions against those who did not pay. But I myself have always paid and paid voluntarily. I think that we have more than 80 per cent. of members who subscribe and I believe that the Law Society, which is, equally, a purely voluntary association, is in no worse position. I think that a union only demeans itself by trying to dragoon people into membership.

What the noble Lord is really saying is that if a man with a genuine conscientious objection (which the noble Lord agrees ought to be provided for in the Bill) gets the sack for not joining a union, he can get compensation or can refuse to join a union only if he pays a compulsory subscription to charity equal to the amount of his union contributions. I think that it is excellent if voluntarily he pays to charity a subscription based on what would have been his union subscription. It will satisfy his fellow workers, of course, that he is genuine in his convictions and that he is not simply trying to avoid having to pay up. I could not approve of such conduct more than I do.

To say that he shall only get his legal rights if he subscribes to charity seems objectionable in principle. Having said that, I recognise that in the 1971 legislation there was a somewhat similar provision. I make the point against myself that there was such a similar provision about which the TUC said in a lordly fashion: "To unions in Britain money is less important than commitment. The agency shop will create two classes of workers in a particular place: one party to and bound by the union's rules, and the other not party to them and not bound by them: so the proposal was meant to weaken the union's authority".

Now we are asked to go back to the 1971 Act. This is a very strange reversal of roles. If the noble Lord wants to "twit" me for inconsistency, I should have thought that I was able to turn his weapons against himself. On the whole, I think that subscriptions to charity should be voluntary, and I think that if you prove a conscientious objection, you should not have to be made to pay a subscription to charity. I think that it may be a suitable subject for a code of practice, and of course I shall convey what the noble Lord has said, and his arguments in favour of this as a statutory provision, to my right honourable friend and ask him whether he thinks it would be an appropriate insertion to make into the code of practice. But as a statutory insertion, I think that it is going too far.

Lord MONSON

I have a certain sympathy with this amendment; I can understand the feelings that motivate it. I should be inclined to support it if there could be some sort of trade-off; that is to say, if the Opposition, for example, could see their way towards supporting the anti-discrimination amendment (Amendment No. 53) in the names of the noble Lord, Lord Orr-Ewing, and two of my noble friends on the Cross-Benches, that would be a reasonable quid pro quo.

Lord UNDERHILL

I think that we will deal with the amendment on principle as it stands. What the noble and learned Lord says is perfectly correct: there may be a change of view on the part of some people, in the same way that the Government have changed their view from the 1971 Act. But it is something that we were looking at frankly from the standpoint not only of the individual but of the industrial relations on the shop floor. The noble Lord who last spoke referred to this. At this time of night, we shall not divide. I hope that consideration will be given to this amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 45 not moved.]

11.13 p.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 46:

Page 7, line 36, at end insert— ("Provided that in any case where an industrial tribunal determines the question whether it is the practice for employees to belong to a specified independent trade union or to one of a number of such trade unions within the meaning of this section, it shall, for that purpose, take no account of the fact that any such employee is a member of any such union.").

The noble Lord said: This amendment relates to a problem which is of equal consequence to unions and management in union membership agreements: a problem which is arising under the law as it stands now and which will be made worse in relation to the Bill unless an amendment of this kind is included.

The problem arises from the fact—of which no mention has been made this evening—that most union membership agreements and arrangements in fact exclude the obligation of existing employees to join the unions when those agreements come into effect. The recent survey by Mr. Gennard and two colleagues published and provided for the Department of Employment in the November Employment Gazette concluded that where new closed shops have appeared, it has increasingly become the norm to exclude existing non-unionists from compulsion to join the union. The problem to which this gives rise is that the way in which the union membership arrangement can be maintained is if management does retain the right to dismiss, on grounds of non-unionism, a non-unionist who sets about splintering and fragmenting the closed shop in various dissident ways, and it is a right which management wishes to retain when it makes the union membership arrangement. Management has that right only where it is the practice for employees for the time being of the same class as the dismissed employee to belong to one or more of the specified trade unions.

Under the 1974 Act the requirement was that all the employees had to belong to one or more of the specified trade unions. Therefore, it was not very surprising that in 1976 the Industrial Tribunal, in the case of the Ferrybridge workers who dissented and would not join a specified trade union, found them to be unfairly dismissed because, out of the 39,000-odd workers in the industry, some 1,000 appeared on the evidence not to be members of the specified union. There was not, therefore, the necessary practice.

In 1976 the words were changed and appear as they appear in Section 58(3) now —namely, that it should be the practice for members of the same class as the dismissed employee to belong to one of the specified independent trade unions. Even so, a decision of the Employment Appeal Tribunal in 1978—the case of Himpfen and Others v. Allied Records—decided that in a case where there were 42 workers in the firm and nine did not belong to what ultimately became the specified trade union, there was not a sufficient practice to allow for a fair dismissal of non-unionists. It therefore appears to be the law, as interpreted by the courts, that the practice has, as the court put it in that case, still to be one where, as a necessary qualification for a practice to he demonstrated as falling within the provision, almost all the employees of the relevant class should, on the critical day, belong to a specified trade union. That is the problem as the law stands today.

If the Bill is passed in its present form every existing employee will have a statutory right to remain out of the union, as opposed to the present position where it is normally the case to bargain on that basis—with, of course, management and unions both keeping an eye on maintaining a sufficient practice—and, once it is a statutory right for each and every existing employee, at the date on which the agreement comes into effect, to remain outside the union, proving the practice may be a very difficult thing to do until a lot more employees are taken on who join the union.

Therefore, it is the purpose of this amendment, again to use the words of the noble Lord, Lord Rochester, to find a line of judgment and to say—and I am taking it as a Committee stage operation, accepting a clause I do not like to accept, but accepting that the Government have their way—that if all existing employees have a statutory right to maintain themselves out of the union, then, in order to make union membership arrangements workable in law, it will be necessary to exclude them from the computation of what is the practice required by the Act in terms of fair dismissal. Were that not the case, there would be very few union membership arrangements that were enforceable through the means of dismissal.

11.20 p.m.

Lord MACKAY of CLASHFERN

This appears to be an extremely technical question, and I have tried to follow the explanation of the noble Lord, Lord Wedderburn. However, I find it hard to reconcile his explanation with this amendment, particularly as the amendment finishes up with these words: … it shall, for that purpose, take no account of the fact that any such employee is a member of any such union. I am wondering whether the wording is really what the noble Lord intended. It does not appear to me to make much sense, but perhaps I have misunderstood something.

Lord WEDDERBURN of CHARLTON

The noble and learned Lord is quite correct. The last line should read: … the fact that any such employee is not a member of any such union.

The LORD CHANCELLOR

Iolanthe.

Lord WEDDERBURN of CHARLTON

Indeed. The noble and learned Lord the Lord Chancellor reminds me of the Gilbert and Sullivan occasion. It may not be proper, therefore, for me to move this amendment and I shall have to withdraw it since it says the opposite of that which it should say. In withdrawing it, I will take the opportunity to say that we will come back to this matter on Report. Since the noble and learned Lord said that he did not quite understand the point I was putting, may I explain that the point is that if this Chamber were a group of employees and a union membership agreement were coming into effect, and all the noble Lords sitting on the Benches opposite decided to leave the union before the agreement took effect, they would probably deprive it of a sufficient practice.

I very much hope that the Government, on looking at this matter, will come back on Report and deal with it, because it is a point which has been noted very carefully in trade union circles and also Labour circles. If the Bill goes through in its present form it will make union membership arrangements unworkable.

Amendment, by leave, withdrawn.

[Amendment No. 47 not moved.]

11.22 p.m.

Lord ORR-EWING moved Amendment No. 48:

Page 8, line 13, after ("58A") insert— (" (1) A union membership agreement which came into force after 4th May 1979 and before the coming into operation of the Employment Act 1980 shall be deemed to be null and void unless it has been confirmed by a secret ballot carried out not later than one year after the passing of the Employment Act 1980 and in accordance with the provisions of this section.").

The noble Lord said: This amendment would give the people concerned an opportunity of voting on a union membership. The research in the Charles Hansen and the Helen Jackson paper, which is called the Closed Shop and the Employment Bill 1980, shows that there are 5.2 million people in formal closed shops, and the informal or what some people call the undercover or underground closed shop covers another 2 million workers. This is out of a total of between 22 and 23 million, so we have a total of 7 million out of 22 million covered by either informal or formal agreements.

Incidentally, the informal agreement, which seems to be criticised from time to time as being an underground or undercover agreement, covers the National Union of Mineworkers. That is an informal agreement covering 255,000 people, and I should have thought that it stood for a very long time without being totally unsatisfactory to the mineworkers and the unions. One has to face the fact, though, that in recent months there has been an acceleration of activity to try to force the closed shop before this Bill becomes effective. Therefore, I would seek at this stage to say that where a closed shop has been brought about since the Government were elected with a manifesto which clearly showed that they did not accept the closed shop unless a considerable majority wanted it that way, it would then be right that those concerned should be given the opportunity of voting.

I would say, too, in retrospect, that, as we have discussed earlier on other amendments, 20 per cent. is a rather large minority who may be totally against it, but still it is to be accepted under the 18 to 20 ratio which is built into the Bill at the moment. It is difficult to discover how many people have entered the closed shop agreement since May 1979. It could be up to half a million, but there are no figures available and I can only hazard that. Certainly I have some facts and figures for the Strathclyde Council. There they have entered into a closed shop agreement with four unions—NALGO, NUPE, TTGW and General and Municipal Workers. That closed shop was entered into in 1978 without consultation at all. When the NALGO members called for a vote it was interesting that in June 1979—that was after the general election—it turned out that 5,214 were in favour of a closed shop and almost as many—5,028—were against it. Had it been referred to a democratic process it would not have occurred in the way it has.

I may say that this is a council in an area which is taking the matter to the extreme, with illiberal measures, because they recently, against their will, forced into a closed shop very large numbers of lunch ladies, as I think they are called, who do the washing-up for up to three hours a day and are part-time workers who work as little as five hours a week. So it is not every union and every area that is liberal in its approach to the closed shop, and I am sure that the Opposition Front Bench will recognise that there are in the family black sheep as well as good sheep.

Before concluding, I should just like to say that I deplore the argument which we have heard so much, that the closed shop in its present form is convenient to management. I speak for management and have 20 years' experience in the engineering industry, and I think that it discourages managers from managing. It encourages management to decentralise a lot of management—by which I mean recruiting, promotion and much else—to the shop stewards. I do not believe that that is the job of the shop steward; it is the job of management. It deters a lot of young, thrusting and, what might be called, awkward squad characters from staying in a firm, because promotion tends to go to the good union man, who is steady, perhaps without very great ambition and without a desire to better the firm and better himself at the same time. So I am not one of those who believe—whatever some managers may think—that the closed shop is good for British industry or for the trade union movement.

I hope that I have, in a succinct speech, shown that what is good in asking for democracy to work in the case of the closed shop from the passing of the Bill, should now be back-dated by this amendment to May 1979. As a result of the manifesto which we put before the nation, and the tremendous vote of confidence from trade unionists, we should back-date it to then and should not condone the rush to closed shops which there was in some quarters, particularly local authority quarters, in the last few months. I beg to move.

Lord ROCHESTER

We have made such good progress that, perhaps, the noble Earl will not take it amiss if I say a few words now. I suggested earlier that, as an alternative to further immediate legislation on the closed shop, it would be better to operate through the code of practice that is promised by the Secretary of State. I cannot think of a better subject for inclusion in that code than the question raised in this amendment of how best to review the support for existing closed shops.

It should be possible, without too much difficulty, to produce such a code well within a year of the passing of the 1980 Employment Act, if that is what it becomes, and we can then see how the situation develops. That approach seems to me to be much more likely to gain support within industry than the imposition by law of ballots, as proposed in this amendment. I regard the amendment as very similar to one which was proposed earlier by the noble Viscount, Lord Colville, on ballots before strike action. He was very wise, having given the subject a good airing, then to withdraw it and, maybe, the noble Lord, Lord Orr-Ewing, will in due course consider doing the same.

Lord SPENS

I should like to support this amendment. In fact, when it was first drafted I should have liked to take it very much further back, to 1976, because it was in the years 1976, 1977 and 1978 that the majority of the new closed shops were formed. They were formed very quickly, and not necessarily with the willing acceptance of all members. They were mostly negotiated between trade union leaders and management, and members were then told that they had to join. However, I see the point in taking it back only to the date of the general election, because that keeps it within the Conservative Party's manifesto. For that reason, I support the amendment.

11.30 p.m.

The Earl of GOWRIE

As I hope the Committee will accept, I have considerable sympathy with the concern which lies behind my noble friend's amendment. It therefore rather grieves me that we nevertheless advise that it should not be pressed or adopted. We are aware that some new closed shop agreements have been negotiated since last May, and one would guess that in the circumstances these negotiations and agreements may leave something to be desired. But the most significant instance was quoted by my noble friend; namely, the Strathclyde agreement. As he himself said, this was made before the election and therefore would not be covered by the amendment. We do not have evidence of there being very significant numbers, on the scale of half a million, brought into closed shops since the election.

I would point out to my noble friend that where a closed shop is very new or has been hurriedly brought into existence for some motive or other—perhaps, as in the instances which he gave, for the political or imperfect motive—the employer can break the union membership agreement if he wishes. It seems to us that it is up to employers to renegotiate UMAs in line with the code. Many of the kinds of anxiety that my noble friend brought to our attention would, as the noble Lord, Lord Rochester, realised, come to fruition in the code.

We are trying, where possible, to leave things to managers. Good employers will ask whether union membership agreements are sufficiently popular with their members, and it would be inappropriate for a Government which are trying to stand back, where they can, from the industrial arena, to involve themselves in this way.

My more rooted objection—and it is one which grieves me a bit because I am in sympathy with the motive—is that the amendment has in it quite a considerable element of retrospection. We have castigated noble Lords opposite, who I hear cheering me on this occasion, many times for what we think of as being dubious retrospective activities, and we do not wish to follow their poor example. Another objection is that we do not want to create a potential third category of closed shops; namely, those which took effect between last year's general election and Royal Assent for the Bill. We do not want a sort of Orwellian situation where some closed shops are more equal than others.

Finally, the question of 4th May 1979 would be a hotly disputed date, though I was interested to hear of the Cross-Benches' stern adherence to the manifesto commitments. If there were to be an element of retrospection, it might be more logical to date from the publication of the Bill. As I have said, we do understand the concern which has stimulated the amendment, but it would be out of line with the Bill's general approach. It could introduce, as I have said, a new and unwelcome element of retrospection. It creates what seem to us to be arbitrary distinctions between different types of closed shop, according to the time when they came into operation, and that would seem to us possibly to add to the difficulties of closed shop agreements rather than subtract from them. It also provides less effective solutions to the problems than those which we profoundly believe (and I am sure my noble friend will find this) will be provided by the code after the Bill is enacted. For those reasons, I hope my noble friend will withdraw his amendment.

Lord ORR-EWING

I was surprised to hear cheers from the Opposition Benches when my noble friend suggested that retrospection was not good. I thought that retrospection, when it gave people the democratic chance of saying whether or not they liked it was highly to be encouraged. I remember the many hours we spent on the Act dealing with shipbuilding and shiprepairing when retrospection was not taken back to the date of the election; it was the six months period before the general election ever took place, from September 1973 to February 1974. So please do not cheer when my Front Bench mention retrospection, since noble Lords on the Opposition Benches are the architects of retrospection of the most vicious type, not asking for votes on it but valuing assets on a totally false premise.

On the question of whether I accept codes of practice as an alternative—yes, I think my noble friend and the Liberal Benches are right. Again, I am a little sceptical about codes of practices because we have been waiting for four years for a code of practice in Fleet Street. It was first to be drawn up between the two sides —it was in the Employment Bill of 1978. Totally nothing came out of it. We were then going to have a code of practice thought up by Mr. Wedgwood Benn; absolutely nothing happened. We had an election, another year has gone by after the election and absolutely no sign of the code of practice. So I hope we shall be more successful under this Bill with our codes of practice than the Fleet Street code of practice, which has not yet seen the light of day. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.38 p.m.

Lord McCARTHY moved Amendment No. 49: Page 8, line 18, leave out ("80 per cent") and insert ("two-thirds").

The noble Lord said: With the leave of the Committee, I should like to move Amendment No. 49 and speak to Amendment No. 50 at the same time because they are closely related. At the moment the Bill says that in order for a new UMA to be acceptable, there 80 per cent. of those entitled to vote must vote for the UMA. We are saying that that is an extreme provision to require: it is more than is required in a general election. The present Government would not be elected if that was the requirement. We are saying, therefore, that it would be reasonable, even for those who support the notion in the Bill, for there to be some reduction of these very severe provisions. We are proposing two reductions. In Amendment No. 49 we are suggesting that the figure of 80 per cent. should be reduced to two-thirds, and in Amendment No. 50 we are proposing something which I should have thought was very reasonable indeed; that is, that the provision "entitled to vote" should be changed to those "voting". So that we are not then putting a premium on those who stay, those who do not turn up, those who are sick or those who are absent from some other reason.

Therefore, if these amendments were acceptable it would be two-thirds of those voting rather than 80 per cent. of those entitled to vote. Of course, the Government may take the view, although they have not said so tonight, that they want to make union membership agreements so difficult that they are impossible. In that case they might as well have said 90 per cent. entitled to vote or 90 per cent. voting. But we are giving them the benefit of the doubt at this moment and saying that they are not necessarily wanting to make union membership agreements impossible in future—not because we know that they like union membership agreements, but because we understand that they accept the argument that workers in the future, as in the past, are going to refuse to work with non-unionists; and if workers refuse to work with non-unionists then the law somehow has to come into conformity with that.

If we insist, as this Bill insists at the moment, on 80 per cent. entitled to vote, then we say very strongly to the Government that they will get groups of workers —it may be not the whole of the bargaining union but groups of workers—who, denied the right to a legal union membership, will refuse to work with non-unionists, producing an industrial dispute and a repetition of the famous case of Mr. Goad and others under the 1971 Act. Therefore, whatever the Government may think about the principle of the closed shop, if they want to avoid industrial disputes they ought to agree to change these very high proportions in the way we suggest. I beg to move.

Lord ORR-EWING

Is it not a rather quaint idea that if people do not want to obey the law you must therefore change the law? I understand there are no black dockers in our country because the dockers do not wish to have recruited to their midst people who are of coloured race, yet we have not amended the race relations law. I have not yet seen many women bus drivers, as they do have in many other countries, but no one has suggested that we change the sex discrimination law. I am not sure we could change the law just because people do not like it.

Lord BROOKS of TREMORFA

I have been a docker and I have worked with black dockers. I do not know where the noble Lord gets his information from.

