HL Deb 12 July 1982 vol 433 cc9-18

2.59 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—[Earl Ferrers.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

[Amendment No. 47 A not moved.]

Clause 3 [Basic award]:

The Deputy Chairman of Committees (The Earl of Listowel)

I should point out that if Amendment No. 48 is agreed to, I cannot call Amendment No. 49.

Lord McCarthy moved Amendment No. 48: Page 5, line 37, leave out ("by virtue of section 58 or 59(a)").

The noble Lord said: I should like to take Amendment No. 48 in association with Amendment No. 52 which is in Clause 4 but which, in effect, is making the same point. The purpose of the Bill at this stage is to create a new special and basic award, the minimum of which is a £2,000 sum and the maximum is a £4,000 sum. The Committee will remember that we are here dealing with dismissal on grounds of union membership, which was the subject of Clause 2 which we considered when we last debated this measure. Having made the distinction between people who are unfairly dismissed on grounds of union membership, on the one hand, and all other forms of dismissal on the other hand, the Bill proceeds to give special compensation provisions for all those involved in unfair dismissal on grounds of union membership. That is done in this clause which is about the basic award, and in the following clause, which is about the special award; so that we have here a new form of basic award.

The first point to make in relation to the amendment is that it was this Government which in their 1980 legislation in effect abolished the old basic award in the sense of an irreducible two weeks' pay. So the situation which this Bill proceeds to change, and which our amendment proceeds to change in a slightly different way, is that we now have a compensatory award standing at a maximum of £7,000, which has not been fully indexed for inflation for the last three years, and a very small additional award which, at the moment, is paid to about 3 per cent. of complainants where reinstatement is awarded and refused.

Under the provisions of the unfair dismissal legislation, as it now stands, as we shall undoubtedly be told by the Government in opposing this amendment, there is a distinction already as far as the additional award is concerned between unfair dismissal in general and unfair dismissal for an inadmissible reason. It is true that for unfair dismissal in general there is a slightly lower minimum and a slightly lower maximum, a 13-week minimum and a 26-week maximum, whereas for those dismissed on inadmissible reasons (that is to say, for trade union membership, race and sex) there is a slightly increased additional award of a 26-weeks minimum and a 52-weeks maximum.

We no not argue, and would not accept, that this small additional award which is paid to the three categories of inadmissible reasons and which is paid at the moment, as I have said, on average to about 3 per cent. of complainants, represents a justifiable precedent for what the Government are doing in this clause; because what the Government are doing in this clause and, even more, what the Government are doing in the next clause, is creating a completely different set of conditions with a much more substantial minimum and maximum level of payment simply for those who can say that they have been dismissed for trade union reasons, either because they refused to join a union or because they were dismissed because they were members of a union.

We do not maintain or accept that what happened in the past as far as the inadmissible reasons are concerned, in any way justifies what is being done now. I, myself, would say that the only real way in which one can justify compensation for dismissal and the degree of compensation for any particular dismissal, is the degree of loss suffered by the individual who has been unfairly dismissed. It will be said (and has been said) by the Government that there is a sense in which those dismissed for refusing to belong to a trade union can suffer more loss than those dismissed on other grounds. I will accept that there are certain circumstances where, in individual cases, that may be the case. It is possible that if someone is expelled from a union and therefore excluded from a job, it will then be more difficult to get another job in that particular trade and in that particular industry, because exclusion from the union is more important than exclusion from any particular job.

Nevertheless, there are many other forms of dismissal in particular cases where the same circumstances could apply. It is perfectly possible to think of situations for dismissal on grounds of ill health, and especially dismissal on grounds of ill health in relation, for example, to a heart condition or mental instability; and irrespective of whatever the tribunal may say—if it says that it was unfair and gives compensation because the dismissal was thought to be unfair—the fact that one has had this kind of thing as a reason for dismissal, fairly or unfairly, follows people about from job to job. References have to be given and information of this kind, even if it is dismissed and set aside by the industrial tribunal as unfair, undoubtedly affects in general terms the capacity of the individual to get another job. Therefore, someone in that situation might find that he was suffering more loss, and needed far more compensation, than someone who was dismissed because of exclusion from a particular craft union.

