Employment Bill

HL Deb 17 October 1989 vol 511 cc787-856

3.15 p.m.

The Parliamentary Under-Secretary of State, Department of Employment (Lord Strathclyde)

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. —(Lord Strathclyde.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 12 [Trade union duties for which time off must be allowed by employer]:

The Chairman of Committees

If this amendment is agreed to, I cannot call Amendment No. 27.

Lord McCarthy moved Amendment No. 26: Page 11, leave out lines 7 to 12 and insert — ("(i) those matters listed in paragraph 13(a) to 13(f) of the ACAS Code of Practice on time off for trade union duties and activities.").

The noble Lord said: We turn now to Clause 12. The object of the amendment is to limit the impact of the proposed clause. The Committee will remember that under the Employment Protection (Consolidation) Act trade unionists enjoy certain rights of time off with pay. Those rights are set out in Section 27(1) of the 1978 Act. Paragraph (a) states that the rights shall include' the right: to carry out those duties of his as such an official which are concerned with industrial relations between his employer and any associated employer and their employees; or (b) to undergo training in aspects of industrial relations which is—(i) relevant to the carrying out of those duties; and (ii) approved by the Trades Union Congress or by the independent trade union of which he is an official".

Section 27(1) is further defined in subsection (2), which states: The amount of time off which an employee is to be permitted to take under this section and the purposes for which, the occasions on which and any conditions subject to which time off may be so taken are those" — and this is the important part— that are reasonable in all the circumstances having regard to any relevant provisions of a Code of Practice issued by the Advisory, Conciliation and Arbitration Service". The ACAS code of practice on time off came into effect in April 1978 and of course, as with other codes of practice, it provides that failure to observe such provisions of the code would not in itself render a person liable to any proceedings but they can be taken into account in determining any question arising during an industrial tribunal hearing on the issue of time off for trade union activities.

The code fleshes out both Section 27(1)(a) and (b). Paragraph 8.12 of the code deals with general considerations. Paragraph 13, which is the part of the code with which this amendment is concerned, deals with the duties concerned with industrial relations; for example, large parts of Section 27(1)(a) of the 1978 Act. The remaining paragraphs 14 to 22 are largely concerned with Section 27(1)(b); that is, more union related matters such as training and so on.

As far as I am aware and as far as the Government have suggested in another place, that position was not contested by for example, the CBI, the Engineering Employers Federation, the IPM or the BIM. I do not know, and I hope that if I am wrong the Government will tell me, of any determined attempt on the part of employers' associations or individual employers to argue that the provisions of the 1978 code of practice are too wide. I should say that they were not opposed by the then Conservative Opposition when they were introduced.

It is true that in the 1980s there were a number of cases such as Young and Carr Fasteners, Beal and Beecham Group,. and Scott and Allen where the courts appeared to be deciding that shop stewards could attend meetings of unions which were not directly concerned with their recognised representative functions.

For example, they were entitled under the code of practice to brief their members on the outcome of national negotiations. Even though they were not inolved in the national negotiations they were entitled to time off. They were entitled to time off to brief their members or to find out about certain pension schemes, even though they might not be involved in the negotiations on those schemes.

It would appear—I say it would appear because we have no direct evidence; we wonder where this comes from—that these cases are the basis for the Government's move to narrow the legal position. The Government's intentions surfaced in Burdens on Business. In 1988 Burdens on Business stated: greater clarity is needed in defining the range of industrial relations duties for which trade union officials have a statutory entitlement to paid time off. The present legislation can result in employers having to pay for lay union officials to take time off for activities unrelated to the terms on which the employer recognises their union, and thus causing real cost to employers". Naturally enough, one would not expect Burdens on Business to provide any evidence of that, and naturally it does not.

It goes on to say: The Government intend to limit the range of duties for which time off with pay must be allowed to the scope of union recognition by the employer". I stress those final few words: to the scope of union recognition by the employer". This is important because I ask the Minister what the Government have done about this.

Burdens on Business goes on to say: No change is proposed in the provisions allowing trade union members time off without pay". Therefore, the proposals in Clause 12 simply confine future time off to areas where the employer agrees in advance that there shall be time off. That is basically what the clause means. The new paragraph (i) reads: any duties of his, as such an official, which are concerned with negotiations with the employer that are related to or connected with any matters which fall within section 29(1) of the Trade Union and Labour Relations Act 1974"— and this is the important point— and in relation to which the trade union is recognised by the employer". Recognition is important in order to obtain time off.