Lord ORR-EWING

I have been to the London docks when they were more active than they are today, and I must say I never succeeded in finding one. Are women also allowed in the docks?

Lord BROOKS of TREMORFA

The noble Lord should come to Cardiff and he would find many black workers in the docks.

Viscount CALDECOTE

The noble Lord, Lord McCarthy, says that his amendment would increase industrial peace. Supposing there are 100 people in the shop and you have the 80 per cent. requirement, then 80 must be in favour. If you take the noble Lord's figure, and only 75 vote and a two-thirds majority is required, you get 50 per cent.; so you have 50 per cent. of the people in the shop wanting a closed shop. Is that really a prescription for industrial peace? We have found that if you agree to a union membership agreement only when 80 per cent. vote for it that does give industrial peace when one is forced into a UMA situation.

Lord MACKAY of CLASHFERN

The Government's view on this matter is that introduction of a new closed shop marks a very substantial change in the terms and conditions of employment, and it is right and sensible that that should happen only when a very large percentage of those who will be affected by it vote in its favour. The 80 per cent. figure was arrived at after the consultations that we had last year. It was considered to be the appropriate level required to impose such a major change in employees' terms and conditions of employment in the light of representations made to my right honourable friend the Secretary of State. I agree that the 80 per cent. figure is quite a high one, but it is deliberately so, in order to ensure that a new closed shop will be approved only where it is genuinely and positively desired by a large majority of those who will be affected by it.

The Government have been accused of trying to stop the spread of closed shops. We readily admit that this provision is designed to halt the spread of closed shops where they are not positively desired by the overwhelming majority of those to be affected. In general and traditionally, closed shops are not established unless there is already a very high percentage of union membership among the relevant employees. The 80 per cent. ballot requirement reflects that. But the Government do not accept that evidence of union membership in itself is sufficient to justify such an important change in terms and conditions. It is clear that when individuals join unions voluntarily they often do so in the knowledge that they can leave the union if they feel they have to. A closed shop cuts off this option, and it is not surprising to find that many voluntary union members object to forced union membership. For this reason, it is right that a secret ballot should test support for the closed shop proposal.

It is surely right also that the vote for a new closed shop should be considered in relation to those entitled to vote. This major change in terms and conditions should be positively approved by the majority of all those concerned. My noble friend Lord Caldecote has just given an example of what could happen on the figures proposed in this amendment, and it is obviously ridiculous that such a tremendous change as a new closed shop should be approved on that kind of basis. Mere apathy is surely not a good ground for proceeding with such a major change. Therefore, it should be those entitled to vote who should be the basis of such a change. We would ask the noble Lord to withdraw the amendment or, if he is not prepared to do so, we ask the Committee to reject it.

Baroness GAITSKELL

May I ask the noble Lord where can we obtain the figures which the noble and learned Lord has been talking about? I am not aware that many people would agree with him. Where can I find these figures?

Lord MACKAY of CLASHFERN

The only figures I referred to are those in the Bill, coupled with the example given, which is just a pure matter of arithmetic.

Lord MONSON

As we are speaking to Amendment No. 50 as well as to Amendment No. 49, may I point out to the noble Lord, Lord McCarthy, that the precedent for the phrase, "entitled to vote", in the subsection as it stands was set by Mr. Tam Dalyell in an amendment to the Scotland Bill, and he is a member of the same political party as the noble Lord.

Lord McCARTHY

It is not fair of my noble friends on this side to ask noble Lords on the other side for figures. They are not using figures tonight. They are using anecdotal evidence. They are as unconvincing as ever and I would not wish to withdraw this amendment.

On Question, amendment negatived.

[Amendment No. 50 not moved.]

Lord WEDDERBURN of CHARLTON moved Amendment No. 51:

Page 8, line 30, at end insert—

(" (4) No communication concerning or relating to the question in a ballot held under this section shall be made in the relevant period by the employer to any person entitled to vote in the ballot unless he provides to each independent trade union of which any such person is a member a copy of that communication at least two days before he proposes to make or does make that communication.

(5) During the relevant period before the holding of a ballot under this section, the employer shall not make a communication to any person entitled to vote which contains a threat or promise, however expressed, connected with the manner in which such a person may or will cast his vote or with the abstention of such person from voting.

(6) In this section the "relevant period" is the period either between the announcement of the decision to hold the ballot and the date of holding the ballot or three weeks, whichever is the longer.

(7) A trade union of which a person entitled to vote in a ballot under this section as a member may present a complaint to an industrial tribunal that the employer has contravened subsection (4) or subsection (5) above.

(8) A tribunal shall not entertain a complaint under this section unless it is presented before the end of the period of three months beginning with the date of the ballot or within some further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period.

(9) Where a tribunal finds that a complaint under this section is well-founded, it shall make a declaration to that effect; and, where the trade union seeks an order after such declaration it shall declare the said ballot void and order that a further ballot shall be held under the provisions of this section.

(10) In subsections (4), (5), (6), (7), (8) and (9) above "the employer" includes any associated employer (within the meaning of the 1974 Act) of the employer of persons entitled to vote in the ballot.").

The noble Lord said: It is perhaps rather late to move proving amendments but, in view of the terms the Government's Bill takes in our labour law, it is, in our view, necessary to do so. We explained our views on ballots in earlier clauses, our basic position being that they are sensible when trade unions want them and unions and employers agree to have them.

This clause for the first time introduces a compulsory ballot into the arrangements regulated by law between the employer and his trade unions. In that situation, it becomes important to ask some questions which have been little discussed in this country and which might perhaps be thought relevant to a body which is said to be a revising chamber. The question is, if we are to have a compulsory ballot in collective labour relations, what are the conditions under which it should be held?

We shall no doubt be told that there will be a code of practice which relates to this. Our amendments are put down in a probing fashion, as the only way of seeking the Government's view of important matters which arise. There have been recent ballots at places of work where some employers have put leaflets and other documents into wage packets, and have done so without breaching the law as it stands, and have extended tea breaks and other breaks in order to speak to the workers concerned. In some cases, it has been with union co-operation because the unions have been afforded like access. In other cases there has been some disagreement on the matter and the union has been not at all happy. These amendments suggest that at any rate in the Bill the Government should be giving thought to what the conditions of the ballot should be.

If I refer to another jurisdiction, it is only because the noble Earl, Lord Gowrie, said that in doing so I took risks in earlier debates. I refer to a country which has the constitutional right to free speech. In the United States of America, the vote and bargaining arrangements which depend on a ballot for representational agents of unions have a number of restrictions placed on them by law—in that case, under statute. It is, for example, illegal for the employer to address the workforce or approach it in any way before the ballot with a threat of force or reprisal, or promise of benefit. Many representational ballots have been set aside quite recently where an employer has said that the works might be closed down if it were won by the union.

There is also the doctrine operated by the National Labour Relations Board, sometimes known as the "captive audience doctrine", where the board does not allow the validity of the ballot if the employer has treated the employees within the ambit of what is called the captive audience. This has given rise to a great deal of litigation. Such litigation I had hoped we would avoid. Nevertheless, experience in the other country again would not lead us, I hope, to impose its solutions, but I hope that noble Ministers will accept that at least that experience probes some questions. Will the code of practice say whether or not an employer can take advantage of his position in relation to a situation which our American colleagues might call a "captive audience situation", or will it leave the matter at large?

Of course, there are further questions which arise as soon as compulsory ballots are introduced. In parliamentary elections, under the Representation of the People Act, at least there is a law which causes the press to publish all the names of the candidates. At present it is just upheld by a platform of law of a rather slender kind. However, as regards union elections, this last month there have been two occasions when a well known columnist in The Times has printed the list of those for whom members should vote, and not referred to any others. A year or two back in the same newspaper, a rather more responsible journalist printed the names of all the candidates for General Secretary of the union, together with their electoral addresses. But the union in that case was, of course, the National Union of Journalists. These questions arise if one introduces compulsory ballots.

I hope that the noble Minister will not take drafting points on the amendments that are put forward. They are put forward on the basis of a line of thinking into which it seems the Government will, willy-nilly, be led by imposing a ballot in this type of situation. The basic question which arises from the amendment is as follows: Will the Government say anything at all about employers' rights of access to the voters, access to the voters' minds, in relation to a ballot on union membership arrangements? I beg to move.

Lord MACKAY of CLASHFERN

We understand the matter that the noble Lord wishes to raise, but we believe that this amendment is not a good one for perhaps two main reasons. First, it imposes conditions on the holding of a ballot which are likely only to give rise to dissention and disruption. As formulated, the new clause dealing with ballots sets few conditions. It stipulates that the persons entitled to vote shall be those in the class potentially to be covered by the agreement, and it stipulates that all those, so far as reasonably practicable, shall have the opportunity of voting in secret. Those are the essential requirements. Other details are for the employer to resolve, usually in discussion with the union or unions involved, and we would hope that the code of practice on the closed shop would be of further assistance on these practical matters.

We do not consider that it is helpful to any party to have procedural details such as those in this amendment set out in legislation. I must say that I should have expected that perhaps to be the point of view of the noble Lord, Lord Wedderburn of Charlton, having regard to the general attitude to any form of statutory recognition provisions in this situation.

Secondly, and perhaps this is more important in a way, the amendment seems to presuppose some hostility by the employer to the introduction of a union membership agreement. That seems wrong. An employer is most unlikely to negotiate a union membership agreement with a union or unions and submit it to a ballot of employees unless he supports or at the very least acquiesces in it. It follows that he is highly unlikely to engage in the underhand activities which these amendments are designed to prevent.

But there are also sound reasons why the Government would in any event find this amendment unacceptable. The Government would not wish to put on employers new statutory obligations exercisable by trade unions in connection with the closed shop. We have made clear that we do not like the closed shop and we could not countenance a statutory provision which might enable unions to exercise any pressure or cause any unwarranted inconvenience to employers in this connection. Looking at the noble Lord's amendment, I must say that I was reminded of what he said at column 1315 about being even-handed in these matters.

The amendment appears to be extremely one-sided. A union seeking to impose a union membership agreement is at least as likely as an employer to be tempted to use persuasion in an attempt to influence the result, yet no restraints are proposed on that side of the Committee. Therefore, the amendment does not seem to meet up with the criteria which the noble Lord himself has suggested, and we do not feel that we could accept it in principle in any event. I would invite the noble Lord to withdraw his amendment. If he is not prepared to do that, I would advise the Committee to reject it.

Lord WEDDERBURN of CHARLTON

I am tempted to take issue with the noble and learned Lord, but in view of the hour I shall take his word and ask leave to withdraw the amendment, asking the Government still to consider the matter when we come to the Report stage.

Amendment, by leave, withdrawn.

11.56 p.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 52:

Page 8, line 30, at end insert— ("For the avoidance of doubt it is hereby declared that:

1. (a) an act done in contravention of section 58 of the 1978 Act, and
2. (b) an act done in contravention of, or any failure to observe the conditions of section 58A of that Act,

shall not be regarded by reason only of such failure or contravention as the doing of an unlawful act or the use of unlawful means for the purpose of establishing any liability in tort.")

The noble Lord said: This is a much more important and central matter. When a statute is put on to the statute book today it encompasses within itself a number of sanctions, either civil or criminal. However, that is not the end of the matter. That is to say, if something is to be sanctioned by a criminal sanction or someone is given a civil right of action, those are not the only types of illegalities which are knocking around when you get the matter into court.

The principle of law upon which the courts now act has been well-stated this last year by the Master of the Rolls, Lord Denning, who, in a case not concerned with labour law, nevertheless stated the principle which he stated in a case that was about our subject this evening. He said in the case of Carlin Music Corporation v. Collins: I take the principle of law to be that which I stated in Torquay Hotel Ltd. v. Cousins [1969] …"— and the noble and learned Lords who were involved in 1974–76 debates will remember debates about Torquay Hotel Ltd. v. Cousins— namely, that if one person, without just cause or excuse, deliberately interferes with the trade or business of another, and does so by unlawful means, that is, by an act which he is not at liberty to commit, then he is acting unlawfully. He is liable in damages; and, in a proper case, an injunction can be granted against him".

On the basis of that now well-founded and clear proposition of law, the problem always arises with statutes—and in particular statutes now in the sphere of labour law—as to whether or not there is a hidden minefield of illegality, because if some contravention of a section occurs, albeit that the section does not appear to give rise to a remedy for particular types of plaintiffs in particular types of action, nevertheless on the basis of that principle, as Lord Denning goes on: In such a case the person concerned is liable in damages and, in a proper case, an injunction can be granted against him"; that is to say, the breach or contravention of a statute can be unlawful means even if it is not stated in the statute itself to give a remedy to the particular plaintiff if he is directly injured. This is a principle which has been accepted in a whole string of authorities, and in the recent case against Haringey Borough Council was taken by the Master of the Rolls even further, to the point where, when the borough council and the unions agreed to close the schools, because that resulted in a breach of statutory duty by the council, the Master of the Rolls took the view that that was a conspiracy to commit unlawful means.

I repeat these propositions in no critical spirit. I am trying to assess the law against the background to which the Government are enacting the Bill. When we come to the Bill we therefore find a large number of areas in which certain types of sanctions are laid down, but which could be used by the courts as a means of unlawful means, whereby other plaintiffs could obtain a remedy. This matter was debated in another place and the Government's spokesman, the right honourable gentleman Mr. Mayhew, took a distinction between two other clauses of the Bill. I should like to refer to that and then come to the example, and put the point to the Government as an example on this clause.

In regard to Clause 3 it had been put to him—and I quote him at col. 1100 on 11th March: A strike to secure the dismissal of an employee held to have been unreasonably excluded from a union would not infringe his right not to be unreasonably excluded. Such a strike would not be held to be unlawful and, hence, unprotected by immunity". Thus, a strike in consequence of an industrial tribunal decision, where he had been reasonably or unreasonably excluded, would not be unlawful.

He then went on to face another example which had been put to him, in the form of a strike in protest against the contribution which the shop steward, or union, had to pay under Clause 9 of the Bill, to which we shall come, in third party proceedings in an unfair dismissal case. In regard to such a strike against the obligation of the union to pay up under such a contribution proceedings, he said: But it is quite otherwise in the hypothesis put forward today by the honourable and learned Gentleman. The whole purpose there [in that strike] is to infringe in reality the employer's right to receive a contribution from the union". I understand the argument in the second case. It is a strike, in a sense, against the decision of the tribunal. Nevertheless, I say to the Government that anyone reading the Bill would not see that that remedy lay. No one would find in the Bill the statement that a strike in protest against the joining of a shop steward in third party proceedings is unlawful. It may be said that that would obviously be unlawful means. It would perhaps be so to a lawyer, but not necessarily to anybody else.

There are much more difficult areas of the Bill upon which this amendment is the first of two occasions upon which we shall raise the matter with the Government. In regard to this clause, suppose that there is a threat to take industrial action in a case where a large number of employees wish to have the works organised on a unionised 100 per cent. basis, except perhaps for two or three people who have been there so many years that nobody minds, because that is the usual situation. Whatever experience other noble Lords may have had, I have had many experiences of discussing this with both managers and trade unionists, where they say, "Of course we have a closed shop, but there is Bill, George, and Joe and they have been here for so long and nobody minds them not joining the union." That is the usual situation.

Suppose the employer then is faced with a demand from the workers before they go through the new process of a ballot, before they formalise anything, "But we really must get rid of Smith because Smith is going around wrecking everything. Not only is he refusing to join the union but in all sorts of other ways he is inflaming passions at the workplace." Suppose in that case there is a threat to take industrial action without going through the process of a ballot for a new union membership arrangement. No doubt if the employer submits and dismisses, that would be an unfair dismissal.

On the basis of the judgments of the Master of the Rolls, and of many other judgments in my notes which, in view of the hour, I will not quote, the primary question arises: Is the threat to take industrial action unlawful? That is to say, is it a threat to use unlawful means? If it is, it should be put in the Bill. We have moved an amendment here to say that it is not. We say that it should not be, because the Government have chosen their own remedy in that matter; that is to say, if the employer dismisses he can join the union in third party proceedings.

We say that therefore the logic of that, to which we are coming in Clause 9, is that that is the remedy chosen by the Government; that is a remedy which in certain respects we shall contest because we think that it is undesirable in industrial relations terms as put forward, but, that being the chosen remedy of the Government, it is quite wrong then to enact a Bill which would allow a court to say, "Not only is the union to be joined in third party proceedings and be made liable there, but before anything happens an injunction can be issued by the courts because what the workers have threatened to do is threatening to use unlawful means".

It is on that basis that for the first time we raise with the Government one of the most important issues underlying the words in the Bill. What I have called the "hidden minefield of illegalities" is becoming a major problem in industrial relations law; the hidden minefield of unlawful means. On this occasion we say that the amendment is reasonable within the logic and structure of the Bill, because the unlawful means and sanction they have chosen later, in Clause 9—in this respect not having said that such industrial action is unlawful—should clearly be declared not to be so. If the Government wish to resist the amendment, then, in order to make things clear, they should introduce a new provision on Report saying that such industrial action will be unlawful. I beg to move.

Lord WIGODER

As one who much admires the contribution made by the noble and learned Lord, Lord Denning, to the development of English law, might I say how encouraged we are to know that he now has the full support of the trade union movement?

Lord WEDDERBURN of CHARLTON

Not support; admiration.

Lord MACKAY of CLASHFERN

The questions raised by the noble Lord, Lord Wedderburn of Charlton, are quite difficult ones. We do not believe that the courts would willingly entertain an action in tort when the individual bringing it had a clear remedy under statute, and that would seem to be the position not necessarily in all the examples he gave but certainly in the general area covered by the amendment. In the case considered by the amendment, both the employee dismissed and the employer induced to dismiss would have remedies under the Bill in Clauses 6 and 9 respectively. The Court of Appeal's ruling in Cory Lighterage v. TGWU is authority for the view that courts are not willing to entertain such claims in tort, albeit that this case arose under the somewhat special circumstances of the 1971 Act. Further support for my belief here is Section 129 of the Employment Protection Act 1978, which provides that the remedy of an employee for an infringement of his rights conferred by the Act—and this includes the rights given by this Bill under Clause 6—shall be by way of complaint or reference to an industrial tribunal and not otherwise. In any event, we would think that a clause for the avoidance of doubt covering so narrow a field as this would, instead of avoiding doubt, create doubt in a large number of other areas, and accordingly I ask the noble Lord to withdraw the amendment or, if he is not prepared to do that, I must invite the Committee to reject it.

Lord WEDDERBURN of CHARLTON

We are very disappointed at that response. The Minister made four points, the first being that tort actions are not available. I only wish the hour were not so late, in which case I would read half a chapter of one of the leading text books which shows the number of tort actions that are available on the basis of unlawful means of exactly this kind. The noble Earl, Lord Gowrie, need not worry; I am not going to read it. I merely state that it is available in the Library if he wishes to see it.

