Employment Protection (Variation of Limits) Order 1984

HL Deb 20 December 1984 vol 458 cc746-9

12.30 p.m.

Lord Belstead rose to move, That the draft order laid before the House on 5th December he approved. [5th Report from the Joint Committee.]

The noble Lord said: My Lords, I beg to move this order, and if your Lordships will agree I shall speak to the two subsequent orders as well.

The Employment Protection (Variation of Limits) Order 1984 has been laid in accordance with Section 148 of the Employment Protection (Consolidation) Act 1978 which requires the Secretary of State for Employment to carry out an annual review of the level of guarantee payments to workers on short-time and temporary lay-off and the weekly earnings limit for the purpose of calculating redundancy payments, the basic and additional awards for unfair dismissal and certain debts in relation to the insolvency provisions of the Act.

My right honourable friend has by law to take account of three factors in carrying out the review and reaching decisions. These are first, the general level of earnings obtaining in Great Britain at the time of the review; secondly, the national economic situation as a whole; and, thirdly, such other matters as my right honourable friend thinks relevant.

As part of the autumn 1984 review, the Government consulted a wide range of organisations for their views of what changes, if any, should be made to the limits. In the light of these consultations the Government have decided that all the monetary limits covered by the review ought to be increased.

At the time of the review in August 1984, the figure for average earnings in July showed an increase of 5.3 per cent. over the previous 12 months. The increase in the Retail Price Index over the same period was 4.5 per cent. We feel that this indicates increases of the order of 5 per cent., which is what the increases average over all three orders. The current weekly earnings limit for calculating redundancy payments and certain debts under the insolvency provisions of the Act is £145. The Government propose that this limit should go up to £152, which is an increase of 4.8 per cent.

Another of the payments subject to a weekly earnings limit is the basic award of compensation for unfair dismissal. This part of an unfair dismissal award is intended to reflect broadly the amount of redundancy payment which would have been received by an employee if he or she had been made redundant instead of being unfairly dismissed. For this reason we consider that the limit for calculating the basic award should remain in line with the redundancy payments earnings limit. The new maximum in the basic award therefore remains exactly the same as the maximum redundancy payments going up from £4,350 to £4,560. The additional award which an industrial tribunal may make when an employer has refused to comply with an order to reinstate or re-engage is also currently subject to a £145 weekly earnings limit, and this is also increased to £152.

So far as guarantee pay is concerned (still on the first order) the Government propose to increase this limit from £10 to £10.50, which is a 5 per cent. increase. We have decided not to increase the other limits—namely, the specified number of days in any relevant period (now five days)—and the length of the relevant period, which is three months. The reason for that decision was given in the report laid at the same time as the order, and is that the maximum number of days for which payment is required to be made still seems to strike a fair balance between the employer's obligations and the employee's rights.

If your Lordships will allow, I shall say a brief word on the second order. The Unfair Dismissal (Increase of Compensation Limit) Order 1984 has been laid again in accordance with the 1978 Act. It revokes the Unfair Dismissal (Increase of Compensation Limit) (No. 2) Order 1982, which set the limit on the compensatory award for unfair dismissal at £7,500, and raised the limit to £8,000—an increase of 6.7 per cent. Your Lordships may wonder why this higher increase has taken place; the answer is that this limit is not subject to annual review but may be reviewed from time to time. It has not been reviewed for two years so my right honourable friend thought that the slightly higher rate would be right.

The limit applies not only to unfair dismissal awards to compensate for the actual loss sustained by a person who takes a claim to an industrial tribunal but also to compensation which may be awarded in cases where complaints of discrimination under the Sex Discrimination Act or the Race Relations Act have been upheld.

May I say a brief word on the third order, that is the Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1984 laid in accordance again with the principal Act. These limits apply to the basic and special awards for unfair dismissal for trade union activities or membership or non-membership of a union, which were introduced by the Employment Act 1982 and became effective from 1st December 1982.

The high limits on the basic and special awards for unfair dismissal in a closed shop stemmed from the particular injustices involved in these dismissals in that the individual concerned may find it almost impossible to get another job in the same industry. This is the first time these limits have been increased. The Government propose that the limits on the basic and special awards should be increased by what in effect is 5 per cent. respectively throughout.

There is one final thing I should say. The orders have been drafted to come into effect on 1st April next year instead of 1st February, as in previous years. The reason for this change is that it has been pointed out to the Government by a number of employers' organisations that problems and delays have arisen in the past where the limit has been changed between the date that the employee ceases work and the date his notice expired or would have expired if he had been given his statutory period of notice. This period can be up to 12 weeks. My right honourable friend therefore decided that it would be preferable to allow at least 12 weeks between the date the orders are made and the date that they come into effect. I beg to move.

Moved, That the draft order laid before the House on 5th December be approved.—(Lord Belstead.)

Lord Dean of Beswick

My Lords, first may I express once again my appreciation to the Minister for the way he has presented these three orders in his usual courteous and very informative manner. However, I have to strike a little sour note on the question of availability of the material—the time factor. I am not criticising the Minister by any means, but I always think that in this place—being a second Chamber—when these statutory instruments and orders are first placed we ought to have a little time to study what is behind the Government's thinking from what is said in Hansard reports from another place.

I was in and out of the Chamber once the business started this morning in order to try to get the reports of what the Minister had said in another place. This leaves one rather at a disadvantage. I make no criticism of anybody. I think that the noble Lord, Lord Hooson, in his speech yesterday on the role of the House of Lords, referred to this over-usage of the speed at which statutory instruments come from one place to the other and go through almost without stopping.

We are fortunate on this occasion that the three orders that the Minister has moved are not really contentious. They are acceptable, they are necessary, and are up-ratings mainly in accordance with inflation and wage increases. They are to be welcomed on that basis.

The only order which I would pick out for a brief comment was where the Minister mentioned the figure of £7,500 being raised to £8,000 for one category because it is not subject to annual review. There is a feeling that this figure is inadequate from its original starting point. I hope that the Minister may bring this to the notice of the Government when they are considering in future the reappraisal of these schemes so that they may consider that particular order.

Having said that, and because of the day it is, I shall rest my case on that. We accept the orders because of the business that is involved.

Lord Belstead

My Lords, I am grateful to the noble Lord. I am sorry that this order followed quickly on the order in another place. I understand his desire to see the exchanges there. It is a point that I will take on board and ask my right honourable friend to bear in mind in the future, although I cannot give any undertaking. I am grateful to the noble Lord for the way in which he spoke.

I also take on board the point that despite the fact that the increases are higher than any of the other increases the noble Lord feels that there is a case for looking benevolently on the levels of compensation given under the second draft order. With that response, I commend to your Lordships the first of these three orders standing in my name on the Order Paper.

On Question, Motion agreed to.