Paragraph (ii) states: any other duties of his, as such an official, which are concerned with the performance, on behalf of employees of the employer, of any functions that are related to or connected with any matters falling within that provision and that the employer has agreed may be so performed". Therefore, it is recognition that is the joint factor. You cannot unilaterally have yourself recognised. The employer has to agree to recognise you. It is a matter for the employer as to what areas are recognised. He decides. Outside any area of recognition in negotiations he has to agree that these matters can be dealt with by the union and that therefore time off can be given.

We say that that is to break the whole principle under which time off is granted under the 1978 Act. It is not intended that time off shall be entirely in an area decided by the employer, completely and absolutely at the definition of the employer. At the moment, of course, that is not the case because the code of practice does not suggest that that should be the case. Therefore, we suggest that part of the code of practice—and only part of it—should replace the new definition which the Government propose. We want to substitute for both the present words and the proposed new words the rights set out in a particular section of the ACAS code. We simply take paragraph 13, which is only one part of the ACAS code.

I regret that I have to read out quickly to the Committee the contents of the code. It lists six areas for which there shall be time off for representatives carrying out trade union duties:

1. "(a) collective bargaining within the appropriate level of manning.
2. (b) informing constituents about negotiations or consultations with management.
3. (c) meetings with other lay officials or with full time union officers on matters which are concerned with industrial relations between his or her employer and any associated employers and their employees.
4. (d) interviews with and on behalf of constituents on grievances and discipline matters concerning them and their employer.
5. (e) appearing on behalf of constituents before an outside body such as an industrial tribunal.
6. (f) explanations to new employees who he or she will represent of the role of the union in the work place industrial relations structure".

The essential point about that list is that the areas are not dependent on recognition. They are not finally dependent on the revocation by the employer of any right to time off, which is what the present clause proposes. Therefore, they are fit subjects for an appeal to an industrial tribunal, because a tribunal can say where the shop steward wants time off for collective bargaining, whether he needs it for informing constituents, whether he needs to hold interviews or give explanations to new employees. A tribunal could, in principle at least, decide objectively whether or not the shop steward has a reasonable case.

The present position if the Bill is enacted unamended is that all the tribunal can do is ask the employer whether he recognises all those purposes; and since the employer is entitled to say whether or not he recognises, if he does not recognise there is no right to time off. What was intended to be a joint operation has become a unilateral operation.

In conclusion, I want to stress that we are not bringing in the whole of the present section. We are not trying to get back to the situation in which, for example, under Section 27(1)(b) there is the right to undergo training in all aspects of industrial relations approved by the Trades Union Congress or by independent trade unions of which the person may be an official. The amendment simply proposes to list the matters in the code of practice which are concerned with industrial relations in the place of work, but they are not to be unilaterally determined by the employer. They are to be jointly determined.

Finally, what has happened to the pledge which was made by the Government to leave the matter alone, as it were, in regard to the position where a trade union representative is not paid for time off? At present, payment for time off and time off is coterminous. Now the Government intend seriously to restrict the area in which there is to be a right either for time off or payment for time off. The Government intend to restrict the area for which a representative receives payment and they said in their original consultative document that they will leave alone the area covering time off without pay. However, no special provisions have been made.

In the light of those arguments I suggest that this is a modest amendment which should find support in the Committee. I beg to move.

Lord Rochester

This amendment, as has been said, proposes that the ACAS code of practice as interpreted by various court cases which followed its publication provides a reasonable legislative framework for determining when a trade unionist should be entitled to time off. In my view it does.

Any change of principle as proposed in Clause 12 may, as I understand it, involve the renegotiation of an organisation's entire negotiating procedure agreement, not to mention the revision of the ACAS code of practice. However, surely any arrangement relating to time off should be part of and not separate from a general procedure agreement. The ACAS code stresses the wide variety of circumstances and problems facing employers and unions in this respect. In it there is a strong recommendation to the management of large and small enterprises, besides the trade unions, to take these matters into account in reaching flexible arrangements.