The EARL of GOWRIE

I was not worrying. I simply remarked, "The night is young".

Lord WEDDERBURN of CHARLTON

The noble Earl is provocative, but I shall not read it all the same. The Cory Lighterage v. TGWU case on which the Minister relied is clearly distinguishable. If one reads the three judgments of the Court of Appeal, especially that of Lord Justice Buckley as well as Lord Denning, it is clear that the decision there—that a breach of Section 5 of the Industrial Relations Act 1971 was not unlawful—means, because of the construction of that section, that it is not matched by Clause 6. It is quite true, thirdly, that under Section 129 of the 1978 Act the employee is given only the rights stated in the Act and now in the Bill which amends the Act.

As to the fourth point, the employer, he is not excluded, and it could be not only the employer; a third party might take action for an injunction against a strike because if a third party were to be injured by the use of unlawful means, it is now clear on the authorities that he could obtain an injunction. So let us forget the employer and employee; it is clear that a third party who might be injured by, say, a cessation of work, might get an injunction on this ground.

This is a matter on which we feel very strongly indeed in relation to the Bill and we shall return to it on a new clause. After consultation with my noble friends, we feel so strongly about this hidden minefield of illegality that, to register our position (to which, as I say, we shall return later on a new clause) we intend to divide on this amendment because we believe this to be a fundamental question in which trade union rights are threatened by the measure.

12.10 a.m.

On Question, Whether the said amendment (No. 52) shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 89.

CONTENTS
Allen of Fallowfield, L.	Goronwy-Roberts, L.	Parry, L.
Birk, B.	Janner, L.	Peart, L.
Blease, L.	Kaldor, L.	Pitt of Hampstead, L.
Brooks of Tremorfa, L.	Kirkhill, L.	Ritchie-Calder, L.
David, B. [Teller.]	Llewelyn-Davies of Hastoe, B. [Teller.]	Stone, L.
Davies of Leek, L.		Underhill, L.
Elwyn-Jones, L.	McCarthy, L.	Wedderburn of Charlton, L.
Gaitskell, B.	Morris of Kenwood, L.	Wells-Pestell, L.

NOT-CONTENTS
Airey of Abingdon, B.	Gisborough, L.	Mowbray and Stourton, L.
Amherst of Hackney, L.	Glendevon, L.	Murton of Lindisfarne, L.
Ampthill, L.	Gormanston, V.	Orkney, E.
Bellwin, L.	Gowrie, E.	Orr-Ewing, L.
Belstead, L.	Gray, L.	Renton, L.
Bessborough, E.	Greenway, L.	Rochester, L.
Boothby, L.	Grimthorpe, L.	Salisbury, M.
Bradford, E.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Sandford, L.
Bridgeman, V.		Sandys, L.[Teller.]
Brookeborough, V.	Halsbury, E.	Savile, L.
Burton, L.	Hankey, L.	Seear, B.
Buxton of Alsa, L.	Hanworth, V.	Selkirk, E.
Caithness, E.	Harvington, L.	Sempill, Ly.
Caldecote, V.	Hatherton, L.	Sharples, B.
Camoys, L.	Henley, L.	Skelmersdale, L.
Chelwood, L.	Hives, L.	Spens, L.
Cottesloe, L.	Hornsby-Smith, B.	Strathcarron, L.
Craigmyle, L.	Killearn, L.	Strathcona and Mount Royal, L
Cullen of Ashbourne, L.	Kilmany, L.	Sudeley, L.
de Clifford, L.	Kimberley, E.	Swinfen, L.
De L'Isle, V.	Lauderdale, E.	Trefgarne, L.
Denham, L.[Teller.]	Lindsey and Abingdon, E.	Trenchard, V.
Donegall, M.	Long, V.	Trumpington, B.
Duncan-Sandys, L.	Lyell, L.	Vaux of Harrowden, L.
Elliot of Harwood, B.	Mackay of Clashfern, L.	Vickers, B.
Elton, L.	Mackie of Benshie, L.	Vivian, L.
Faithfull, B.	Mansfield, E.	Wigoder, L.
Ferrers, E.	Monson, L.	Winstanley, L.
Fortescue, E.	Montagu of Beaulieu, L.	Wynford, L.
Gainford, L.	Mottistone, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 6 agreed to.

12.18 a.m.

Lord ORR-EWING moved Amendment No. 53: After Clause 6, insert the following new clause:

"Unlawful discrimination in relation to contracts for the supply of goods or services

(. It shall be unlawful for any person who makes or invites an offer or tender, or who places a contract, for the supply of goods or services—

1. (a) to discriminate in making the offer or invitation or in the placing of the contract on the grounds that any person to be employed in connection with the supply of those goods or services (whether by the other party to the contract or by some other person) is or as the case may be is not a member of a specified or any trade union; or
2. (b) to impose any term in the contract which 354 is either more onerous or less favourable to that other party than that which would have applied but for that ground.").

The noble Lord said: Towards the end of our previous debate, Lord McCarthy asked for more statistics. The result of that vote was 89 to 23, and that must shame him. I can give him some more statistics. This amendment concerns the civil engineering industry. There are 880,000 who work in the civil engineering industry, and only 250,000 of those are currently trade union members. So it is an industry which is very thin on its trade union membership.

There are coming about some closed shop arrangements by a back door; and, if I may again borrow a phrase, from Lord Wedderburn on this occasion, it is the hidden minefield of illegality to which I want to draw attention. An amendment similar to this was moved in the other place by Mr. Bruce-Gardyne, and this, again, was at the request of the Federation of Civil Engineering Contractors, because they are the chief sufferers. In replying for the Government, Mr. Mayhew was very sympathetic, and he saw the problem.

What is happening is that public authorities are increasingly putting into their contracts a demand that no one should go on to the site unless they are trade union members. This is demanding of your contractors, of your tenderers, a closed shop; and this applies to local authorities, public authorities, British Airways—and I can give instances—and the nationalised industries. In particular I have one in my hand concerning shipbuilding. This is an example of the sort of clause which the shipbuilding industry (British Shipbuilders, now nationalised) are demanding. It says: The contractor shall ensure that all persons on the works, whether employed by him or by any of his subcontractors, whether nominated or otherwise, are acceptable to all the trade unions represented within the employer's shipyard".

This is closed shop by stealth. I suggest to my noble friend that it is an unacceptable practice. What happens is worse than this because it can adversely affect many individuals. It is an industry which has less than one-third of its work force in trade unions. If a subcontractor wins a contract and assembles his workforce and starts work, he may ask to be released from the obligations if it concerns one or two or, perhaps, 100 of his 1,000 work force. If he is not released (and this has happened in the past) he then is called upon to sack those non-trade unionists and move them from the site. They are not protected by law; they do not earn any compensation; and that is brought about by this particularly vicious clause. I hope that my noble friend will look sympathetically at this. It is a practice which circumvents the democratic principles contained in this Bill concerning the closed shop. This is closed shop by the back door, by stealth. It is a hidden minefield of illegality, again to quote the noble Lord, Lord Wedderburn.

Viscount CALDECOTE

I have considerable sympathy with the amendment proposed by my noble friend Lord Orr-Ewing. I entirely agree that the practice he describes whereby contractors are, in effect, forced into signing contracts with union-labour-only clauses is really iniquitous. It is against natural justice; it spreads the effect of the closed shop and it can face the contractor with the most unenviable choice between sacking the non-unionists or getting out of the business. I agree with him that something should be done about it. Therefore, I shall read with considerable interest what my noble friend Lord Gowrie will say in response to this proposal; but I have little doubt that his reply will reflect that of Ministers in another place in response to similar amendments put down there on Report stage. I must say that I see the force of the arguments then adduced by Ministers that to make unlawful union-labour-only clauses in contracts would be unlikely to be effective in practice and would raise, as the amendment does, the difficult question of trade union immunity.

But I wonder whether there is not another way of approaching this problem. To be specific, it seems to me that we might make use of a concept which is already in the Bill in Clause 9, that of joinder. Would it not be possible to extend this so that if a client-employer insisted on applying a union-labour-only clause and as a result an employee of a contractor was sacked unfairly because the contractor has to comply or go out of business, then the contractor should be able to join the client-employer for the unfair dismissal proceeding as well as, presumably, with the union in forcing the union-labour-only clause? This would at least enable financial responsibility for any compensation to be placed where it rightly belongs; that is, with the client-employer who gives in to pressure in applying these very objectional clauses. It may not be the whole answer, but it would certainly be better than nothing and I believe it is an idea which is well worth looking at. I commend it to the Government in the hope that they might propose an amendment later on at the Report stage.

Lord RENTON

In our common law the use of undue influence does in certain well-established circumstances invalidate a contract. The circumstances mentioned in my noble friend's new clause have never been considered by the courts in that context. But, on the other hand, we should surely lean against the use of undue influence in the circumstances which this new clause covers. Therefore I should like to join with my noble friends in making a plea to the Government to give this matter some further and sympathetic thought.

Lord HANKEY

I also should like to support this amendment. This sort of action which the noble Lord, Lord Orr-Ewing, has described is thoroughly bad for industrial efficiency and it is not good for getting the contracts which this country is out to obtain for export orders.

12.26 a.m.

The EARL of GOWRIE

These new clauses are directed to the problem of the terms of commercial contracts which require one of the parties to use union labour only on the work covered by the contract. It thus imposes on the employees of the contractor a requirement to be a member of or, if not, to join a union and in this way can spread the effects of the closed shop in what my noble friend Lord Orr-Ewing called a "back-door" fashion. I want to be clear about the Government's position on this. We dislike this practice. It can readily be seen as a way of requiring reluctant contractor employers to impose conditions of union membership on their employees who have no desire whatsoever to join the union. I must regretfully say to my noble friend that I see some considerable difficulties in the solution to the problem—and we share his view about the problem—in the form of his amendments.

As my noble friend Lord Caldecote said, these reasons were fully adduced by my honourable friend the Parliamentary Secretary in another place. In view of the lateness of the hour, I should like to adduce them quickly. It is doubtful in our view whether the proposed new clauses would work as my noble friend intends. It would be difficult for the disappointed contractor to prove the discrimination complained of. On the other hand, someone whose tender had been properly rejected might involve the main employer in costly and unnecessary litigation. That is something which industry in general would not thank this Government for getting it into.

The potential liability under this new clause might also dissuade employers from using contractors at all. That would not help anybody, least of all the contractors and those who might otherwise get employment from them. So, however much one dislikes the effect of the imposition of union membership by these means, one can identify a graduation in such matters. Some motives are less acceptable than others.

There is then the vexed question of sanctions. If a union were going to be penalised for taking industrial action in support of its policy in this matter, it would have to be deprived of the immunity conferred by the 1974 Trade Union and Labour Relations Act. This is what the later new clause which forms Amendment No. 53A attempts to do. It makes actionable in tort any interference with the performance or placing of a contract on the grounds that a person who is not a member of the specified union would be involved in the work which the contract entails. That is a pretty wide formulation, in our estimation. It would catch all the examples I have cited and would ignore the graduation of motives which I have suggested may apply in these cases.

Some would say that this would be a good thing. Others would point out—and I would tend to agree with them—that that might serve only to unite opposition to the clause. In its terms, the new clause in Amendment No. 53A would go wider than simply this question of contractors' labour which we have been discussing in relation to my noble friend's first amendment (No. 53). It would also catch disputes about the union membership of a group of workers of the same employer as those taking the industrial action without any outside contractor being involved. Therefore it would catch a whole range of primary disputes about union recognition, demarcation and union membership generally. We should not take action on the union immunity aspect of these proposals in advance of the further Green Paper review of the whole question of trades union immunities which we have promised for later this year.

There is, however, a step which the Government might feel could be taken now. The central purpose of the closed shop provisions of the Bill is to provide basic protections for employees against abuses of the closed shop, and these protections must, of course, be maintained. But the imposition by client employers on contractors in a dependent commercial position of "union labour only" clauses in contracts can place contractors who have no other suitable work available for their non-union employees in a very invidious position. Either they lose a contract vital to the continued survival of their business or they dismiss such employees and then perhaps find they have to pay substantial sums in unfair dismissal compensation, as we saw in the earlier debate on the closed shop, and that can go nearly as far as £17,000 today. So the extended protections for individuals in the Bill and particularly the protection for existing employees in the closed shop ballot provision, while absolutely vital, in our view, may, I accept, increase contractors' difficulties in this respect.

So we are anxious to do something to help, and it is in that context that my noble friend Lord Caldecote made an interesting suggestion. If an employee who is not a union member is dismissed in consequence, a contractor who is facing a claim of unfair dismissal might be able to join the client employer in the case, and the latter might be required to pay any compensation awarded. This, in the Government's view, will enable the responsibility for these clauses, and therefore their ultimate financial consequences, to be placed where they belong—with the employers who insist on them—and therefore will provide a strong disincentive for the adoption of such clauses. I should like to consider that issue between now and the Report stage, because there may be a solution to this problem there.

Lord MONSON

The official Opposition have so far remained mute on this amendment. Would it be in order to ask whether they approve or disapprove of the practices described by the noble Lord, Lord Orr-Ewing?

Lord McCARTHY

I think the position is quite simple. We took the view that the Government were going to say what they said in another place and point out that this is a totally impracticable and ridiculous amendment. They seem to be thinking again, so we shall come back on Report. We oppose this.

Lord ORR-EWING

I am sorry that my noble friend on the Cross-Benches— perhaps I should say "the noble Lord on the Cross-Benches", although everyone is "a noble friend" at this time of night—has not received a more satisfactory answer. I am grateful to my noble friend for having gone rather further in his reply than the Minister in the other place was able to do when this arose. I do hope he will look at this seriously and come forward with constructive suggestions, because clearly it is a practice which is alien to the whole philosophy behind this Bill and certainly could be very damaging to the civil contracting industry. I beg leave to withdraw this amendment, on the understanding that my noble friend will do something before or during Report stage.

Amendment, by leave, withdrawn.

12.34 a.m.

Lord ORR-EWING moved Amendment No. 53A: After Clause 6, insert the following new clause:

"Interference with contract on ground of non-union membership

(.—(1) Nothing in section 13 of the 1974 Act shall prevent an act to which this section applies, from being actionable in tort in any case where a person interferes with the performance of a contract or with the placing of a contract on the grounds that the fulfilment of the terms of the said contract have involved or would involve, at any stage, any person who is not a member of a specified trade union.

(2) Expressions used in this section shall have the same meanings as in the 1978 Act.").

The noble Lord said: I shall try to speak succinctly. This is a similar amendment in that it deals with the printing and publishing industry, which has been beset by closed shop problems over a very long period: hence the difficulty in bringing forward a code of practice for that important area in Fleet Street and elsewhere. The present practice is that the NGA publishes a book called, A Fair List, and any illustrations or any documentation or any print coming forward from any company has to be in this fair list or it is banned. That, again, is a back-door closed shop.

SLADE was acting in a similar but an even more vicious way in recruiting. One of our sons was operating a very small company of only four or five people and he was a victim of the SLADE practice. What was so sad, of course, was that when they did eventually recruit the one person who had to be recruited because all their work was blacked they had not got the stickers to put on the work because they had run out of them. A further six weeks of work was therefore aborted and that very nearly sent this small company bankrupt. That must be only one of a number of illustrations of unfair practices.

Here is a book called, A Fair List. It has 220 pages with various names. When one submits work one has to give one's number as printed in this book if the work is to be accepted. Here is a closed shop by both SLADE and the NGA and no doubt by other print unions, which has come into existence or is coming into existence through bad and, I would think, highly uncompetitive practices. I hope my noble friend will look sympathetically at this and see what he can do about it.

Lord HANKEY

I should like to support my noble friend Lord Orr-Ewing on this amendment also. This is a form of censorship which I should have thought was objectionable to all sides of the Committee.

Lord SPENS

I wish to say a few words about this amendment. I want to draw the Minister's attention to what happened some 20 years ago in the Restrictive Practices Court. The Federation of British Carpet Manufacturers were one of the early victims of the court. They were taken to the court, and although the noble and learned Lord, Lord Wilberforce, was one of their counsel he was not able to get them off the charges that were brought against them. One of those charges was that they operated a wholesale list. That list was for responsible wholesalers—I think there were about 120 of them—who would be given a wholesale discount, and the 50-odd members of the federation would not give wholesale terms to anyone who was not on that list. That was decided by the court as being contrary to public policy, and I would say that was a very similar situation to what SLADE is doing now.

The Earl of GOWRIE

I did refer to this amendment and did, I think, deal with it in general terms during the discussion on the last amendment. May I say to the noble Lord, Lord Spens—at this time of night I shall probably be referring at any moment to "my noble friend Lord Wedderburn"—that the issue of SLADE will be coming up on Clause 17 and therefore we shall have another go at it then. If he reads what I have said as a general reply to Amendment No. 53, he will see that I have tried to go a little further than was the case in the House of Commons. I hope we can leave it at that for the time being.

Lord ORR-EWING

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 [Exclusions of rights]:

12.40 a.m.

Lord McCARTHY moved Amendment No. 54: Page 8, line 38, leave out ("two years") and insert ("six months").

The noble Lord said: The object of this amendment is to take out the provision which allows firms employing fewer than 20 persons to dismiss unfairly for up to two years, and to go back to the situation as it existed before this Government came into office, when the period for unfair dismissal was six months. I take it that this provision is to be justified, as it was justified in another place, by the argument that small firms are particularly hurt by the fact that they are unable to dismiss workers unfairly for two years. It is not clear tonight whether the noble Earl will defend the provision on the grounds of the evidence, or on the grounds of psychology. He cannot defend it on the grounds that they do it already, because this is a new provision. Whatever the reasons, we say that there is no evidence and we are concerned with the psychology of workers in small firms. Therefore, I beg to move.

Lord DAVIES of LEEK

I must come in here for a short while, despite the late hour. There is a fallacious argument here, that the unfair dismissal provisions of the Employment Protection (Consolidation) Act of 1978 are inhibiting small firms. This is not correct and I was delighted to find that the CBI do not agree with it. Consequently, I shall have mercy on the Committee and on myself, and shall not go into this matter in depth. But on both sides there are people who know that we are using legislation by reference and we keep doing it. There is a Lord Chancellor here who, in the old days, objected to the expansion of this practice.

I look at what is proposed here: After section 64 of the 1978 Act there shall be inserted— 64A.—(1) Subject to subsection (2), section 54 does not apply to the dismissal of an employee from any employment if the employment is less than two years. The Government have put two years into this Bill and we believe that it is unnecessary and unjust.