Again, one of the weaknesses of the present unfair dismissal provisions is the size of the maximum, the £7,000 maximum. It is possible for a middle manager or a senior manager who may not be unionised at all to get maximum compensation for unfair dismissal and, given the present level of the maximum, for that maximum compensation to compensate for less than 12 months' salary; because there are people with significant salaries on the managerial side who, because of the present level of the maximum compensation, cannot obtain any reasonable redress in an unfair dismissal situation.

Therefore, we say that if you want to inject into this Bill something which increases the size of compensation, we are not against that; but do not limit it to those who are dismissed on a very narrow section of grounds; for example, in this case, those who are dismissed on grounds of trade union membership. Raise the maximum! Raise it in general! It will be an extremely cheap thing to do because the tribunal will still be deciding whether individuals have mitigated their loss, whether individuals are likely to suffer an anticipated loss in future, what is the level of their present salaries and, therefore, what kind of degree of suffering or loss they are likely to have—and they can decide that on the basis of the individual and not in some crude, rather biased way by reference to a particular kind of dismissal. We take the view, I believe, that a dismissal is a dismissal is a dismissal; and an unfair dismissal is unfair whatever the reason. If Parliament legislates and says that some reasons are fair and some reasons are unfair, the only fact which should govern the substantive degree of compensation should be the decision of the industrial tribunal of the anticipated loss of the individual concerned. That is the point of the amendment.

Finally, let me say that there is no evidence known to me—and I should like to hear from the Government if they have any—that those individuals we talked about in the past (and I do not intend to mention them) when we were discussing Clause 2 of the Bill, in fact were dismissed and compensated in ways which were unnecessarily and unfairly limited because the maximum of the present compensation did not enable them to get adequate redress.

One looks, if one may mention the name, for example, at the Walsall dinner ladies' case. The existing provisions seem perfectly adequate to deal with their case. Then again, if the Government wish to put into the Bill an improvement in the maximum, and if they wish to do it in terms of the basic award, we have no objection to that; but we see no reason why that maximum should not be for all categories of dismissal rather than this narrow category. That is the purpose of this amendment. I beg to move.

Baroness Seear

May I ask what would now be the maximum rate for unfair dismissal if the figure that was paid in the Conservative Government's 1971 Act, which first introduced the unfair dismissal award, had been indexed to keep up with inflation? What would now be being paid?

The Earl of Gowrie

I have asked for information to be given to me on the question raised by the noble Baroness. It may be too much for our pocket calculators this afternoon, but we shall try and get her a satisfactory answer on that matter as soon as we can. We are now squarely in the territory of compensation, as the noble Lord, Lord McCarthy, pointed out to us. The purpose of Clause 3 is to provide a minimum basic award of £2,000 to employees unfairly dismissed for reasons relating to trade union membership, including non-membership in a closed shop. This together with a special award introduced by Clause 4 is intended to provide employees dismissed in such circumstances with a total award of compensation that will not only adequately compensate them, but also deter employers from carrying out such dismissals in the future.

At a previous stage of this Committee I said that I made no apology whatsoever for the desire of the Government to try to create an effective deterrent in this field. It is our view that unfair dismissals, because of non-membership of a union in a closed shop or because of trade union membership or activities, call for substantially greater compensation than is the case in regard to the generality of unfair dismissals. This is the difference, the differential, to which objection is made by the noble Lord, Lord McCarthy, and which he seeks to correct in his amendment.