As the Institute of Personnel Management put it, where is the evidence that the great majority of these sensitive and complex arrangements are not working? There will always be a few borderline cases that are taken to a tribunal. But, as the noble Lord, Lord McCarthy, has said, changing the rules to rest on a management-based recognition agreement which this clause proposes will surely serve only to open up new areas of potential conflict.

The stated purpose of the present statutory provisions on time off is to aid and improve the conduct of industrial relations. I do not see how the Government's new proposals can be justified within that purpose. I therefore suggest that the Committee, by accepting the amendment, should decide in effect to leave well alone.

3.30 p.m.

Lord Callaghan of Cardiff

I hope that the Government will take this amendment seriously. It seems that the proposal they have made is likely to create friction rather than to improve industrial relations. You may have a very active and able trade unionist employed in a firm or company that does not recognise a union. He may still remain a member of his trade union. As part of his responsibilities he may be called upon to represent other fellow workers in a particular area. As I understand it, to insert the offensive words that he can only act in relation to the trade union recognised by the employer, means that he is not then able to represent people who are engaged in another firm. I do not know why the noble Lord, Lord Strathclyde, should laugh at that. This situation can arise in the case of smaller trades unions where officials have to represent people across a number of concerns. That has always been the case and such a procedure has been carried on, so far as I know, without any great friction.

The situation does not arise in the case of the Amalgamated Engineering Union or the Transport and General Workers' Union. The procedure I have outlined has fulfilled a need as regards the smaller unions. I urge that the matter be looked at again. Why not accept the amendment? I believe that most people who have studied these matters agree that ACAS has done a pretty good job. I am very glad to see that that opinion has received assent. It has a series of proposals as to the circumstances in which time off shall be given. They were enumerated by my noble friend Lord McCarthy. It is a reasonable group of suggestions in which a man might have time off not necessarily to represent someone in his own firm but in another. To deny that facility means weakening the smaller trade unions to a very marked degree and introducing a niggling nuisance and irritation into trades union and employer relations. If the Minister were to withdraw the words to which I think particular objection is taken and then accept the amendment which lays down a very modest series of circumstances in which this may happen, it will show that the Government are not, as so many people believe, afflicted in all their actions by anti-trade union prejudice. I sincerely hope that the Minister will consider the matter.

Lord Boyd-Carpenter

As always, the noble Lord, Lord Callaghan, has crystallised the issue and put it forward with his habitual clarity. However, his reasoning does not lead me to the same conclusion as it appears to lead him. As I understand it, what we are concerned with here is not just time off but time off paid for by the employer; namely, time which the employer is paying for in the pursuit of his business. That is what we are involved with.

Frankly, I do not agree with the noble Lord, Lord Callaghan, that an employer who does not recognise, rightly or wrongly, a particular union, should, because he is employing a man who is working for that union in respect of other companies, pay for time so spent. Surely that is the point. I am subject to correction if I am wrong. However, as I understand the clause, if work is being done on behalf of a union with the employer affecting industrial relations or negotiations in the company then it is thought proper that the time the official spends should be and could be time for which the employer is paying for his work.

I always differ from the noble Lord, Lord Callaghan, with the greatest of hesitation because he has enormous experience. If you employ someone who carries out trade union activities in respect of other companies, I do not see why the employer should pay for the time that the official spends on those duties. Therefore, I believe the clause is about right.

Lord McCarthy

I wish to draw the attention of the noble Lord to Section 27(1) of the 1978 Act which provides a duty on an employer to permit an employee who is an official of an independent union recognised by the employer. If there is no recognition in the first place, then no rights adduce at all. We are talking about what happens when there is some recognition.

Baroness Phillips

Will the noble Lord, Lord Boyd-Carpenter, accept that a director is paid very much better than a man on the line and that the former will frequently indulge in some activity relating to the British Institute of Management, the CBI or the Institute of Directors? He will be involved in quite a number of discussions and negotiations which will take place during time paid for by his employers. What is the difference?

Baroness Seear

We on these Benches have supported a considerable amount of the Government's trade union legislation, but surely enough is enough. If we are to move into a more prosperous time, as we all hope, then it is absolutely essential that we should have a responsible trades union movement working collaboratively with employers though doing their proper job of representing employee interests. Why must the Government niggle at the trades unions in this way? They have gone far enough. Can they not show a little generosity with the broader concern and purpose of developing better industrial relations in this country?