Without going into the matter in further detail, the maternity allowances, and the way that women have to give written accounts, interfere with the liberty of the individual. There is no purpose whatsoever in extending the period. Consequently, I ask the noble Earl—and so as not to make the Committee bad-tempered, I will sit down after this—why the Government have put in the two years.

The Earl of GOWRIE

That is a very clear invitation, to which I am delighted to respond. We went into the principles of this matter to some degree in the debate on Clause 5 and I am aware that, sooner or later, the noble Lord, Lord McCarthy, is—as was the noble Lord, Lord Wedderburn, when we were debating Clause 5—determined to flush out of me attitudes to evidence about the disincentive effects on small firms of employment protection legislation. The noble Lord, Lord McCarthy, earlier made the point—it was a perfectly fair debating point—that a lot of our evidence was anecdotal. Of course it was our business, in opposition, to consider such evidence, and I must say it was also very much a concern of the Liberal Party at that time. Indeed, so much so was this a joint concern of the Liberal Party and the Conservative Party that, as a result, the last Government saw fit to appoint Mr. Harold Lever, now Lord Lever, to take a special interest in small firms.

As I reminded the House at Second Reading, our fears about the disincentive effects of employment protection legislation were echoed in another place—or pre-echoed would be a more accurate way of putting it—by Mr. Lever, as he then was. Surveys were conducted by the Policies Studies Institute and the Opinion Research Centre on behalf of the department. While certain of the replies recorded in the surveys suggested that some employers were not unduly troubled by the legislation, other responses showed that the legislation was a problem. Seventeen per cent. of those who responded to the Policies Studies Institute survey said that employment protection legislation had had a major impact. In the case of the ORC survey, 24 per cent. of those who responded said they would have taken on more people but for the legislation.

Lord WEDDERBURN of CHARLTON

Surely the noble Earl would accept that that statistic was based on a prompted question. On an unprompted question, the figure was almost minimal.

The Earl of GOWRIE

To do justice to me, the noble Lord will know that when we debated this matter on the first orders last summer, and then again a few hours ago here, I talked about the closed shop and expressed my general scepticism about polls and surveys as a method of eliciting information, because so much depends, as the noble Lord has said, on which way you phrase the question. You can prompt the question to get the answer that you want, and that is why I show a certain scepticism in these directions. The noble Lord, Lord McCarthy, has teased me for being frank about this, but I think that at Second Reading the noble Baroness, Lady Seear, shared my view when I said that our feeling was that a lot of small employers did not understand very well employment protection legislation, and probably overestimated it, that this had had a marked disincentive effect on recruitment, and that one cannot survey with any accuracy the disincentive effects on employment on those people who have not obtained employment. In other words, surveys have to be post facto operations.

We are quite happy and secure to rest upon our impression, our political judgment, our manifesto commitment: on the fact that this concern was shared by the two other principal political parties in making these provisions. Where we quarrel with noble Lords opposite is in their attempt to show that these provisions damage employees. We see them entirely as correcting imbalance and providing a better psychological atmosphere.

In regard to this particular amendment and the question put to me by the noble Lord, Lord Davies of Leek, we believe that one year is the appropriate qualifying period for firms employing more than 20 employees. The purpose of the two-year period for firms of 20 or fewer is to relieve them of some of the burden of this legislation and to encourage them to take on labour, perhaps to meet a fairly short-term increase in demand. It is firms of this size which find the legislation most onerous because often they have only one tier of management and no personnel specialist. No evidence has come to our attention that small firms are more liable to dismiss unfairly. The rights of employees retain their protections. It is a relatively small issue. As I said earlier, it is the correction of what we feel to be an imbalance.

Lord DAVIES of LEEK

I am afraid that the old-fashioned phrase "cowboys" or "the lump" will be encouraged, and that might cause a great deal of distress so far as industrial relations are concerned.

The Earl of GOWRIE

That is a tax issue.

Lord ROCHESTER

In view of the remarks made by the noble Earl concerning the attitude of the Liberal Party, would he accept that in certain orders which we debated last November I, speaking for my noble friends, anticipated the employment protection legislation which is now being introduced? I said that in my view in terms of rights, such as those we are now discussing, there was not really a case for distinguishing between firms simply on account of their size; and I think I am right in saying that nothing that the noble Baroness said at Second Reading on this Bill differed from what I have now said. I do not want to make a great meal of this. We shall come to the employment protection clauses a little later, but in view of what the noble Earl said I felt that I should say something on those lines just to put the matter straight as I understand and recollect it.

The Earl of GOWRIE

I am happy that the noble Lord should underscore his attitudes and those of his political party, although he will understand that I would wish to draw attention to the fact that for many years the Liberal Party have made a great to-do about small businesses, but when it comes to modest, simple amendments to improve the balance in favour of small businesses they tend to qualify their support. So I do not think that is a very creditable stance.

Lord ROCHESTER

I am anxious that we should not have a prolonged ping-pong match. We are in favour of small businesses, of their formation and development, but we have reservations on this particular point in that regard.

Lord McCARTHY

I am afraid I cannot accept what the noble Earl has said. He can say, if he likes, that he does not care what the evidence says, but he cannot say that he has the evidence on his side, and when we demonstrate, as we have done repeatedly tonight, that the balance of evidence is against him he cannot then say that he does not care. He talks about small firms and there being no evidence that small firms are worse in unfair dismissal cases than large firms. The best piece of evidence—and there is quite a lot—comes from the Department of Employment for 1978, which shows that firms with fewer than 20 employees lost 39 per cent. of their cases at industrial tribunals, whereas firms with over 1,000 employees lost only 16 per cent. of their cases.

Finally, the noble Earl cannot say that it does not damage employees. It takes away the legal rights from workers in firms of fewer than 20. Of course it damages them; it gives them absolutely no protection against unfair dismissal. I am afraid we cannot withdraw this amendment.

On Question, amendment negatived.

[Amendment No. 55 not moved.]

12.53 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 55A: Page 8, line 44, leave out ("associated employer") and insert ("other employer or otherwise working as workers at that same place of work").

The noble Lord said: This amendment involves a legal problem of very great social consequence. As my noble friend Lord McCarthy has pointed out, under the new clause workers will lose their unfair dismissal rights for a whole year, and they will lose those rights under the new Section 64 A(1)(b) unless at any time during the period the number of employees does not exceed 20. To be strictly correct it is if the number of employees added to the number employed by any associated employer exceeds 20. In that formula it is the words "employees" and "associated employer" that give us grave cause for concern. Our formula would, in the strict legal sense, add to the employees employees of other employers working in the same place, and others engaged as workers at the same place.

I must explain why we put that forward. It is because there is in law a distinction which today is frequently not matched in society; that is to say, the employee is someone who in law works under a contract of employment. Many persons who, to the layman, look to be employees, turn out upon closer inspection to be persons who are workers within the extended definition of Section 30 of the 1974 Act but who are not strictly employees. Therefore, it is quite clear that there would be three problems with the clause as it stands.

First, there would be enormous uncertainty because employees in the strict sense might not know whether the person who had been added to the labour force as number 21 was an employee or a worker. I will come back to the distinction at the end of my remarks to illustrate how difficult that would be. Secondly, because of the distinction, it would be very easy for an employer who wished to keep his workforce out of unfair dismissal rights—and the Government's own case is that small employers are afraid of these rights, and therefore on their present psychology, and presumably their psychology under this Bill, where their fears are reinforced, they would be still afraid—to be tempted to keep his employees down to 20 and to take on workers above 20.

Thirdly, that leads to the most serious social consequence, in an industry that concerns many trade unions, which is very badly organised and which perhaps it would be agreed on both sides of the Committee is in grave need of reform in all parts of its industrial relations; that is, the construction industry. If these firms employing 20 or fewer workers are construction firms who take workers on the lump, as it is called, or labour supply contracts, then there is every incentive for them to extend the lump. And if ever there was a social evil, in tax terms, industrial relations terms, trade union terms and management terms, that should never be encouraged by statute, it is the lump. Every trade unionist in the construction industry knows that is so. But the lump has extended far beyond construction.

That is why I conclude my remarks—and I suggest to the Government that they might well consider accepting an amendment along these lines—by referring to the facts within the past two years in regard to the distinction between an employee and a worker—that is, a person who is employed under a contract of service, of which the old test was whether the master controlled the servant in the way he did the work, to which has now been added the organisation test (is the employee part of the organisation of the workforce, or is he in business on his own account?), the mixed test, and the ordinary commonsense test. Whenever judges, with great respect to them, revert to the ordinary commonsense test, you know they are really in trouble because there is nothing else left. Indeed there is nothing else left here, because the distinction is becoming very difficult. Are they employees or are they persons who occupy a position under a contract for services, independent contractors or workers under the labour law legislation?

It took a hearing in the industrial tribunal, the Employment Appeal Tribunal, and then a 20-page judgment in the Court of Appeal just a few months ago, in the case of Young and Woods v. West, to decide whether a sheet metal worker at a firm which employed over the course of time between 20 and 25 people, was an employee in the strict sense, or under a contract for services and a worker in the broader sense. It was finally decided by the Court of Appeal—I wish I could cite the details because it makes the point so clearly—that the sheet metal worker was a self-employed person in terms of tax but an employee in terms of labour law.

In a previous case, the Ferguson case, a scaffolder ended up in a different position. In the Massey case of 1978 an insurance agent ended up under a contract for services. These have all gone to the Court of Appeal in the last two years. The chief oboist at the London Philharmonic last year was held to be an independent contractor and not an employee. These cases are food for lawyers all the time. It really is not good enough to leave the cut-off point—the point at which workers lose their rights—as the point where a person is added to the workforce under a formula by which no lawyer can predict the outcome of the case.

Up and down the land people are working on the lump. It is a grave social problem and should not be encouraged by a clause of this sort. As the clause stands, it encourages the lump; it encourages the employer who wants to keep the labour force below the 20 mark to take the extras on under a contract for services, or an independent contract, or as a worker. Surely that cannot be right and surely employees are entitled to know when the number is above the 20 mark by a clear test. Surely there should be no encouragement of the lump? I beg to press this amendment strongly upon the Government's consideration.

Lord MACKAY of CLASHFERN

As is obvious, the reason for requiring employers and associated employers to aggregate their employees for the purposes of this clause is to prevent abuse of the provision by employers. I have no doubt that the noble Lord, Lord Wadderburn, believes that the amendment would widen the scope of the aggregation of employees required by this clause. I would suggest, however, that it is not clear and that the amendment might well have the effect of narrowing the circumstances in which employers would be required to add people in.

Under the amendment, employers would be required to aggregate only those employees or other workers working at one particular place of work, presumably that of the dismissed employee, although that is not absolutely clear from the terms of the amendment. It talks about the "same place of work", but I think there is no antecedent to that.

Under our provision, an employer running a number of separate but associated businesses from different premises—and that is particularly often true of the construction industry—which is surely how he would be expected to operate, would have to aggregate all his employees and forfeit the exemption if they totalled more than 20.

I should perhaps add that we do not think that employers will be prepared to go to the trouble of contracting out their work to self-employed workers just to secure the benefit of this provision. I presume preventing this abuse to be the purpose of the insertion of the phrase "or otherwise employed to work", in the original form of the amendment.

On the question of extending this to include workers, I presume that it might be an extension of the clause, although otherwise the amendment is a restriction. We think it hardly right to extend the provision beyond employees where the obligations in question are owed by the employer. No such connection or obligation exists with workers who are self-employed or employed by employers elsewhere.

In the circumstances, although I see plainly the point the noble Lord is making, we consider that the clause as drafted is preferable to what it would be with his amendment, and I would ask him to withdraw the amendment or I would advise the Committee to reject it.

Lord WEDDERBURN of CHARLTON

I take the noble and learned Lord's point. There would be an argument about drafting but I shall not make it. I think there is an alternative explanation which shows that it does not narrow the clause. Nevertheless, I take the point on the drafting. We are most disappointed about the point made by the noble and learned Lord on the lump. We would ask the Government to think again. To register that on the record we shall not divide, but we shall attempt to carry this.

On Question, amendment negatived.

1.4 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 56: Page 8, line 44, at end insert: ("and (c) the dismissed employee was on being engaged informed in writing of the effect of this section.")

The noble Lord said: This is an amendment to put back into the Bill a paragraph which the Government, in their wisdom, included in the first draft of the clause which they put forward. This is a new section to be added to the 1978 Act which, after all, takes away workers' rights.

In Standing Committee in another place on 4th March and 6th March, both the Secretary of State and his honourable friend Mr. Mayhew, said that the Government thought it was—to quote the Secretary of State— an important point to include in the section, paragraph (c) which our amendment seeks to restore to the Bill, that is to say, that when an employee is engaged by one of these employers who is not under the same obligation as other employers not to dismiss him unfairly, he should be told so in writing.

There is, of course, the problem of the existing employees. We considered putting down an amendment which would go wider than the Government's original paragraph to include existing employees. If the Government invite us to do that on Report and so cover the entire workforce, we shall happily do so. Indeed, it should be considered. However, we thought it right to probe again the Government's very own words which we put to them, because no explanation was ever really given as to why they were withdrawn. They were withdrawn on Report on 24th April, at col. 651 of the Official Report when the Secretary of State said: At that time"— that is, in Committee— we still maintained that, on balance, it was probably right to keep the notification. We have thought about it a great deal since then, and I have been aided by my hon. Friend the Member for Basingstoke … who is Under-Secretary of State for Industry. I have never met anyone who is more persistent over a point. If he serves small businesses as well as he has badgered me over the past few weeks, there will not be much wrong with small businesses. No doubt the noble and learned Lord's right honourable friend is badgered in many parts of Whitehall, but the mere fact that he is being badgered is no reason for withdrawing from a Bill a paragraph which he previously said was very important.

Surely there is no reason for withdrawing the notification to the employees. The only suggestion of a reason on Report was that it would be too big a burden upon the employer in the small firm. But that surely cannot be right. He must keep a record of how many employees he has, otherwise he will not know when he can and cannot dismiss an employee, with a risk of unfair dismissal litigation in the tribunal. Presumably he keeps a record, so when he is still employing new workers below 20, why should he not just give them a slip saying, "Under Clause 64A your unfair dismissal rights do not run until the later period." That really does not seem to be too big an onus. The Government are out for balance. They keep talking about striking a balance. To strike a balance between a piece of paper which the employer has to give the worker and the loss by the worker for a whole year of his rights on unfair dismissal really does not seem excessive. I beg to move.

Lord LYELL

The noble Lord has criticised the Government in fairly round terms. He castigated small businesses and had a good political dig at my honourable colleague down the corridor. He mentioned badgers and other strange animals. However, I would suggest that he and his noble colleagues, and indeed the Committee, might consider that really no small employer could benefit from the extended qualifying period for unfair dismissal in respect of any employee, unless in this particular case he had notified that employee on engagement, when that employee first signed the contract of employment, or was taken on, that he, the employee, would have to serve an extra year before acquiring the right to make a complaint of any unfair dismissal.

In the particular case that the noble Lord is stressing, notification would be a condition of securing the extended qualifying period. If the employer had not told the employee that he would have to serve an extra year before he acquired the right to make a complaint of unfair dismissal, and the employee went ahead and made a complaint, then the employee's complaint would be heard, and perhaps be upheld—provided, of course, that he, the employee, had served the normal one-year period.

We can well understand the objections of noble Lords opposite to the fact that we decided to accept an amendment deleting the notification requirement. I acknowledge that to the noble Lord, Lord Wedderburn, this seems to be a controversial point, and certainly the arguments on both sides are fairly finely balanced. But we felt that the overriding consideration must be that the purpose of Clause 7—that is, especially to relieve the small firm of some of the burden of unfair dismissal provisions (and we had a fairly lengthy debate about this earlier this evening)—should not be defeated by the inclusion of this one requirement to notify. We know that small employers of the particular type about whom we are talking in this clause do not necessarily have the time or the ability to acquaint themselves instantly with what is popularly known as the small print of the law.

Inclusion of the notification requirement would, we believe, be very likely to result in substantial numbers of small employers suddenly finding that they could not benefit from this provision because of ignorance of what they might regard as a technicality in the law. The benefits of the provision would then be seriously undermined and it would not achieve its purpose of encouraging employers to expand and to take on extra workers.

On this side of the Committee some hours ago when the sun was high in the sky we were castigated about employment. Certainly we think that this is a particularly relevant point. We do not believe that the practical effect on employees of deleting this particular notification requirement will be at all significant. I would concede that it is desirable in principle that employees should be aware of their position under the law. But there is no other provision which places on the employer the obligation to inform a prospective employee of his rights. Furthermore, what employee will refuse a job—and I would ask the noble Lord, Lord Wedderburn, whether he, indeed, would refuse a job—which had been offered to him simply because he might at some future date be unfairly dismissed by his employer and would not be able to make a complaint to a tribunal unless he had worked with that employer for two years rather than one year? That is the point at issue in the amendment raised by the noble Lord. We would suggest that both employees and employers in this particular line of business simply do not think like this. It is for that reason that I wonder whether the noble Lord would reconsider his amendment.

Earl DE LA WARR

I should like to add a point to what my noble friend has said. I am a very small employer in that I am a farmer employing eight men. It is a grotesque idea that I should take someone on and write a letter to him telling him what might happen if he was to be dismissed. This is just not how things happen—not on farms anyhow, and I would hope not in any other business. If I could use the technical words, it does not pass the test of practicality, good sense or commonsense.

Lord WEDDERBURN of CHARLTON

I hope that the noble Earl, Lord De La Warr, observes his statutory obligations in giving his employees written particulars and statements of their terms and conditions of service; and in doing so it would seem not very excessive to ask him to put two more lines on that piece of paper which he is statutorily obliged to give to his workers, saying, "You fall within this section".

The only arguments that the noble Lord, Lord Lyell, seems to have advanced is that small employers are ignorant, which the noble Earl, Lord De La Warr, plainly proves they are not; secondly, that they cannot write on a piece of paper; and thirdly that small firms cannot get information. All my noble friends immediately said to me: "Of course they can; they do it all the time; they get information from chambers of commerce and all sorts of other people". Of course, small firms are sent information about this.

As for the fact: would the worker take the job with the small print on the piece of paper? My goodness, he would take the job. What with the economic policy of this Government there are too few jobs going around at the moment, and in that sort of context, not even to tell the man what his loss of rights will be seems extraordinary and excessive. We shall not withdraw the amendment.

On Question, amendment negatived.

[Amendment No. 57 not moved.]

1.15 a.m.

Lord PARRY moved Amendment No. 57A:

Page 9, line 6, at end insert: ("(3) Subsection (1) shall not apply to the dismissal of an employee to whom section 117 of this Act applies.")