The major impetus for increases in closed shop compensation has in fact arisen out of deep public concern that unfair closed shop dismissals have continued to occur in spite of and in defiance of the protection against such unfair dismissals in the 1980 Employment Act. It is clear that further such dismissals are only likely to be deterred by substantial increases in the sums of compensation payable in such cases. The circumstances of the dismissed employees in the Walsall and Sandwell cases illustrate the point well. In the Walsall case, the four dinner ladies who were sacked were part-timers, some of whom had been employed in their jobs for only a few years. Their employer obviously thought that they would receive only small awards of compensation—particularly if their reinstatement was not ordered. Fortunately, the fact that reinstatement was ordered meant that compensation was higher than it would otherwise have been. In the Sandwell case, Miss Harris chose not to take her case to a tribunal as was of course absolutely her right. Even if she had or if an employee finding his or herself in comparable circumstances had, such an employee might have received no more that a derisory few hundred pounds.

In these cases, therefore, the councils concerned—the employers concerned—were risking only relatively small sums of money in dismissing unfairly while those dismissed were unlikely to be adequately compensated. That is why the Bill provides for substantial increases in compensation, including the minimum basic award of £2,000. The justification for placing a minimum on the basic award, as well as introducing special awards, is of course that if the dismissed employee does not ask for reinstatement, he will only be entitled to the basic compensatory award. It is right in these circumstances that the total award should still be at a deterrent level and should not normally fall below a minimum level, which the Government judges should be at least £2,000.

Reference has been made to the fact—the noble Lord, Lord McCarthy, made play with this—that the sums of compensation now to be payable in unfair closed shop dismissal cases are well in excess of the current median awards for unfair dismissal generally. The noble Lord argued that all unfair dismissals are equally to be condemned and indeed, in fairness to him, might equally receive higher levels of compensation. I have made the point already about the element of deterrent. If I may underline it, these enhanced awards arise out of the cases that I have mentioned. The crucial aspect about those cases is that the closed shop dismissals were carried out in the full knowledge that they were unfair. In this connection, it is perhaps worth quoting briefly from the decision of the tribunal in the Walsall dinner ladies' case. At paragraph 3 of their judgment given on 28th January the tribunal said: At the very outset of the proceedings the respondent authority [i.e. Walsall Metropolitan Borough Council], no doubt upon advice, and if we may say so with respect sound advice, conceded that it had unfairly dismissed each applicant within the meaning of section 58(3B). There seems only one logical interpretation of this statement in the judgment. It is that Walsall Metropolitan Borough Council knew at the point at which they dismissed Mrs. Todd and her colleagues that their dismissal was unfair; that they were being dismissed in defiance of their rights not to be unfairly dismissed and that therefore compensation would almost certainly have to be paid; and yet in spite of this, the employers went ahead with the dismissals nonetheless, which seems to me to be a quite disgraceful exercise by a supposedly responsible publicly-elected body.

That was not a situation where an employer dismissed an employee as he thought fairly, but then later the tribunal subsequently finding this unfair; this was a clear situation of outright defiance by the employer of statutory rights provided in law by Parliament. It is against a repetition of that kind of behaviour that it is necessary in the Government's view to provide a deterrent. I hope that when the tumult and the shouting had died this kind of dismissal, and this kind of activity, will become simply a horrid memory in the past. This provision in the Bill is designed to see that it soon becomes a horrid memory of the past.

If I may make one more point, there is another reason why it seems to me wholly justifiable to pay substantially higher compensation in cases of unfair closed shop dismissals. This is in order properly to compensate the people who suffer the dismissals. It is self-evident that persons dismissed for non- membership of a union in a closed shop may find it very difficult indeed to get another job in the same industry or locality, particularly where pre-entry closed shop arrangements are widespread. That would therefore be another reason for "upping" the amount that should be paid in this particular set of cases.

I hope, having explained the Government's policy, which was in response to widespread public anxiety on this score—certain anxiety which was far from restricted from supporters of the Government—that the Committee will not pass the noble Lord's amendment should he seek to press it.

