Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1989 (Hansard, 9 March 1989)

§ Baroness Turner of Camden
My Lords, I thank the Minister for explaining in such detail the upratings and the reasons for them. We do not offer opposition to the orders; but, on the other hand, I should like to take the opportunity of making a few remarks. I have referred to Section 148 of the Employment Protection (Consolidation) Act 1978. As the Minister has said, it would be possible for the Minister to have been rather more generous in the uprating than he has been because the general level of earnings in Great Britain at the time of the review was substantially more than the 5 per cent. which is now proposed in the order. The Minister is also entitled to take into consideration the national economic 1669 situation as a whole. We are repeatedly told in this House (and this often leads to some discussion) that the economic situation in the country is improving and has improved substantially over the past year. For that reason it would have been possible to have been rather more generous in the upratings.
The Minister is also entitled to take account of other matters, and it is interesting to. note that employee organisations believe that the upratings should run in line with the general level of earnings rather than simply at the 5 per cent. which I suppose was the rate of inflation at the time of the review. As we now know, the rate of inflation is substantially more than 5 per cent., and is likely to be 7 per cent. within the next few weeks or so.
The other point I should like to make in connection with the issue of limits is why there have to be limits. I know that that is provided for in the 1978 legislation introduced by the last Labour Government. All that is true, of course; but, on the other hand, it was the first time we had had legislation of that kind. At some time in the future we ought to be considering whether it is not something which could be left to the tribunal to assess in the light of each case which comes before it.
Although this is provided for in legislation, I should like to mention the substantially larger amount of compensation that can be obtained by way of special award in connection with actions regarding trade union membership. This amount is substantially more than the limit available if an employee successfully sues an employer for unfair dismissal. It seems that there is no real reason to allow a substantially larger amount in those circumstances than in circumstances where an employee sues an employer. With those few remarks, I offer no objection to the orders and they are supported from this side.

§ Lord Rochester
My Lords, I shall be brief and join in thanking the noble Earl, Lord Dundee, for the clear way in which he has explained the orders. They provide, as he said, for increases in compensation for unfair dismissal and in redundancy payments under the Employment Protection Act 1978 of about 5 per cent. in every case. As the noble Baroness, Lady Turner of Camden, has said, this is less than the current increase in the rate of inflation and much less than the average national increase in earnings. Like the noble Baroness, I think the Government might have been rather more generous in their conclusions than they have been to the employees concerned.
As I understand the position, things will get a little worse; for although this is not the moment to debate it-we shall have the opportunity when the Employment Bill currently going through another place comes to this House-under that Bill it is proposed that redundancy rebates to employers having fewer than 10 employees will no longer apply. That surely can only serve to damage small businesses. I feel I should take this opportunity to give notice that my noble friends and I are likely to oppose the relevant clause (I believe it is Clause 13 of this year's Employment Bill) when the time comes for us to discuss it.
1670 Subject to those somewhat stringent qualifications, we on these Benches are prepared to accept the Motions that are before us.

The Earl of Dundee
My Lords, I am grateful to the noble Baroness, Lady Turner, and to the noble Lord, Lord Rochester, for their comments and their welcome to these orders. The noble Baroness questioned the advisability of having limits at all. It is not the Government's intention that there should be a statutory right to unlimited redundancy payments or unfair dismissal awards regardless of earnings. Employers have a right to expect some protection against astronomical claims and to remove the limits would make employers more reluctant to recruit, and that would reduce the number of jobs available.
The noble Baroness suggested that if there are to be increases why not make them in line with average earnings? The increases are a fair compromise having regard to the needs of employers and employees. We must avoid adding unnecessarily to the burdens on business and guard against taking any action which might lead to the recruitment difficulties that I have just mentioned. I accept the comments of the noble Baroness that economic indicators should always be born in mind. and to that extent a case can be made out for aligning to them. However, in context it is surely preferable to strike the kind of balance which I have just described.
The noble Baroness also touched on the aspect of the orders which gives higher awards when it is a case of dismissal for union or non-union affiliation. As the noble Baroness will recall only too well from last year's legislation, we laid great stress on this and wished to provide that there would be an added deterrent against dismissal for these reasons. I thank the noble Baroness and the noble Lord again for their welcome.