The noble Lord said: The Committee will have noted that there are three amendments standing to my name and to the names of my noble friends Lady David and Lord Davies of Leek. They will have noted, too, that these supplementary amendments can well be taken together because they all relate to Section 117. The effect of Section 117 is that where a employee is employed by one party but in fact by virtue of some statutory provision paid by another party, the paying authority bears liability for any redundancy payable to the employee upon his dismissal by reason of redundancy. There is, however, no existing provision to the effect that continuity of employment of an employee continues to run even though, despite a change of employer, the paying authority remains the same.

The problem is exemplified by the case of a teacher employed in an aided school. Your Lordships will know that an aided school is a church school in which the religious worship and instruction are under the care of the management, the governors, and must be in accordance with the trust deed and of a denominational character. Where a teacher takes up employment in a new aided school where fewer than 20 staff are employed, he or she would not have those employment protection rights which are covered by Clause 7 of the Bill for two years following the first employment of staff in the new aided school.

The great majority of teachers are now employed in the service of local education authorities generally, rather than at a particular school and are technically subject, within their contracts, to transfer from school to school. In their context, the context of the teachers' employment, the "undertaking", as that term is used in Clause 7, must refer to the local education authority's education functions as a whole. Teachers who are employed in maintained schools other than aided schools would therefore not be covered by Clause 7 regardless of the size of any new school to which they are allocated.

Teachers employed in aided schools would therefore be in a disadvantageous position compared with their colleagues in other schools in the same area despite the fact that they will be paid from the same source, and are generally subject to the same conditions of service. The employment of teachers in aided schools by the managers or governors of these schools is little more than a legal technicality for the purpose of giving to the Church authorities an employer's control of teaching staff in aided schools.

The position of teachers in aided schools would also contrast unfavourably with that of many of the non-teaching staff in aided schools who are employed directly by the local education authority in its wider undertakings. These non-teaching staff would not be covered by Clause 7. Section 80 of the Employment Protection (Consolidation) Act provides that where a teacher in an aided school is dismissed by the governors or managers in pursuance of a requirement of the local education authority under the Education Act 1944, the provisions of the Act relating to unfair dismissal shall have effect as if the local authority were the employer.

Section 80 does not, however, apply to redundancy payment entitlement. The effect of this must be that the teacher in a new aided school with fewer than 20 employees, dismissed within two years from the first employment of staff in the new school, would be protected if dismissed upon a requirement of the local education authority, but would not be protected if dismissed by the managers or governors acting independently. The concern of teachers in general and of teachers' associations—the NUT for example—particularly, arise in this connection. The purpose of Clause 7 appears to be that an employer engaged in a new venture should have time to achieve stability without the risk of potential liability for unfair dismissal.

I am not going further into the details except to say that when the arguments I have just used were deployed—almost in the same words—in another place by my right honourable friend Mr. Harold Walker, they were well received by the Under-Secretary of State for Employment, Mr. Patrick Mayhew. Members of this Committee will find his sympathetic statements at columns 1,000 to 1,007 of the report of Standing Committee A on the Bill on 6th March. Further assurances were given by Mr. Mayhew in a detailed response in a letter to my right honourable friend Mr. Barry Jones. I have a copy of that letter. Assuming that the noble Earl, Lord Gowrie, will be giving similar assurances, I will not go on to his ground here, but I would reserve the right to reply, if it should be necessary, to one of the points that I hope he might make on the legislation now pending and its effect on the assurances that he might be able to give. Naturally, I should be only too glad if the Minister were able to give assurances to the Committee and, through the Committee, to the teachers in aided schools that, if that legislation is not successful in achieving its desired end, the Government will themselves take legislative measures.

The Earl of GOWRIE

I must first apologise to the noble Lord, Lord Parry, because I came into the Committee during his third or fourth sentence, rather than his first sentence, which I should have done, and I am therefore not clear whether he was speaking to all the amendments in his name or just the first one.

Lord PARRY

I was speaking to all of them.

The Earl of GOWRIE

As the noble Lord anticipated, the Government have given this and the two subsequent amendments careful consideration and we are sympathetic to the intention behind them. The legal advice available to the Government suggests that it would not be wise to amend the legislation at the present time, since a case awaiting decision in the Employment Appeal Tribunal may bring about the results desired by the noble Lord in the following way: if the court establishes that the meaning of the expression "associated employers" in the Employment Protection (Consolidation) Act 1978 should be less narrowly interpreted than it has been hitherto, teachers in aided schools might well be unaffected by the small firms provisions, since the governors of church schools and the local education authority might qualify as associated employers. The employees of an aided school would then have to be aggregated with the other employees of the local education authority in question, if not with those of all local education authorities, thus taking the aided school out of the scope of the special provision in Clause 7(1).

The Government will, however, keep the issues raised by this and the other amendments in mind and, if case law does not develop in a way which solves the problem for teachers in aided schools, we shall give serious consideration to introducing amending legislation. We could do that under Section 149 of the Employment Protection (Consolidation) Act as amended by paragraph 21 of Schedule 1 to this Bill; in that provision there is power to achieve the aims of the first two amendments by laying an order subject to Affirmative Resolution by Parliament. I hope that in the meantime the noble Lord will take my words as an earnest of our good intentions and recognise that we are anxious to solve this problem.

Lord PARRY

I am grateful to the Minister for that helpful and forthcoming response and, subject to the agreement of my co-sponsors and the Committee, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 58 not moved.]

1.23 a.m.

Lord SPENS moved Amendment No. 58A:

Page 9, line 10, at end insert: ("(3) The 1974 Act, the 1975 Act and the 1978 Act shall cease to have effect in any case where the number of employees employed by the employer does not exceed five.")

The noble Lord said: On Second Reading I said I wanted to have another look at the effect of the employment protection provisions in relation to small businesses. I also wish to take up a point made by the noble Lord, Lord Lyell, when he was replying to an earlier amendment. He said we had heard too much about the preservation of existing rights of trade union members and nothing at all about incentives for getting more people into employment. Surely at this time of huge unemployment, which is forecast to increase very considerably still, incentives to get people to start up new businesses must be important. We have also heard—the noble Earl, Lord Gowrie, has said this—that a number of small businesses are frightened of the employment protection Acts. Indeed, when one has five or fewer employees, the administration involved in relation to the employment protection Acts becomes a burden, and it is a burden despite anything the noble Lord, Lord McCarthy, may say.

This is a very simple amendment. I am suggesting merely that the Employment Protection Acts should cease to have effect in cases involving firms with no more than five employees. I want the Committee to consider this matter in particular in the light of the large number of redundancies which are taking place in businesses all over the country. Former employees are now out of work, but they have redundancy money which could be made available to set up an enterprise by themselves or in conjunction with one or two of their pals. This is the kind of incentive which might help them to do that, rather than to sit on their backsides and wait for someone else to come along and provide jobs in their home town. I beg to move.

Viscount HANWORTH

I wish to support the amendment for the same reasons as I gave earlier in the evening. If one is setting out in a new small business one is taking a considerable risk, and of course no one will receive compensation if the company does not succeed. With unemployment at its present level I believe that the balance falls on encouraging the employer to take on as much labour as he can, and I do not believe that anyone for one moment does not realise the risks involved in joining a small firm. So on balance I think it right to support the amendment, as providing more employment than would be possible if small firm are circumscribed by these regulations.

1.27 a.m.

Lord LYELL

We should like to thank the noble Lord, Lord Spens, for putting forward the amendment so succinctly and so clearly at this late hour, and we also wish to thank the noble Viscount, Lord Hanworth. I believe that the Committee would wish me to make it absolutely clear that the Government fully support the concept of protection for any employees against unfair dismissal, in firms of all sizes. When the Government of this party introduced the unfair dismissal provisions in 1971 we provided that they should not apply to firms with fewer than four employees. As your Lordships' Committee will be aware, that provision was subsequently changed by the Labour Government's 1975 Employment Protection Act. We do not think that it would be right to return to the exclusion of the very small firms from the unfair dismissal provisions.

Clause 7(1) of the Bill provides for an extended qualifying period for any complaints of unfair dismissal in firms of 20 or fewer. We believe that this provision strikes the right balance between the need to protect the employees and the need to relieve small firms of some of the burden of the unfair dismissal provisions, and to encourage them to expand, as is desired by the noble Lord, the noble Viscount, and indeed all of us.

The extended qualifying period will enable small firms to respond in a flexible way to comparatively short-term increases in the demand for their products by taking on any extra labour without any fear of a tribunal complaint should it become necessary to lay off any of the workers. At this point we believe that a figure of 20 employees is the right cut-off point, because we wonder whether a firm with fewer than 20 employees would be able to devote separate resources to personnel management.

At the same time we do not think that it is right to make provision for any permanent exclusion from the important right to make a complaint of unfair dismissal. We would acknowledge that we have made special provisions elsewhere in the Bill for firms of five or fewer who might find it difficult to fit back into the workforce an employee returning after maternity absence; we shall be covering that matter later. However, we ought to note that this special provision does not constitute an exemption, except where an employer can show that it really is not reasonably practical for him to take back the returning employee. This provision is in no way analogous to the exemption from the unfair dismissal provisions which we believe are proposed in this amendment, because it cannot be, as it is put in the amendment, not reasonably practicable, however small the firm, to avoid dismissing an employee fairly.

We are a little unclear as to the intention of this amendment, but it has been mildly clarified by the two noble Lords. If indeed the intended effect of Amendment No. 58A is to make the unfair dismissal provisions which are now consolidated in the Employment Protection (Consolidation) Act 1978 not apply to any firms of five or fewer employees, then we believe that this is really not acceptable to the Government; and for that reason we would ask the noble Lords to consider withdrawing it.

Lord SPENS

The intention behind this amendment was much more than unfair dismissal. There are many other sections of the Employment Protection (Consolidation) Act which we think are too burdensome on small firms. There is the mere fact that they have to give a written contract of employment; the fact that they have to make redundancy payments, and so forth. There are a number of different problems facing them; and one has to remember that, whatever one does over employment protection, the small firms will already have to he burdened with the PAYE operation, which in itself is quite enormous. However, having said that, I can see that I have made no headway with the Government, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Lord McCARTHY

We wish to oppose Clause 7. We have not heard that there is any case for restricting the rights of firms employing fewer than 20 employees and for allowing them to dismiss unfairly up to two years. No protection has been given for lump labour, though we moved an amendment to that effect. We have not moved one of our amendments (because of the time of night) which dealt with the fact of moving to a fixed-term contract and reducing it to a period of one year. For all those reasons, I do not think we feel like voting for this clause this evening.

On Question, Clause 7 agreed to.

1.33 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 59:

After Clause 7, insert the following new clause:

Amendment of section 153 of the 1978 Act. (" . At the end of section 153 of the 1978 Act shall be added the following subsection:— (8) For the purposes of this Act a contract of employment shall be regarded as a contract for a fixed term notwithstanding that the date of its expiry is uncertain at the time when the contract is made where the parties have determined that the contract shall expire upon the occurrence of an event, the date of which is to be determined by the employer or any person acting in his behalf".".)

The noble Lord said: I shall move Amendment No. 59, with the leave of the Committee, speaking also to Nos. 60 and 61. These amendments concern what have come to be known in the labour law world as task contracts. They usually take the form of a task for which the employee is employed by the employer, and nothing more. Rather curious examples were given in the other place and in other discussions—examples such as an employee employed to index the books in your library, or to cut down the hedge in your garden. But, of course, they can be much more serious than that, and they are becoming quite common in industry. They are different from contracts of employment terminable by notice, and they are different from fixed-term contracts. They are a new beast in the zoo of employment contracts, and they are causing a great deal of trouble.

The effect of these amendments would be to include the expiry of a task contract as a dismissal under Section 153 of the 1978 Act; to allow for the exclusion of rights of unfair dismissal under Section 142 in a task contract only if it lasted for two years; and, in Section 2 of the 1978 Act, to include in the statement of particulars a description of the task. The task contract is already known, vaguely, in the 1978 legislation, in Section 143; but unless the noble and learned Lord wishes to make a point on that section I will not go into it in detail. It is a section which marginally recognises the task contract for certain purposes.

Similar amendments to these were resisted in the other place. This is a complex area of law. However, the response was not complex at all. The response was, in the words of the Under-Secretary of State on 6th March (at col. 1006) that they would be a patent anomaly. The reason he gave was that self-discharge by preformance of a task cannot be dismissal. That may sound good in logic and as an abstract proposition; but it cannot be a correct argument in terms of the law, not a knock-down argument under the 1978 and previous legislation. If that were right, the expiry of the fixed-term contract would also be a dismissal only as a patent anomaly; and a fixed-term contract expiry has, under the legislation of both Governments who have dealt with unfair dismissal, been treated as a dismissal. Therefore, we are saying—and this is the most important point—that where the task contract expires by the performance of the task it should presumptively be treated as a dismissal. I add that, of course—and I hope that there will, be no time lost about this—in the average case that dismissal will not give right rise to any claim for unfair dismissal; that is to say, employed for one task and one task only, the task ends, and even if it is dismissal it is plainly not unfair dismissal. The trouble is that in industry today the task contract is being used for, as it were, task after task after task. The case of Stewart in 1979 was the case of a ship repairer, taken on for many years for job after job after job. But each one was no dismissal and so he had no unfair dismissal rights. This year, the Court of Appeal was faced with a hybrid case—so that now there is a fourth animal in the zoo—a cross between the two: a fixed-term contract with a task element. It was a teacher, Mrs. Guy, employed by the Wiltshire County Council to teach for each academic year, by year-term, but to teach only the courses which they required. When the courses ran out, she was not required any more that year. The Court of Appeal had the difficult task of deciding whether that was a fixed-term contract, the expiry of which was dismissal; or a task contract, the expiry of the task being no dismissal. These problems arise in any legislation, problems of the line. They decided, with the nose for justice that members of the Court of Appeal sometimes have, that this was a fixed-term contract and therefore a dismissal.

But they raised the question of what would have happened if they had said it was a task contract. The fact that Mrs. Guy had been employed for many years by Wiltshire County Council should not have made her legal position for unfair dismissal and associated rights all that different merely because it was described in terms of task rather than year. Incomes Data Services for May, 1980, at page 3 of Issue 181, talked about the Appeal Court decision in the Wiltshire County Council case as having "highlighted another loophole in employment protection legislation". It is a long passage and I will not quote it except to say that the IDS commentary ends with these words: The Court of Appeal are correct in law at the moment by holding that such contracts, that is, task contracts, are not for a fixed term and are terminated on discharge by performance, but they do leave certain categories of worker naked of unfair dismissal and redundancy pay rights. What, for instance, is the position of construction workers taken on until the power station is built or research officers engaged to produce a report on a specific topic? Did those who drafted the statutory definition of 'dismissal' intend to exclude those categories of workers from statutory employment protection? I think the truth of the matter is that those who drafted the legislation did not really think about it because the task contract was not then common in industry.

The task contract is very common in industry today. It would be a gesture at least of goodwill by the Government towards workers who are engaged on jobs that they cannot get otherwise than by terms of task definition, if the Government said, "Yes, we will at least keep the legislation up to date and bring the task contract in where it belongs, within employment protection." I beg to move.

1.40 a.m.

Lord LYELL

May I attempt to explain what we believe are the effects of the amendments to which the noble Lord, Lord Wedderburn, has just spoken. They would amend the Employment Protection (Consolidation) Act so that an employer who engaged an employee for a task which would be completed at an unspecified time would be—and this is the nice word—deemed to be taking the employee on a fixed term contract. Thus, if the contract expired without being renewed, the employee would be deemed to have been dismissed and so he or she would have the right to complain of unfair dismissal and be entitled to a redundancy payment unless he or she and the employer had agreed to waive the rights.

May I summarise quickly the position on the waiver of rights. Lord Wedderburn mentioned Section 143 of the Employment Protection (Consolidation) Act. If I may mention Section 142(2) of the Employment Protection (Consolidation) Act, this provides that an employee may waive his rights to a redundancy payment if he is employed on a fixed term contract of two years or more, and Clause 7(2) of the Employment Bill amends Section 142(1) of the Act so that an employee may waive his rights to complain of unfair dismissal if he is employed on a fixed term contract of one year or more. That is a fairly brief summary of the position on the waiver of contracts if they are fixed term. So far we have not come yet to the fixed task contract.

The first new clause (Amendment 59) would enable employees to waive their employment protection rights upon the expiry of "fixed task" contracts of over two years and I take it this is meant to I apply to both unfair dismissal and redundancy rights. But I think this clause might benefit employers. I do not know whether noble Lords opposite would wish this. It would allow the employers to offer a series of fixed task contracts and insist on a waiver.

This is what the noble Lord is complaining about. We think that his clause would enshrine this and make it worse from his point of view. The second new clause (Amendment 60) complements the third new clause (Amendment 61) by requiring the employer, when taking on employees on "fixed task" contracts, to specify when (in the sense of the relation to what event) the contract will expire. So far we have had no representations about this alleged problem. The noble Lord, Lord Wedderburn, mentioned that this was a new animal and referred to what I might call the "jungle" of legislation—indeed, the jungle of industrial relations. He has some new animals that he has brought back tonight. He has mentioned the case of Mrs. Guy and the Wiltshire County Council. It seems that the Court of Appeal found that she was employed on a fixed term contract because both she and her employers knew that her employment would come to an end at the end of the summer term—courses or not.

So we do not quite understand why noble Lords opposite wish to continue to discuss this amendment. Do they have any further examples of employees who have suffered because they are employed on fixed task contracts? We are not entirely clear that employment protection of this type is necessary or desirable in the cases of fixed task contracts. The legislation that we have before us points out that there is a dismissal where a fixed term contract expires without being renewed. This is a fixed term contract; the time is quite clear and all of us will be clear on that point.

So far as a fixed task contract is concerned, there cannot be a renewal because the task is finished. There lies the difference. Fixed task contracts are more like contracts for service for which one is paid a fee much more than contracts of employment. We believe that that is the difference and we hope that that will show that these three clauses are not necessary to achieve the purposes of the legislation and especially in view of what I pointed out in Amendment 59.

Lord WEDDERBURN of CHARLTON

I am utterly astonished by the Government's response to this. In regard to Amendment No. 59 they seem to have no answer, and in regard to Amendment No. 60 they say it would allow an employer not to insist upon a waiver if the task contract went on for two years or more. That is true, but at the moment the employer does not have to insist on any waiver because a task contract does not get the worker any rights. All we are saying is that presumptively a task contract should give the worker some rights unless he waives them. So to say that it gives the employer the advantage of a waiver is no argument against giving the employee the option of whether to take the job and waive his rights. At the moment if he takes the job he does not get any rights anyway.