Lord McCarthy

I am afraid that I cannot accept any of that reply. The question that I asked the noble Earl—and he has not answered it—is: what is different? What is the difference between a dismissal for trade union membership and other types of dismissal? That is what our amendment is saying. It is saying that there is no difference, and he does not say that there is. For example, he tells me that he has to have a deterrent because he says that unfair dismissals continue to occur. Of course they do, but they just do not continue to occur in the very narrow area of membership of a trade union. They continue to occur all the time and indeed this Government, as a result of their order, have made it absolutely certain that a far larger number of unfair dismissals will occur than have occurred in the past, because they have put up the minimum period to 12 months and therefore hundreds and hundreds of unfair dismissals will occur which might not have occurred before because of what the Government have done. There is no deterrence about that. A million workers have been taken outside the scope of the unfair dismissal provisions and the Government do not propose to provide any deterrence.

He says that there is widespread concern. We know why there is widespread concern about the Walsall dinner ladies. It is because—and I am not attacking the ladies nor defending the council—for a very long time you could not pick up a newspaper without reading about the Walsall dinner ladies; and if, say, one-thousandth of the publicity had been directed at certain other kinds of unfair dismissals which are far more numerous and just as hard and tough to put up with, maybe we would have had rather more public concern about them too. So on nothing that the noble Earl has said here is he really suggesting that there is any real difference—a dismissal is a dismissal is a dismissal. And when he talks about the Walsall dinner ladies, I warn him that if we get much more talk about the Walsall dinner ladies we shall disinter Gennard.

He says that the Walsall dinner ladies did not get very much of a compensation award. That is perfectly true and it was because they were not entitled to it, bless their hearts. They were part-time workers; they did not work for very long; and they got a job very soon after. Therefore, bless their hearts, they got compensation which varied from £98 to £324—and quite right and proper too. Therefore the Walsall dinner ladies were nowhere near the £7,000 maximum. But in addition to compensating the Walsall dinner ladies, they were reinstated, and the reinstatement was refused so that they got a compensation award of something in the region of between £2,000 and £3,000.

Therefore the Walsall dinner ladies do not justify changing the Act at all. The only justification for changing the Act is either that you want to deal with a whole range of people, as I have said—for example, middle managers whose annual salary is considerably in excess of the present maximum. That is a decent, respectable reason. Alternatively, you are just involved in anti-trade union legislation. That is what this Bill is, that is what this amendment is seeking to correct, and that is why we shall press it to a Division.

3.24 p.m.

On Question, Whether the said Amendment (No. 48) shall be agreed to?

Their Lordships divided: Contents, 35; Not-Contents, 104.

Ardwick, L. Llewelyn-Davies of Hastoe, B.—[Teller.]
Bishopston, L.
Blyton, L. McCarthy, L.
Briginshaw, L. Molloy, L.
Brockway, L. Northfield, L.
Caradon, L. Oram, L.
Collison, L. Paget of Northampton, L.
Crook, L. Ross of Marnock, L.
David, B.—[Teller.] Stewart of Alvechurch, B.
Elwyn-Jones, L. Stewart of Fulham, L.
Ewart-Biggs, B. Stone, L.
Fisher of Rednal, B. Strauss, L.
Gaitskell, B. Taylor of Mansfield, L.
Irving of Dartford, L. Underhill, L.
Jenkins of Putney, L. Wedderburn of Charlton, L.
John-Mackie, L. Wells-Pestell, L.
Leatherland, L. White, B.
Listowel, E. Wootton of Abinger, B.
Abercorn, D. Killearn, L.
Airedale, L. Kilmarnock, L.
Alexander of Tunis, E. Kinnaird, L.
Amherst, E. Lane-Fox, B.
Auckland, L. Lauderdale, E.
Avon, E. Lloyd of Hampstead, L.
Aylestone, L. Long, V.
Beaumont of Whitley, L. Lyell, L.
Belhaven and Stenton, L. Mackay of Clashfern, L.
Beloff, L. Macleod of Borve, B.
Boardman, L. Marley, L.
Boyd-Carpenter, L. Mayhew, L.
Broadbridge, L. Mersey, V.
Buckinghamshire, E. Montgomery of Alamein, V.
Burton of Coventry, B.
Byers, L. Morris, L.
Caccia, L. Mottistone, L.
Campbell of Alloway, L. Mowbray and Stourton, L.
Campbell of Croy, L.
Chelwood, L. Northchurch, B.
Clancarty, E. Nugent of Guildford, L.
Clifford of Chudleigh, L. Orkney, E.
Constantine of Stanmore, L. Orr-Ewing, L.
Perry of Walton, L.
Craigton, L. Porritt, L.
Cullen of Ashbourne L. Rathcreedan, L.
Daventry, V. Reigate, L.
Davidson, V. Renton, L.
De Freyne, L. Rochester, L.
De La Warr, E. Sainsbury, L.
Denham, L.—[Teller.] St. Davids, V.
Derwent, L. St. John of Bletso, L.
Dilhorne, V. Saltoun, Ly.
Drumalbyn, L. Sandys, L.—[Teller.]
Effingham, E. Seear, B.
Ellenborough, L. Sempill, Ly.
Elliot of Harwood, B. Sharples, B.
Elton, L. Skelmersdale, L.
Ferrers, E. Spens, L.
Feversham, L. Stamp, L.
Gainford, L. Strathcona and Mount Royal, L.
Gladwyn, L.
Glanusk, L. Strathspey, L.
Glenarthur, L. Sudeley, L.
Gowrie, E. Taylor of Gryfe, L.
Grey, E. Thorneycroft, L.
Gridley, L. Trefgarne, L.
Harmar-Nicholls, L. Trumpington, B.
Harris of Greenwich, L. Vaizey, L.
Henley, L. Vaux of Harrowden, L.
Home of the Hirsel, L. Vivian, L.
Hooson, L. Ward of Witley, V.
Hylton-Foster, B. Wilson of Langside, L.
Kennet, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

[Ammendent No. 49 not moved.]

Clause 3 agreed to.

Clause 4 [New special award]:

3.32 p.m.

Lord Wedderburn of Charlton moved Amendment No. 50:

Page 6, line 19, leave out subsection (1) and insert — ("(1) For section 71(2)(b)(i) of the 1978 Act there shall be substituted — (i) where the dismissal is of a description referred to in subsection (3), consisting of—

  1. (a) a basic award (calculated in accordance with section 73),
  2. (b) a compensatory award (calculated in accordance with section 74), and
  3. (c) a special award (calculated in accordance with section 75A),".").

The noble Lord said: This amendment also goes to the question of compensation for unfair dismissal under Clause 4. In effect, it says to the Government that if there is to be a difference in compensation paid by reference to types of case, then the Bill as it stands has not got it right. In speaking to Amendment No. 50, which would replace Section 71(2)(b)(i) of the 1978 Act, I am also speaking to the amendment to Schedule 4. But I am conscious that other amendments to the schedules would have to be made, if this amendment were lucky enough to obtain favour from your Lordships' Committee.

My noble friend has spoken to some extent about the matter of compensation. When we come to Clause 4, which creates the special award, we must realise the enormous difference which it is making to the system of unfair dismissal. In actual operation, today, most people come away from the tribunal, if they are lucky—only one-third are successful—with very little compensatory award, and often with a small basic award of a few hundred pounds, and certainly not more than £1,000. Under the new Section 58, dismissals for non-unionism or for trade union activity, there is to be a minimum basic award plus a special award of £10,000, plus £2,000, making £12,000 minimum in all, and with compensation added in a compensatory award it would be possible to go up to £31,000. The Government are changing the character of unfair dismissals by doing this, and they have not made out their case. That is why we wish to test it in this somewhat different context.

First, the amounts are, from an employer's point of view—and I shall come back to him later—penal. Indeed, the noble Earl has said that they are meant to be a deterrent of such a kind that they are penal. It is worth noticing that in previous employment legislation, where deterrence has been the object of the compensation, the legislation has made it clear to the employer that that is so. In Section 30 of the 1978 Act, or in Sections 99 and 101 of the 1975 Act, dealing with unfair dismissal and redundancy compensation respectively, it is stated that the compensation is to reflect the seriousness of the employer's default in his obligations. In this case, the Government have chosen to put in a bid of an enormous character for non-unionists.