Lastly, on Amendment No. 61, it says you have to specify the amendment. Of course: that is part of the particulars of the contract. Then it is said, "The Wiltshire County Council v. The National Association of Teachers in Further and Higher Education was decided in favour of Mrs. Guy." Of course it was, because it was a hybrid case, as I tried to explain. The fourth animal in the zoo—not in the jungle—is a hybrid case in which the court has to work out whether it is a fixed term contract or a task contract. The fact that Mrs. Guy won her case was due to good luck, good advocacy and good judgment; but she might have lost it on a ludicrous technicality. Then the Government say they would like a contract for services, not for service. That is most extraordinary. I have never heard of a task contract where the employee paid his tax on a self-employed basis. If the Government have, I should like the evidence of it. Then they say: "We have received no representations." I can assure the Government that they will.

This is a practice which is spreading throughout various parts of industry. There have been five or six cases in the last year or two in the courts. I was very sparing with my references. If the noble Lord would like to look at the case of Ryan v. Shipboard Maintenance in 1980 and the case of Stewart v. Craig in 1979, as well as the Wiltshire case and a number of others referred to in those cases, he will find it is becoming a cause of quite unnecessary litigation. If the Government want to benefit the legal profession and give brief fees to lawyers, well and good. But if they want to look after the interests of employers and employees then they will seize this problem before it becomes a matter of big representations from everyone. Why not be a forward-looking Government for once and actually anticipate a problem we all know is there? The literature is telling us it is there, everybody is agreed that it is a problem and everybody is agreed on a sensible solution. I shall not withdraw the amendment: we shall register our attitude in the normal way.

On Question, amendment negatived.

[Amendments Nos. 60 and 61 not moved.]

Clause 8 [Basic award]:

Lord McCARTHY moved Amendment No. 62: Page 9, leave out lines 20 to 22.

The noble Lord said: If I may, I should like to take Amendment No. 62 along with Amendment No. 64, since they both aim in a complementary way to do the same thing. Clause 8, as we know, is the clause which cancels the entitlement to a basic award and provides that the amount may be reduced where the employee has unreasonably refused an offer of reinstatement, or because of his conduct. It says that in the Explanatory and Financial Memorandum. What it does not say there is that the clause also, as a result of lines 20 to 22 and lines 1 to 8, which we want to leave out, proposes to allow a tribunal to consider the conduct of an employee who is before that tribunal, which took place before the dismissal, and conduct which was not necessarily considered by the employer when deciding whether or not to dismiss the employee. That is to say, they can consider conduct before the dismissal other than conduct taken into account under subsection (7) of the 1978 Act. That subsection provides that the tribunals can take into account the employee's own action which contributed to his dismissal in assessing his compensation beyond the basic award.

What the new provision means is that they can take into account other behaviour of his which does not necessarily contribute to the size of his compensation, or to his own actions in relation to the dismissal and which was not necessarily known even to the employer at the time the decision was taken. The Minister in another place said that this must be misconduct of some kind—misconduct which was not known to the employer when he was dismissed. In other words, the tribunal is entitled to punish the man twice—once for what was known by the employer when he dismissed him and then for things which were not known at that time. We think this is quite unfair.

Lord MACKAY of CLASH FERN

I should like to remind your Lordships that the basic award that is here in question for unfair dismissal is separate from any compensatory award that may be made, and is payable automatically upon a finding of unfair dismissal. The basic award is calculated, like a redundancy payment, by reference to the age and length of service of the employee. Currently it is reducible in cases of contributory fault only.

The purpose of subsection (7B), the scope of which has already been narrowed in another place, is to allow tribunals to reduce the basic award to the extent that it seems to them just and equitable to do so in the light of conduct on the part of the employee which did not contribute to his dismissal. In effect, this means misconduct which was not known to the employer when he took his decision to dismiss, but which came to light between the dismissal and the tribunal hearing. Let me give an example of the type of situation we have in mind. Certainly I would not consider it likely to arise often. An employee in a shop has stolen on several occasions from the till, but his employer is unaware of this. His employer dismisses him for rudeness to customers and the employee makes a complaint of unfair dismissal. The employer then finds out that the employee has stolen from the till. The tribunal finds that the employer dismissed the employee unfairly; that is, because he dismissed him summarily, let us say, on the word of a customer without attempting to establish whether the employee really had been rude.

Under the present law, despite the fact that the employer found after taking the decision to dismiss that the employee has been guilty of theft, the employee would still receive a full basic award. Subsection (7B) gives the tribunal discretion to reduce the basic award by such amount as it considers just and equitable in the light of the employee's subsequently discovered misconduct. In these circumstances, it is surely not right that the employee should still receive a full basic award from his employer.

Lord WEDDERBURN of CHARLTON

Will the noble and learned Lord give way? I am much obliged. May I ask him why he is taking that example when in the next paragraph the Government are about to abolish the basic award altogether?

Lord MACKAY of CLASHFERN

I have chosen this example for the simple reason that it illustrates the point we are trying to get at. I am taking this in order to illustrate the nature of the conduct that is in question, which can be used to reduce the award. That is the reason I have taken this particular example. The important point I want to make is that the nature of the conduct which is in question is conduct of this kind—misconduct which is not known at the time the employee is actually dismissed but which comes to light before the tribunal hearing. What we are saying is that that misconduct can properly be taken into account in reducing the amount of the award.

It is the basic award we are talking about at this stage. It is the minimum basic award that is being affected by subsection (5). We would say, as I think I have already said, that it is not right that the full basic award should be paid in these circumstances. Lord Diplock said—I am sure noble Lords opposite will remember—when commenting on the analogous case of Denis v. Atkins, which has inspired this provision, that for an employee to receive a full basic award in these circumstances would be to convert the compensation provisions for unfair dismissal into a veritable rogue's charter.

The noble Lord, Lord McCarthy, in moving this amendment, suggested that this involved two punishments for the same thing. It is nothing of the sort. It is reductions for two different things; the one for the conduct which was known about, and the second for the conduct which was not known about at the time the dismissal was decided upon. I ask the Committee not to accept this amendment.

Lord McCARTHY

In view of the lateness of the night, I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney)

I believe that the next amendment should read: Page 9, line 22, leave out from ("conduct") to end of line 23.

1.56 a.m.

Lord McCARTHY moved Amendment No. 63: Page 9, line 22, leave out from ("conduct") to end of line 23.

The noble Lord said: I should like to take Amendment No. 65 with this amendment, and it will take only one moment. The aim of the first amendment is to reinstate the basic award. No defence for this change has been given. Presumably, it has something to do with small firms, because the Parliamentary Secretary in another place said that the village shopkeeper could not afford to give two weeks' pay to a man who had contributed to his own dismissal, and had not mitigated his loss. We are not convinced by this. I beg to move.

Lord MACKAY of CLASHFERN

It is perhaps as well, in view of the intervention when I was speaking last, that I should make it plain that what we are seeking to do by the parts of the clause challenged in this amendment is to abolish the minimum basic award, not to abolish the basic award. The Government can see no justification, in principle, why an employee should receive a minimum basic award of two weeks' pay, when he is not entitled to do so by reason of his age and length of service, or on those rare occasions when his actions have been such that it is just and equitable that his award should be reduced below this point. We cannot see any good reason why there must be a minimum basic award, when he is not otherwise entitled to it. Therefore, we invite the Committee to reject these amendments.

Lord McCARTHY

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 64 and 65 not moved.]

Clause 8 agreed to.

Clause 9 [Contribution in respect of compensation]:

1.58 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 66:

Page 10, line 27, at end insert— ("( ) Where any trade union or person is to be joined under subsection (1) above the tribunal shall afford such trade union or person the same opportunity as the employer to present to the tribunal arguments concerning the question whether the employer's dismissal of the complainant was unfair.")

The noble Lord said: We now come to a clause which, despite the lateness of the hour, must surely give us pause for consideration. This is the clause—and I am encouraged by the noble Earl, who told us just now that the night is young—which introduces an entirely new procedure, and which, as it were, crosses the wires of the individual regulatory employment protection law which has been introduced over the last few years, and collective labour law in the sense of the liabilities of trade unions.

This is the clause which allows an employer to join a trade union, a shop steward or any other person, who has induced him to dismiss—not just in a closed shop but in any other situation—the complainant in a tribunal, by reason of industrial pressure on the ground that he was not a member of a particular trade union. I say that in preparation for the amendments, the first of which I shall move very briefly indeed.

The first, therefore, is to try to spell out in the Bill that in such a situation, where the union, the shop steward, the official of the worker is joined as a third party, he has equal right to argue the question of the unfairness of the dismissal, with the employer or anybody else. It is meant to give some right to the third party joined—union, shop steward or worker—to have the right not to see the employer simply give up the case and say: "Yes, I did dismiss unfairly. Now I will get the compensation back from the third party."

I appreciate that a reply which can be given is that Rule 7 of the industrial tribunal regulations might well already allow the industrial tribunals to allow the third party to address it and produce evidence on any issue before the tribunal. I understand also that it is true that the industrial tribunal regulations are in an advanced stage of reconsideration and reform, and it may be that the new regulations will spell this out more clearly. However, whether or not this be so under the regulations, surely there can be no objection to calming fears on the matter by enshrining in the Bill the simple proposition that the third party which is joined has the right to address the tribunal on all the issues. On that small amendment, I beg to move.

Earl DE LA WARR

Is it really necessary to dot the i's and cross the t's? I know very little about the law, but if somebody is joined as a co-defendant is it not something that, as night follows day, will happen: that any court will find it to be its duty to examine these people just as keenly as though they were the defendants? I cannot see the point of this, because it seems to me to be so much a part of natural law as hardly to need stating.

Lord MACKAY of CLASHFERN

The view which my noble friend has just expressed is essentially the view that we hold with regard to the amendment. As noble Lords will recall, we amended this clause to make it clear that where another party is to be joined it must happen before the hearing of the complaint. That is in order to ensure that the person who is joined will have an opportunity to participate in the hearing. Once the person is joined before the hearing, it seems obvious that he must be entitled to be heard on any matter which affects his interest. The decision on whether or not the dismissal was unfair is a matter which directly affects the interest of the person who is joined. So our view is that it is unnecessary for this to be added to the Bill.

Lord WEDDERBURN of CHARLTON

I should have been much happier if the noble and learned Lord had added an assurance that this would be enshrined more clearly in the revised industrial tribunal regulations. However, in view of his response, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

2.3 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 67:

Page 10, line 38, at end insert: ("Provided, however, that the tribunal shall not hear evidence concerning or otherwise determine any question relating to that pressure until the question of the fairness of the dismissal has been determined in accordance with Part V of this Act.")

The noble Lord said: This is a much more serious matter. It is something which goes to the heart of some of the procedures and difficulties in the Bill. It goes to a matter upon which there is considerable trade union feeling and already a great deal of worry in some areas of industry.

There are two major problems which are not really dealt with in the Bill and which this amendment would try to resolve. The amendment wishes to add to subsection (2) of Clause 9 a formula whereby the issue of unfair dismissal is dealt with first and the issue of industrial pressure and contribution is dealt with second, with the evidence on the second not being taken until the first issue—unfair dismissal—has been dealt with. There are a number of reasons for that. The first reason is one which presumably must commend itself to the Government. Unless the evidence and issues are treated in that order, and strictly in that order, Section 63 of the Employment Protection (Consolidation) Act 1978 is, by a side wind, in effect destroyed. Section 63 is one of a number of sections which have not been controversial in our labour law until now.

To put it broadly, on the basis of the 1968 Donovan Report's recommendation in paragraph 576, they recommended that what I might call collective labour law issues or, as my noble and learned friend Lord Elwyn-Jones said previously, collective labour law and trade union law issues, should be kept out of the industrial tribunals, especially issues of industrial conflict. Therefore Section 63 of the 1978 Act, re-enacting sections from the previous Acts, states that industrial pressure is not to be taken into account in determining the fairness or unfairness of the dismissal of any particular individual. Unless I have misread the Schedules, the Government are not amending Section 63 of the 1978 Act. Therefore the Government must intend that the fairness or unfairness of the dismissal should be dealt with before any evidence is heard as to the industrial pressure, because the tribunal is not to take into account evidence of industrial pressure in determining fairness or unfairness. Section 63 says so precisely in those terms.

For the same reason strikers who are dismissed en masse do not have any unfair dismissal rights unless there is victimisation. It is a price they pay for keeping industrial conflict out of the industrial tribunals and out of the Employment Appeal Tribunal. So that the industrial tribunal does not have to determine the reasonableness or the equity of a strike or a lockout or other industrial action; and I say this, ending the first point of the argument, that the danger of the course on which the Government are embarked in these new proce- dures is that it may well destroy the confidence which the industrial tribunals and the Employment Appeal Tribunal have built up on both sides of industry.

I do not say that there will be side members of tribunals who will withdraw but I do not say that there will not. There will be some who will say: "We were not put here to deal with strikes; we were put here to deal with issues between a worker and his boss, and we are here as a tripartite group to do that". Coming from Section 63, which means that the issues must be heard discreetly and distinctly, unfair dismissal first, industrial pressure second, under these new and dangerous procedures for the industrial tribunals that would have worked. Indeed, that was what the right honourable gentleman Mr. Mayhew, on the 24th April at col. 664 rather suggested must necessarily happen. When challenged about the likely joinder of parties by tribunals it was suggested to him that the employer could just say: "I join the union", and the tribunal would say, "All right". Mr. Mayhew replied: No tribunal would act upon a claim and accede to the request that the person who the employer claimed exercised the pressure should be joined until the employer made good that claim by bringing forward evidence". That is to say, his argument there, and at other places on the same date and in the same debate, was that the joinder would take place only after the tribunal had heard evidence as to the unfairness of the dismissal and the industrial pressure: a prima facie case allowing the joinder.

But then, of course, only 15 lines later in the same column 665, the Government moved thair amendment which totally destroyed that procedure—a sensible amendment in many ways because it deals with other difficulties into which I need not go because they will not divide me from the noble and learned Lord. They then introduced the amendment which allows the employer to join the trade union, or shop steward or official, before the hearing. That is to say, when the employer is sued for unfair dismissal he simply says, before the hearing, as the noble and learned Lord said in response to my previous amendment, "I join the trade union"—or the official. I can see the reason for that. There are difficulties about just how to manage the joinder question. Indeed, they illustrate many of the problems and the dangers of Clause 9, but the hour is late and I will not go into those although I should very much like to, and perhaps we should mention them on the Question that the clause stand part.

But, having allowed the employer to join the trade union before the proceedings start, one cannot then keep the issues distinct because, as the noble and learned Lord said in response to my previous amendment, any party which is before the tribunal will, especially with the informal tribunal procedures, be allowed to address the court on the issues as they come up, and it is really asking too much of a tribunal to introduce any great formality into its procedures without clear statutory guidance, when you are saying that all three parties are there, joined from the beginning, and you have to determine unfairness of dismissal and industrial pressure. That will be the case unless, that is, you introduce an amendment to the Bill. And, fortunately, happily, we have come up with the salvation for the Government in the shape of a solution to the problem into which they ran themselves in Col. 665 on 24th April.

We are happy if the Government will take this away and look at it on Report, but the essence of our solution in Amendment No. 67 is that the tribunal shall not hear the evidence or determine the question of the pressure until the fairness of the dismissal has been determined in accordance with Part V of the Act. Part V includes Section 63, which the Government do not wish to amend. An amendment of that kind will produce a workable procedure which does not offend the rest of the 1978 Act.

If the Bill does not include any such amendment two things will follow: Section 63 will be destroyed by a side-wind, but, much more importantly, there will be those in the trade union movement and around it, who at the moment have confidence in the tribunals, who will begin to lose it when they find that this issue which has been undisturbed for many years—that industrial pressure is not an issue in unfair dismissal proceedings as such—is being undermined. When those two get tangled together, the confidence in the tribunals will begin to break, and that cannot be an objective on the Government's part. I beg to move.

Lord MACKAY of CLASHFERN

The situation is that Section 63 of the 1978 Act is not intended in any way to be interfered with. Accordingly, the procedure is that all three parties, the complainer, the employer, and, let us say, the union, will be present at the hearing. One would expect the complainant's evidence to come first, the employer's evidence to come second, and the case for the union to come third. In coming to its determination, the tribunal will pay attention to Section 63, and in determining the issue of unfair dismissal it will not have regard to any evidence about pressure. The tribunals are very much respected, and we believe they are perfectly capable of considering the evidence relevant to the question and ignoring evidence which is not relevant to that question. Then when they come on to the second question they will look at the evidence relating to that.

Surely it is not difficult for the tribunals to separate out the questions in that way on the basis of the evidence as a whole. According to the amendment, the evidence would be split, and this would involve introducing two hearings in place of one, because they have to determine the first question and then have a second part of the hearing where evidence is laid on the second question. We can see no reason for that. We believe this is a procedure which the tribunals will be perfectly able to give effect to, and we see no reason why giving effect to this procedure should in any way damage their standing. Indeed the more difficult the questions they have to determine, if they determine them satisfactorily, the higher their standing will be for the future. I would invite the noble Lord to withdraw his amendment.

Lord WEDDERBURN of CHARLTON

With the greatest respect, in some manner the noble and learned Lord has not fully understood the full complexities of the problem. He accepts that Section 63 is not to be in any way amended, but he then says the complainant's evidence will come first, the employer's evidence second, the trade union's third, and then the tribunal will take into account those parts of the evidence that are relevant to fairness on the fairness and those parts that are relevant to pressure on the pressure.

Why on earth give the tribunal the job of sorting out the evidence thrown at it as a kind of unbaked cake, and then make it split the cake and get the portions right in two different ovens. It would not require two hearings; there is no question of two hearings. They will all be there on the same day. These cases are usually short, except in complicated cases when dates are always difficult for witnesses to attend. But if it is an ordinary case, they will all be there on the same day. The tribunal hears the first question first. It bakes one cake first and then goes on, if it needs to, and if it is unfair, and bakes the second cake, and it knows the ingredients it must put into it.

We are being told again and again that we are right on the points we are making, but that the words we want to add need not be added to the Bill. I do not share the noble and learned Lord's confidence that this would not increase complexity. The amendment would reduce complexity. The Bill, without amendment, would increase the number of appeals before the employment appeals tribunal because somebody is going to say, all the time, "Oh, you took a wrong bit of evidence into account on the wrong issue when it was all thrown at you at once." Why not divide the evidence into two parts and have the two issues heard separately? It astonishes me that the Government will not accept that, but they will not. We cannot divide the House, but we shall express our opinion on the matter in the usual way.

On Question, amendment negatived.

2.17 a.m.

Lord McCARTHY moved Amendment No. 68: Page 10, line 42, leave out ("and may constitute a complete indemnity") and insert ("but such contribution shall not exceed 85 per cent. of the said compensation.")

The noble Lord said: This amendment goes to the ability of the tribunals under the proposed clause to give complete immunity to the employer and to make the whole of the sum to be paid in compensation to be paid by the unions: to give total and complete indemnity. We are suggesting that it is not necessary or required and that it is unjustified. We have therefore put in a figure which is arbitrary, to test the Government's mind on this. We are saying that the contribu- tion of the trade union should not exceed 85 per cent. In other words, it leaves 15 per cent. to be paid by the employer.

There are many reasons why we shall be opposing this clause, but I want particularly to urge this amendment upon the Government because it has been accepted by all those involved in issues of this kind that a considerable degree of advantage goes to employers in a situation of this kind: that they get benefits out of a situation of this kind and that it would therefore be quite wrong if it were considered appropriate to join the union in respect of compensation and to make a union, in a case of unfair dismissal, pay the whole of the compensation.

Lord MACKAY of CLASHFERN

It would obviously be a fairly extreme case in which the tribunal would feel that the whole responsibility for an unfair dismissal should ultimately be passed to a union, but that such a case could arise is obvious and the Government cannot see the justification for an arbitrary limit to be set to the proportion of compensation for which a joined party should be responsible. Accordingly, we cannot see any logic at all in this amendment and we invite the Committee to reject it.

On Question, amendment negatived.

On Question, Whether Clause 9 shall stand part of the Bill?

2.20 a.m.

Lord WEDDERBURN of CHARLTON

Something needs to be said as to whether this clause shall stand part of the Bill because of the enormous importance and novelty which it introduces—novelty, that is to say, except for its predecessor in the 1971 Act. If I make this remark in advance of the three points that I wish to make, it is not in any sense a criticism other than my own surprise at being in a position in which I have never been before; that is to say, being in a revising Chamber at 2.20 in the morning discussing what will perhaps be one of the most important innovations in British labour law in the next few years, which may well give rise to very unfortunate consequences in terms of the relationship between law and industrial relations. It is unfortunate that this should come at this point. However, we no doubt take our share of the blame with everybody else in that regard.

This is an alarming clause, not only because it reflects precisely almost to the letter those very parts of the 1971 Act which caused such difficulty. Having said that, I must at least outline and make out my case on that point. The noble Earl says, "Hear, hear" and I shall, therefore, do so. Section 33(3)(a) of the Industrial Relations Act 1971 made it an unfair industrial practice to take industrial action knowingly to induce an employer to infringe certain rights of workers. Among those rights were the right to be a non-unionist and also the right not to be dismissed on various unfair grounds. The next step taken in Section 33(3) was to extend that to unfair dismissal generally.

The parallel with Clause 9 of this Bill is made precise by way of Section 105(1) of the Industrial Relations Act 1971, because, interestingly enough, and perhaps rather sensibly within the logic of the measure, only the employer could sue under Section 105. There was a great deal of litigation about that and, in the second case involving Mr. Langston, it was found that there was another way in the Act by which Mr. Langston could sue the union direct. But that, I think, was rather fortuitous and it was said to be the intention of the Government of the day to allow the employer, as it were, to join the union or to take proceedings against the union consequent upon a pressurised unfair dismissal, although slightly wider, because here, of course, we have the element of pressure being applied to force him to be in the union. But with that limitation the procedural and substantive parallel is precise and an experienced practitioner in the tribunals expressed the opinion to me that this was the most alarming clause of all in the Bill so far as he was concerned.

The first point was worth making simply because it was the very basis of a large number of industrial problems in relation to the national industrial relations court. So Section 33, together with Section 96, of course, is the basis of the proceedings which ultimately involve imprisonment.

Secondly, those problems led to a legal issue to which at that time the framers of the Bill and Act in 1971 did not see fit to address themselves. A few of us criticised the Bill—and I thought that it would be a disaster, but I must be honest and say that I never brought this point up in debate —and did not foresee that one of the real difficulties for them was the doctrine of vicarious liability. But it was soon revealed in the litigation. As soon as we got into the courts we really saw what it was about. Although the non-lawyers think that that was not so, it frequently is the case that once one gets into court the mind is concentrated wonderfully in case one loses, which is as near to death as a lawyer likes to come. In the case of Heatons Transport (St. Helens) v. Transport and General Workers' Union which ended up in the House of Lords in 1973, the issue arose four-square on whether the union was liable for what its shop steward had done; that is, liable vicariously on the basis of the common law doctrines of vicarious liability which had been developed and applied in the realm of master and servant, employer and employee and principal and agent, such that the master or employer is liable for that which is done by the employee, servant or agent, in the scope or course of the employment or agency.

It was found that that common law doctrine was extremely difficult to apply to a trade union case. The issue whether the shop stewards acted within their implied authority for the union—raising the question, what is the union?—caused the courts enormous difficulties. In the case of Heatons Transport (St. Helens) v. TGWU they were held to have acted within their implied authority and, therefore, the union was liable. In a case a year or two later, General Aviation Services v. TGWU, in 1976 in the House of Lords, other shop stewards at London Airport on very similar facts were held not to make the union liable because they had not acted within the scope of their authority.

The unreality of the case law was that one was applying principles that were relevant to companies and organisations of business, but which just did not fit trade unions. Therefore, when I saw what the Government were going to do this time—again to use the same procedures and make trade unions liable in a new form of civil liability —1 thought that they would do something to define the areas of vicarious liability. But they have not done so, and I wonder why not. It is quite clear from the case law that even from their own point of view it might have been sensible to do so. It is not at all clear when the employee joins the union on what grounds the union will be able to say, "Oh well, it was not done on our account or on our behalf, or with our authority, or within the scope of the authority of the stewards." It is still not very clear just how that will apply. Indeed, in my submission, it is quite wrong that the ordinary vicarious liability principles developed for business agencies—and quite clearly so since 1912 at least under the English case law, which is a turning point—and which clearly apply to commercial agencies, are clearly not applicable or very apt to trade unions, which are organisations for people and not of capital and business and of people.

Thirdly, in this connection, plainly this issue arises because this is an evasion of the basic principle of English law since 1906 that, other than breach of contract and breach of trust and associated liabilities, such as restitution and equitable liabilities, trade unions are not open to suit in the civil courts because the other areas are known as the area of the law of tort. Just as the 1971 Act invented a new area of civil liability for unfair industrial practice, this Bill invents a new area of civil liability by the joinder procedure, and the Government must understand that the trade union movement is extremely disturbed that this may be not only some novelty in itself, but a harbinger of what is to come in the Green Paper which has been constantly referred to in this debate. It has been confirmed again and again that there is more to come.

The last point which has also not escaped attention is that oddly enough the trade union movement might be better off in some situations under the common law than it will be under this Bill. In the case of Morgan v. Fry in 1968, in which a group of dock workers split off and tried to form a breakaway union, there was a threat to strike. This was said to be unlawful in terms of interference with contracts, intimidation and so on. But the Court of Appeal said, "Yes, it normally would be under the common law, but these people who split away were such troublemakers that the union was totally justified in the common law in what it did". It does not seem that that is very likely to happen under the joinder provisions; some contribution because of the pressure seems almost inevitable and, therefore, the union will not be faced only with a new civil liability but possibly with an even worse situation than some areas of the civil law of tort would render it liable to. Therefore, we must register on the record our disapproval of this clause and, more particularly, the direction in which it points.

Lord MACKAY of CLASHFERN

It seems plain that in view of the provisions of Clause 6 of the Bill, a provision of the sort that we have in Clause 9 is essential, and it appears right in principle in any case where a union or other person takes action which has the result of forcing employers to dismiss people unfairly, that those who take such action should bear at least part of the responsibility for it. In our view, the clause goes no further than is necessary for this purpose and provides a simple procedure with one hearing and so on, as we have discussed already, in which to determine the matter.

So far as the principles of vicarious liability, and so on, are concerned, these are not dealt with in the clause. The question of the extent to which they should apply in any particular circumstances must be a matter to be gone into by the relevant tribunal. Some reference was made to a Green Paper. Well, this is what we are dealing with at the moment. The Green Paper is for another day. I would invite the Committee to agree that this clause shall stand part of the Bill.

Clause 9 agreed to.

[Amendment No. 68A not moved.]

Clause 10 [Notices to employer]:

[Amendment No. 69 not moved.]

Lord McCARTHY moved Amendment No. 70: Page 11, line 37, at end insert ("which statement shall be in a form to he prescribed by the Secretary of State after consultation with the Advisory, Conciliation and Arbitration Service and with the Equal Opportunities Commission.")

The noble Lord said: We now come at this time of night to maternity. We are discussing Clause 10, and the amendment I wish to move would see that the request for confirmation of return which the Government propose to introduce would have to be placed on a prescribed form. What we say is at the end these words should be inserted: which statement shall be in a form to be prescribed by the Secretary of State after consultation with the Advisory, Conciliation and Arbitration Service and with the Equal Opportunities Commission. In other words, it could not be on any old bit of paper. The employer could not write in some ambiguous way so that the individual was not aware of the fact that she had to do anything about this at all. He could not write and say, "I refer you to the Employment Act 1980", and so on, without saying precisely what he wanted.

It was said in another place that a form of this kind might be a useful thing but it was another piece of bureaucracy and another piece of trouble and difficulty. I am not sure whether people mentioned small firms or not, but anyway we were told that it was a piece of bureaucracy. I suggest that in fact it would be much easier for firms if forms of this kind were available on request either from one of the job offices of the Department of Employment or somewhere else. Most employers who handle large bundles of forms from the Government and send them out for large numbers of purposes would rather appreciate having a simple form which they could send to their employees; a prescribed form asking for confirmation of return. I beg to move this modest amendment.

The Earl of GOWRIE

The Government have already amended the Bill to ensure that an employer requesting confirmation of intention to return must clearly explain to the woman that if she fails to reply to the request she may forfeit her right to return. We do not wish to go to the extreme of insisting on using a particular form. Businesses—especially small businesses—have enough forms to deal with in the modern world without us adding another one. The Government have accepted the main point—that the employer, in asking the employee to confirm her intention, must let her know clearly what her position is. As long as that is made clear, it is not sensible in our view to tie it to a particular form of words. This could lead to absurd situations where the employer had made the position clear to the woman, but because he had used the wrong words, his right to receive confirmation was lost. In such a situation, although he had assumed that the woman's silence indicated that she no longer wished to return, and had made his plans accordingly, he would still be faced with the obligation of reinstatement. The Government will of course do all they can to make clear to all employers, in any guidance and advice issued, what they should say in their requests for confirmation. I therefore do not think that the noble Lord's amendment is necessary, and I hope that he will withdraw it.

On Question, amendment negatived.

[Amendment No. 71 not moved.]

2.35 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 72: Page 12, leave out lines 3 and 4.

The noble Lord said: I will, with permission, speak at the same time to Amendment No. 73, which is in a sense consequential. This relates to the postponement of the right of a woman to return to work. I hope not to incur the wrath of the noble Earl when I mention that there has recently been a survey. It is in the February number of the Industrial Relations Review and Report, No. 217; it is in two parts and the second part is in No. 218. I refer him to it and I draw from it one very simple fact, which is fully substantiated, from a survey which covered 1 million workers. It was an extraordinary piece of work and a most remarkable survey. What I draw from it is the basic response from employers who were surveyed, in that 83 per cent. of them said that the present maternity scheme, including the right to return to work, is working well. Therefore, on that ground, there is a presumption that the Government cannot be right to interfere too much with the scheme.

Secondly, on that basis, the amendment tries to introduce an equalisation of rights as between the employer and the employee. There is no limit on the reasons the employer can give to rely on a postponement of a return to work by the woman, whereas the woman can postpone only in certain circumstances, like interruption of work. The woman is required to confirm in writing that she wants to return to work. Surely the employer ought at least to give his reasons for postponing her return to work, notifying it in writing, and that is why we say "written notice". We understand why an employer may want to postpone a return, and up to 28 days is acceptable so long as the women's rights are not imperilled; but surely she is entitled to written notice on her side, just as she has to give him notice well in advance if she wishes to postpone.

As Section 47 of the main Act stands, the employer can postpone the very night before she returns to her job. She may have made all sorts of arrangements, for example, for the baby to be looked after, and there may have been all kinds of domestic difficulties which she will have had to resolve. Goodness knows! it is difficult enough to find baby minders and créches, and the survey goes into that as well in terms of the small number of employers who provide facilities of that kind. It also shows that only one in six of the women who might be taking up maternity return-to-work rights are taking them up, and there are many reasons for that, including those I have mentioned.

The changes proposed in the Bill will make worse all those difficulties for women workers. If the 21 days which we suggest is considered to be the wrong period, the Government can suggest something better on Report. The amendment is a basic piece of justice for women workers, an equalisation of rights, and the maintenance of a system, within the context of the Government's other changes to it, which is basically working well. I beg to move.

The Earl of GOWRIE

I am delighted to he able to agree with the noble Lord that generally the scheme and the legislation for maternity protection is working well, and I am not in the least surprised that the survey to which he referred, of 1 million, or even 2 million, workers, produced that answer. The whole emphasis of these very minor changes to the existing legislation is to remove the disincentive effects on employers, particularly very small employers, of taking on new women. That must be a matter of judgment and it is hard to quantify that. I agree that there seems some equity in asking the employer to observe some written procedure within time limits when one is asking that of the employee. But the employer's right is strictly limited to postponing the woman's return for up to 28 days, whereas the employee's right preserves her right to return for up to 40 weeks.

The right of employers is to provide for the sudden unexpected event within the context of their business which makes it impracticable to take the woman back on that particular day. To formalise notification in the way which appears superficially equitable to the noble Lord would, in fact, rob the employer of this flexibility, and in any case the advantage is weighted, quite rightly, in favour of the employee in this context. We do not think that the amendment is necessary, and we ask the noble Lord not to press it.

On Question, amendment negatived.

[Amendment No. 73 not moved.]

2.40 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 74:

Page 12, line 4, at end insert: ("(4) In subsection (1) of section 35 of the 1978 Act (calculation of maternity pay) there shall be added the words: ("and where an employee works for more than one employer, the maternity pay to which she is entitled shall be reduced in respect of each employer by the proportion of that allowance which bears the same relationship to the full amount of the allowance as her week's pay payable by that employer bears to the aggregate amount so payable to her by her employers.")

The noble Lord said: This amendment is an attempt to introduce a very minor piece of law reform, of justice for women, which has been occasioned by recent decisions. The problem is as follows. Maternity pay is calculated—I need not go into the details—and after it has been calculated there has to be deducted from it the social security maternity allowance, which at the time of the case in question was £15.75, and I think that it is still the same amount, though that is subject to correction—

The Earl of GOWRIE

It is now £18.50.

Lord WEDDERBURN of CHARLTON

It has gone up a little, after all. The case concerned is Cullen v. Creasey Hotels in 1980 before the Employment Appeal Tribunal. It involved a woman who had two employments. I am told that this problem has arisen on a number of occasions. Various practices were being adopted, and this case to which I refer was regarded as a test case. The woman earned £15.48 from one employer and £15.75 from another employer. She therefore asked for maternity pay from each employer, to which she was entitled. The first employer said, "No, you are not entitled to maternity pay because I deduct the maternity allowance and you don't get very much." The second employer said "I can deduct the maternity allowance as well". In other words, the full maternity allowance was deducted from the wage packets of each of the two employers. In my brevity I have not put the problem very well, but the noble Earl is well aware of it.

The purpose of the amendment is to provide that where a woman has more than one employment, the maternity pay shall be deducted proportionately from each wage packet according to the proportions borne to the total aggregate of her employment wage packets. This seems to be an elementary piece of justice. We very much hope that the Government can accept it, or at least can give an assurance to insert it in the Bill on Report. I beg to move.

The Earl of GOWRIE

I am indeed in sympathy with the intentions of the noble Lord, Lord Wedderburn of Charlton, in tabling this amendment. There is an injustice here. As the noble Lord very clearly said, where a woman qualifies to receive maternity pay, she is entitled to receive from the employer nine-tenths of a week's pay less the amount of maternity allowance, which currently runs at £18.50 a week—a figure on which I corrected the noble Lord. Where the woman qualifies for maternity pay from two employers, both of the employers must subtract maternity allowance, although she obviously is in receipt of only one maternity allowance, not two.

The noble Lord's amendment sets out an ingenious way of correcting this anomaly, but I fear that it is at some cost; and it is really the cost factor that convinces me that we should resist the amendment. For the amendment to work it would almost certainly require every employer due to pay maternity pay to confirm whether there was another employer, and if there was, for employer A to check whether the employee qualified for maternity pay with the other employer, employer B, and finally, if the employee did qualify, to ascertain how much she was earning.

All of that would take place before the employer was involved in the inevitably complex mathematics of ratios and fractions that arise in all social security payments. This extra work, at a time when the Government are striving to simplify the administrative procedures of maternity rebate, would be dedicated to correcting an anomaly that affects only very few women. Indeed, the department has received no complaints about this issue, even after the Employment Appeal Tribunal case which confirmed that both employers had to deduct maternity allowance.

But I said that there is indeed a notional injustice here, and I wonder whether I would meet the noble Lord if I give the undertaking that if this becomes a serious problem, we would consider remedying it by legislation. At the moment we simply do not see that the problem exists on any scale that would justify the costs, and particularly the complexities of the noble Lord's ingenious but, nevertheless, as I say, rather complicated amendment. I do not know whether the noble Lord would find that acceptable.

Lord WEDDERBURN of CHARLTON

I am obliged to the noble Earl. Perhaps I may make two comments on what he said. We are not far apart in analysis, and perhaps it may be that his department will discover that there are rather more cases of this sort than he has suggested, because the number of part-time women workers with more than one job is almost certainly increasing and is likely to increase, bearing in mind the social situation in which we are. So far as the extra work is concerned, I had thought about it. I did not dare to draft it at great length because then it would be said to be a legalistic and very long draft; but it did seem to me that the complexities could be cut through by the woman having to produce to the employer the total wages that she was receiving from any employer, in which case the proportion borne by his wage packet to the aggregate could then immediately be worked out on a very simple calculator on the desk. It really does not seem to me to involve a great deal of complexity; but I am obliged to the noble Earl for his assurance. I rather hope that he will have perhaps a slightly stronger look at it to see whether something could not be done in this Bill at Report stage. After all, as we know, even at this hour of the night parliamentary time is short. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney)

I should point out that in Amendment No. 75 there is a misprint. In the last but one line, "clause" should read "claim".

2.47 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 75:

Page 12, line 4, at end insert: ("(4) In subsection (3) of section 64 of the 1978 Act, there shall be inserted after the words "inadmissible reason", the words: "or to a claim under section 60 of this Act (dismissal on ground of pregnancy).")