I say that it is for non-unionists for this reason. Although, on paper, Section 58 dismissals are evenhanded, and although it says in the Bill, and will say in the Act, that someone dismissed for trade union membership or activity is to be paid on the same scale as someone dismissed for the principal reason of non-unionism, I assert, nevertheless, that it is known, and clearly shown, that dismissals for trade union activity are very hard to prove, whereas dismissal for non-unionism will be in the context in which it occurs. Certainly, as my noble friend has said, the publicity which it will be given, and has been given, will make it much easier, in practice, in the courtroom.

Indeed, the Government mention a few cases, but they never refer to the decided cases at the tribunals, where you can see how it works. I wonder whether they have considered the case of Birmingham Corporation v. Beyer in 1977, in the Industrial Relations Law Reports 509. There a worker failed in a bid for compensation for unfair dismissal on two grounds. It is true that one was that he had given a false name, and it is not surprising that he failed on that ground. But he had good reason for giving a false name, because he had been hounded from job to job and was well-known to be a militant, a strong trade unionist. I do not know of what exact complexion he was, but he was dismissed within a very short time of being engaged—

The Earl of Gowrie

Not a Conservative.

Lord Wedderburn of Charlton

The noble Earl says that he was not a Conservative. I thought he might take some comfort from the fact that there might be some militant trade unionists among the Conservative trade unionists. But I can believe he was wrong. But this man was dismissed after a couple of days. The tribunal considered the case on the basis of whether he was dismissed for his trade union activities. The answer, of course, was, no. He had not had time to have any trade union activities. He had been got rid of before. That has happened in other cases. What happened elsewhere is known. The second problem—and this is central to the noble Earl's reply on the last amendment—is that he said that the need is to create an effective deterrent for dismissals on union grounds, as against the vast generality of cases; that the closed shop dismissals had continued to occur—he concentrated on them, so it is clearly about non-unionists—and continued to be deliberate, despite the 1980 Act.

He talked about those cases that I have mentioned. He mentioned two—I am going to give up this convention of not referring to the facts, because it is time we went back to them—the Walsall dinner ladies and Sandwell. Where are the others? We have asked for them again and again. The answer, as my noble friend suggested, is that they are in the Gennard Report, and I say that that report shows that cases of this sort—and I choose the word with care—are atypical of the situation. Furthermore, the Birmingham Chamber of Industry and Commerce agree, because they said in their statements on the Bill: In reality, there are only a relatively small number of people who are genuine victims of such circumstances. The attraction of higher compensatory awards may tempt others to assert that this was the principal reason for their dismissal". I hope that we can be given any further evidence, because, at the moment, after going through the Walsall and Sandwell steps, all the proponents of trade union intimidation and the vast number of unfair cases go into their act of putting on an anti-disposition—"Well, we know", or "We would if we could" and such ambiguous phrases. That is where they leave it.

We need to be shown that this is a special case beyond the proof offered, and we need to be shown that it is a special case for another reason. It is to this point to which the Government's attention must be directed in the light of this amendment. These special cases in existing legislation arise when an order for reinstatement has not been complied with.

Under the Bill, they arise for this special group where it is merely asked for. Then there is a parallel with the existing legislation. But in the existing legislation, discrimination does not extend only to the trade union grounds. It protects at the moment also discrimination on grounds of sex or race, with the additional compensation. If there are to be categories, why should we be given only the example of trade unionism instead of grounds of trade unionism and grounds of sex or racial discrimination?

If the Government think that this compensation of a special award will be a deterrent, why do they think so lowly of racial or sexual discrimination as not to put those dismissals into the category? It is not I who ask the Government that question. The Government have been asked it many times by employers. The employers' group who put it best are the General Council of British Shipping who say: It seems paradoxical to suggest that a special award for dismissal for non-compliance with a closed shop agreement could be three times that for dismissal on grounds of sex or race". I beg to move.

Lord Denham

I think that the House would probably like to take the Statement as soon as possible. I therefore beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.