The noble Lord said: My noble friend asked whether I had any notes, and I said, "No, but I will do it without". This is a very simple amendment. There is in the relevant subsection a protection for the woman in terms of (if I am correct without my notes) "inadmissible reason". What we are saying is that a claim in respect of a dismissal for an inadmissible reason should also have added to it a claim under section 60 of the 1978 Act on grounds of pregnancy. We make the case that after the decision of Thurley v. Alders Department Stores, which said that a woman dismissed on grounds of pregnancy could not bring a claim under the Sex Discrimination Act (on the rather curious ground that there was no male equivalent of a pregnant woman; no doubt a good ground in law, but socially a rather odd ground for excluding the operation of the Sex Discrimination Act) and accepting that that is right in law, there arises a grave problem in this connection.

The Equal Opportunities Commission, as the Government know, is extremely concerned about this matter of women who are sacked after a short time where they are said to be or are thought to be or are known to be pregnant, and the effect of this amendment, if I am not mistaken, would be to render a woman able to bring such a claim without the need for the normal qualifying period. I beg to move the amendment.

The Earl of GOWRIE

The amendment seeks to remove the qualifying period for unfair dismissal where the reason for the dismissal was pregnancy. I should have thought that the qualifying period of 52 weeks offers quite adequate protection to the woman employee who is expecting a baby. Employers could be understandably anxious at the prospect of employees with no service being able to bring claims for unfair dismissal, and I do not think that this would be in the interests of women, because employers would be even more reluctant to take on young married women, and it is to correct those disincentives that we are amending the legislation. The last Government found no reason to distinguish between this sort of dismissal and the generality in terms of qualifying period, and we for our part see no reason to disagree with that judgment, which is why I would resist the amendment.

Lord WEDDERBURN of CHARLTON

I have now found my notes, but I will not weary the Committee in replying to the noble Earl except to say that of course that was at a time when the Sex Discrimination Act was thought by many to cover at least some of the types of case which have subsequently arisen. Now it is clear that the Sex Discrimination Act does not apply to a case such as the one which has come to light recently, of an apprentice electrician on a six-months probationary period who was sacked after five months because her employers discovered that she was pregnant. That may or may not have been unfair dismissal; but she had no qualifying period even before the Government changed the period from six months to one year.

So there are difficulties here and the argument that women will be worse off if they have more rights is the old argument that protection legislation should not be given to women workers and that there should be no sex discrimination. I know that that is not the noble Earl's intention, but he will recognise the link with the argument that if you have sex discrimination and women-protection laws then people will not take on women workers. In this particular case that is not very likely to operate. There is not much evidence of that; but there is evidence that in some cases women are unfairly dealt with on dismissal by reason of pregnancy. We hope that the Government will think about this before Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 10 shall stand part of the Bill?

2.52 a.m.

Lord McCARTHY

I will not delay your Lordships for very long, but we have to oppose this clause. The result of this clause is a whole series of barriers which women must get through in order to return to work after maternity. The situation is, first, that the notification must be in writing. It is not clear who tells the woman this or what happens if she forgets or does not know it. If it is not given in writing, she has not got over the first hurdle. She must specify the date of confinement. It is not clear who tells her this or whether she has to buy a copy of the Act, or what. She must confirm that she wants to return 49 days after the estimated date of pregnancy. In our amendment we have tried to get the Government to say that there should be some standard form. The Government say, "No. That would be bureaucracy." Therefore, there is no way of telling whether the woman can understand the request made of her. There is no clear way of knowing what would happen if she did not get the reminder, or if it was sent to her, or if her letter was lost in the post.

There is no way in which, with all these qualifications and the extension of the period of time before she needs to say that she wants to return, that we can say that we can accept this clause. There is no justification for restrictions of this kind. The evidence is that considerable numbers of women who are entitled to take up their rights in respect of maternity do not do so. There is evidence in the ORC surveys and so on to show that they do not know what their rights are, and there is considerable evidence that people are not getting maternity benefits and are not exercising their rights of return. We cannot accept that the situation needs to be changed in this way.

Lord DAVIES of LEEK

Before the noble Earl replies, the term "49 days" is obscure when applied to industry. Is it 49 working days? Are Sundays excluded? It is a point which needs to be cleared up.

Lord ROCHESTER

May I, in turn, say that my noble friends and I also have a number of reservations about this clause? I will not go into them. They were largely covered by what the noble Lord, Lord McCarthy, has said; but I do not think I should let this go by without registering that point of view.

The Earl of GOWRIE

One of the most instructive things that one can do—and I recommend this to any noble Lords who have any doubts about what we are doing in this respect—is to write down on one side of a piece of paper what are the women's rights under the existing legislation and then on the other side of the paper to write down the changes that we are proposing. The quantitative changes under Clause 10 are very small indeed. I should have thought a more pungent way of getting at the Government might be to say to them: Are changes on this scale worth while? In Clause 10, 21 days before absence begins, the employee must inform the employer in writing that she will be leaving, the date of expected confinement and when she intends to return. Under the present legislation, the employer can request this to be in writing, so it is a relatively minor provision.

Then there is the issue raised by the noble Lord, Lord Davies of Leek, that not earlier than 49 days after the expected week of confinement an employer may make a written request for confirmation of the woman's intended return to work. He can write her a letter and she must give written confirmation, she must answer the letter, within 14 days, but then we add: or as soon as reasonably practicable thereafter. She might have moved to Hull or there might have been an upset, or whatever. That is a minor provision, too. The noble Lord, Lord Davies, asked: "Why 49 days?"

Lord DAVIES of LEEK

No. With due respect to the noble Earl—it is the first time that I have known him get it wrong—I asked, "What do the 49 days mean in industry?" Are they 49 working days, excluding therefore Sundays and sometimes Saturdays?

The Earl of GOWRIE

My understanding is—I could be wrong, but I think not—that it is seven calendar weeks. Therefore it would include the holidays. We chose that number because it was a length of time that seemed reasonable to the Equal Opportunities Commission, and what was good enough for the commission was certainly good enough for the Government.

Then under the existing legislation the woman has a right to return at any time before the 29 weeks from the week of confinement. There is no change there. Under the existing legislation, the woman must give seven days' notice of the proposed date of return. We have extended that to 21 days' written notice of the proposed date of return, which I should have thought would be an improvement. Under present legislation, the employer may postpone the date of return by four weeks, and there is no change there. These changes are small and anyone who represents them as a monstrous attack on women's rights is assuming that ladies who have babies cannot answer a letter, and that simply will not do.

Clause 10 agreed to.

Clause 11 [Right to return.]:

2.59 a.m.

Lord McCARTHY moved Amendment No. 75A: Page 12, leave out lines 6 to 20.

The noble Lord said: We come once again to small firms. The object of this part of the Bill, which we are seeking to delete, is to create a situation in which firms with five employees or less can renege on their return rights in respect of maternity cases if they can argue that it is not reasonably practical for them to adhere to them. What we want to do is to leave out lines 6 to 20.

This notion of exemption of small firms has been denounced and criticised by an unusually large variety of groups. It is not just the NCCL, it is not just the Low Pay Unit; it is not just the EOC, it is business groups. One of the best arguments against this particular aspect of the Bill has come from the Institute of Personnel Management. There is no evidence, there are no surveys, which show that maternity as such, as against whatever evidence there may be from surveys of unfair dismissal, inhibits small firms from taking on labour. All the evidence we have is that this particular aspect of the present Employment Protection Act is not affecting small firms in any significant way. It is quite shocking that there should be a two-tier system drawn at this point, and for that reason I beg to move this amendment.

Lord ROCHESTER

I should like to support the noble Lord, Lord McCarthy, in what he has just said. I am not sure that at one o'clock in the morning, when challenged by the noble Earl, Lord Gowrie, I was altogether coherent in endeavouring to show why it was that, despite our support for small businesses, we could not go along with the Government in this regard. If I may try just once more, it is that we do not see why, simply because there are distinctions in the numbers of people employed in different firms, there should be different rights. I do not propose to say more than that now, but our position seems to us to hold good in respect of this amendment, and therefore I support the Labour Opposition on this occasion.

The Earl of GOWRIE

Turning first to the point made by the noble Lord, Lord Rochester, I think that probably one of the difficulties is that there has accrued round the word "rights" a feeling of constitutional liberties of a deep-seated character. These, of course, we would be very sensitive towards, but when you look at this thing in practice, what I think many people fail to appreciate is that there is not a blanket exemption here: this is not an institutionalised two-tier system, as the noble Lord, Lord McCarthy, suggested. The very small firm—and by that I mean an outfit of fewer than six employees—is relieved of its obligations only where the employer can prove—and he has to prove—that it was not reasonably practicable to offer the woman either her original job or a suitable alternative.

Under the existing legislation before this "savage attack on women's rights", the woman must be given back her job under the original contract of employment unless it is not practicable for redundancy reasons—unless in fact the job is no longer there. So really even the last Government recognised that there might be situations where practicability of this right—and that is why I rather object to the word "right"—simply did not exist. But, having said that, I acknowledge that this has been the most contentious of our proposals on maternity and that some of the organisations we consulted were totally opposed and some were unreservedly in support. I am afraid this was somewhat of a politicised measure but we were trying to be practical and sensible. Many people told us that the safeguards were meaningless and that what we have done is to create a total barrier to women ever getting their jobs back in small firms. On the other hand, there are those who say that we have been so intent on safeguarding the position of employees that we have made the job of the employer claiming exemption far too difficult. We believe we have got it about right.

This provision is a compromise between desirable objectives which pull in opposite directions. We do not wish to diminish the rights of women to return to work; yet we wish to safeguard the opportunities of women to be offered work in the first place. The aim with this provision is to make employers feel that taking on young women does not saddle them with an intolerable burden—which it does not. They have, in our view, every incentive to take them on. We believe that this relief which has been given to very small firms, and only then to very small firms who can prove to a tribunal that it was not practicable for them to take back a young woman, will not have the effect of creating two classes of employee but certainly of making it that much more likely that the very small employer will be prepared to offer work to young women.

Lord BROOKS of TREMORFA

Before the noble Earl sits down, may I ask him this: how does the position affect an employer with more than six—perhaps 26, 46 or 106—women where they are in small groups of two or three? Are they affected by this legislation or are they not?

The Earl of GOWRIE

No, my Lords. They would be covered by the law as it stands.

On Question, amendment negatived.

3.5 a.m.

Lord WEDDERBURN of CHARLTON moved Amendment No. 75B: Page 12, line 13, after ("practicable") insert ("for a reason other than redundancy and other than that her job has been filled by an employee engaged to do her work during her absence on maternity leave").

The noble Lord said: In moving this amendment, I wish to speak also to Amendment No. 75C. Amendment No. 75B is another attempt to reduce the incursion into women's rights which is being made in this Bill in the small firm, in this case where the number of employees does not exceed five. I pause to say that the remarks we made on Clause 7, where the cut-off point was judged in terms of employees, arise here, too, and the technicality of the number of employees employed by her employer immediately before her absence began may well cause a woman a great number of problems and the Government might wish to reconsider the formula. That is a technical point.

This does introduce a two-tier system into employment. The noble Earl, Lord Gowrie, is right in saying that the previous law recognised that there would be a situation where the employer might prove that it was not reasonably practicable. That, of course, was the situation of redundancy. That is why, in our Amendment No. 75B, we have put in the phrase, for a reason other than redundancy". In terms of a small firm of fewer than five we do not understand why the woman should suffer in the case of redundancy whereas she will not in the larger firm. When there is no evidence whatever that job creation will be affected, and there really is not—none that we have ever heard or found—then not to allow the woman her rights in a redundancy situation simply because she works at a place where immediately before her absence there happened to be a drop from seven to five employees really does not seem a very sensible or just system and is certainly a two-tier system.

When the noble Earl says that some people criticise the Government for being too pro-employer and some people criticise them for being too pro-women's rights, I understand their difficulty, but to end up in such a situation, halfway between right and wrong, does not necessarily mean that the Government have got it right. We think they have got it wrong, especially in regard to Amendment No. 75B, to which we add the further proviso that it should be for a reason other than that her job has been filled by an employee engaged to do her work during her absence on maternity leave.

This was argued in another place. Briefly, the Government's answer was broadly—and I wonder if it would be the same tonight—that there was a fear that the industrial tribunal would accept an argument that it was not reasonably practicable to reinstate because of a replacement, but that it was improbable that the industrial tribunal would accept that. Surely it is not all that improbable, and it seems to us better to put this in the Bill. Of course, parallel arguments then apply in regard to the ordinary situation of the larger firm under Amendment No. 75C.

Of these amendments, it seems to me that the one that sticks out as really just—and very unjust for the Government to resist—is the denial in the small firm of five or fewer of the redundancy rights which the woman worker would have otherwise. It may be that people criticise too harshly, but the noble Earl must not be surprised that, when a consideration of that sort is rejected from the Bill, people say, "Well, this really is rather cutting into women's rights in an unjustified way".

The Earl of GOWRIE

On the last and general point, women's rights are a highly important, but also somewhat emotive subject at this moment in history—

Lord McCARTHY

No.

The Earl of GOWRIE

They are. The noble Lord, Lord McCarthy, and I use language in very different ways. What I mean by "emotive" is that people feel very strongly about them. We have a number of bodies, many of which, as Minister responsible for women's employment affairs, I sit on or chair, and we all beaver away at this subject. Indeed, I spend much of my time trying to encourage girls of the ages of 12 and 13 to take the necessary 'O' level options, to enable them to get into non-traditionally female kinds of employment. So we are all thoroughly involved in improving the stake of women in this economy, and none of us would dissent from that.

But it is simply not good enough, though it is politically understandable, to try to use very minor provisions of this kind as an effort to show, for electoral or other reasons, that the Government are trying to roll back women's rights. All one has to do to disprove that is to look at the existing law, look at what the Government are proposing under this Bill, and you will find that the gap is very small.

In the case of the noble Lord's amendment, yes, it is indeed true to say that our response would be rather similar to the response in another place. But I could add that the tribunal can be left to consider what is reasonably practicable without the noble Lord's amendment, and it is to be expected that the employer would have to show that it was not possible to make other arrangements. We are putting the onus on an employer to prove to a tribunal that it is not reasonably practicable for him to engage in reinstatement, and we would not expect tribunals to look lightly at that.

As I said earlier, under existing legislation, under the legislation in which I understand the noble Lord was a powerful influence, women must be given back a job under the original contract of employment. But then there is a qualification: unless it is not practicable for redundancy reasons. We have increased that qualification, but it is a very small increase. We believe it is important that the tribunal should not be prevented from looking at questions that turn upon the engagement of the replacement of the woman. That is what this part of the clause is involved in, and we do not that see the amendment is necessary.

Lord ROCHESTER

I do not think the noble Earl really meant it, but he gave me the impression that he thought that those of us who felt differently from him were in some way trying to make some political capital out of this. I accept that there is room for a genuine difference of opinion here. That is all that I, and, I expect, people on the Labour Opposition were endeavouring to explain.

The Earl of GOWRIE

I take that correction. I am sorry if I sounded rather tetchy. I think it was a personal response. I work very hard on women's employment issues and I have always rather resented the fact that this Bill is thought to be anything negative in that regard.

Lord WEDDERBURN of CHARLTON

I can understand the noble Earl's resentment and we all appreciate the work that he does. But he asked for a piece of paper and, oddly enough, the other day I typed out a piece of paper which I am holding, on which the changes are listed. On Clause 11, the present position with regard to the woman being given back her job occupies four lines, while the position under the Bill occupies 20 lines. It is true that it is a little verbose, but the number of conditions she has to satisfy is very much greater. It may seem small to the noble Earl, but it is rather a large matter to the women workers involved. The one which I think we would really wish the Government to reconsider in terms of Report is the redundancy one.

I take the point about the industrial tribunals, although again, as a final comment tonight, we have been given, all the way through the Bill, the answer: "Don't worry about this; the tribunals will see that everyone is all right". Now we are told, "Don't worry; the tribunals will see that the women are all right ". I hope that that is so. However, the redundancy point seems to us to be unreasonable, and we wish to register, with the noble Lord, Lord Rochester, our disagreement with the Government, particularly on that point.

Lord BROOKS of TREMORFA

Could it be that the noble Earl is not prepared to accept that when God created man She made a terrible mistake?

On Question, amendment negatived.

[Amendments Nos. 75C, 75D and 75DA not moved.]

3.16 a.m.

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

Lord McCARTHY

I really do not know how we are to please the noble Earl. If we ask for minor things he says they are minor things and not worth having. If we ask for major things he says they are far too significant to give to us because they go to the heart of the Bill. If we say that we merely want to declare for him, in a clear way, what we think he intends, he says it is there already. Unless, of course, it is for the small firms: he can always put it in and make it as precise as the very dickens for the small firms, but not for the women, small or large, and not for the small shopkeeper.

So we have Clause 11. What does it do? It provides a series of excuses for employers to renege upon women's rights. The small firm is told that if it is not reasonably practicable for it to offer suitable, appropriate work, then women have no rights. If it is a larger firm, it is told that it must offer something which it considers to be a suitable alternative, and if the woman unreasonably refuses, she has no rights. I know that the noble Earl does not like people to think that he is against women, and I know he does not like people to think he does not do enough for them. But apart from Clause 12, which we shall be coming to, this clause, and Clause 10, from the point of view of women, is downhill all the way.

The Earl of GOWRIE

I must say that it gives me great pleasure, at the end of a very stimulating, interesting and, in the main, extremely well-tempered day of this Committee stage, to be able to correct the noble Lord, Lord McCarthy—something which I never expected to be able to do. My noble friend Lord Lyell has been most useful to me as a guide, in that he was one of the pupils of the noble Lord, Lord McCarthy. I should never have expected that either he or I would ever correct the noble Lord. However, when he says that the clause provides a series of excuses for employers to withdraw women's rights, that will not do. As I explained, probably to the boredom of the Committee several times during the maternity debate, all that is happening is that a tribunal must attend to reasonable practicability, as it has to attend, under the present legislation. And we have slightly increased the practicability qualification.

On Lord Wedderburn's amusing correlation of how much you erode rights by wattage of lines, may I point out to him that the second qualification we make is that the woman must be given back the job under the original contract of employment, unless not reasonably practicable for other reasons. Nevertheless, suitable alternative employment has to be offered. Then there is an "or", so you can strike five lines off his total of 20, because she remains at work under that definition. So there are there two small issues of fact on what is a rather small amendment. However, it does, I acknowledge to the noble Lord, Lord Rochester, and to others, attach at a sensitive area—perhaps that is a better word than "emotive" which is of very large importance to my mind and to that of the Government. That said, I look forward to the further stages of the Committee. In fact, we shall be kicking off with an altogether new right for women that was not in the last piece of legislation and of which I must say I am rather proud.

On Question, Clause 11 agreed to.

House resumed.