Lord Campbell of Alloway

The noble Lord, Lord McCarthy, speaks of some recognition. Recognition has been the essence of some of the most difficult and complex disputes that have troubled trades unions, employers and the courts. My contribution has nothing to do with anti-union sentiment or with niggling away at small points. Some recognition is a meaningless, confusing and—with respect to the noble Lord—hopelessly sterile phrase. Trades unions are either recognised or they are not. If they are, then I go along with much that my noble friend Lord Boyd-Carpenter has said. If the trade unions are not recognised then the obverse holds true.

For the life of me I cannot see what is wrong, anti-union, niggling or unacceptable about the Government's proposal in logic, in practice or in law.

Lord Strathclyde

The noble Lord, Lord McCarthy, said that this was a very minor amendment. The noble Lord, Lord Rochester, said that what the Government were proposing in Clause 12 was a fundamental change. The noble Lord, Lord Callaghan, said that it was an attack on small unions. All noble Lords opposite have essentially missed the point of Clause 12. I agree entirely with my noble friend Lord Boyd-Carpenter. This is not an attack on the fundamental principle of paid time off for officials. The effect of all these amendments is, in one way or another, to negate the effect of Clause 12.

As the legislation currently stands an employer can be required to grant paid time off for officials to carry out duties for which the employer does not recognise the union. For example, an employer might negotiate with the trade union over pay and conditions but might have no intention of negotiating with the trade union over, say, recruitment policy. Yet a shop steward could still claim paid time off to attend meetings about recruitment policy. This cannot be right.

The clause seeks to correct this anomaly by limiting the right of officials of recognised trade unions to paid time off for trade union duties to duties concerned with negotiations with the employer about industrial relations matters for which their union is recognised or allowed by the employer to carry out functions on behalf of employees. Similarly, paid time off for trade union training must, under the proposed clause, be relevant to duties which meet the same conditions. This is clearly a necessary change.

I turn specifically to Amendment No. 26. To leave out lines 7 to 12 of page 11 and insert the passage proposed in the amendment would remove the new concept of limiting time off to duties concerned with matters in relation to which the union is recognised. It would replace it with the examples of purposes for which an official should be permitted to take time off detailed in the ACAS code. This list provided some examples of purposes for which time off should be granted under the present legislation but it was not drawn up in order to define the conditions for the right to paid time off.

The clause does not attempt to place a specific limit on what purposes fall within the ambit of the legislation. This will depend on the terms of the recognition agreement, whether the time off is for duties concerned with negotiations and, of course, the test of reasonableness. I have no doubt that in the great majority of cases employers and unions will continue to agree mutually satisfactory arrangements for time off. It would be impracticable and not conducive to good industrial relations for an attempt to be made to provide in the legislation for all the occasions where time off need, or need not, be allowed. The clause ensures that employers do not have to provide paid time off for matters in relation to which the union is not recognised. Where there is a dispute about whether paid time off should be allowed on a particular occasion, the appropriate place for this to be resolved is at a tribunal. The tribunal would be able to consider issues such as whether it would be reasonable to grant paid time off.

The fact that employers comply with the current law and give time off in the circumstances it provides does not mean that the law itself is at the moment equitable. The Government have not sought in this clause to change the principle of existing legislation but just to make it more equitable. Where employers and trade unions have reached mutually satisfactory arrangements there is nothing in the clause which will force them to change. What the clause does is to enable those employers burdened by the current law to limit time off to a more reasonable level.

The noble Lord, Lord McCarthy, specifically mentioned Section 28 of the 1978 Act. I have to point out to him that Section 28, which requires employers to provide time off without pay to union members for trade union activities, is not being amended. This is not a fundamental attack on anything that trade unions have been doing over the past 10 or 11 years. The amendment simply redresses the balance. For the reasons I have given I hope that the noble Lord will withdraw the amendment.

3.45 p.m.

Lord McCarthy

The noble Lord, Lord Boyd-Carpenter, seemed to be saying that our amendment was trying to give rights to the trade union official without recognition. We are not trying to do that. We are not trying to give any rights where recognition does not exist. We are going along with the present Section 21 of the 1978 Act whereby the rights arise for an official of an independent trade union which is recognised. That is the answer to the noble Lord's point.

Secondly, he seemed to be saying that if our amendment were accepted almost anything would be possible and that almost any area of industrial relations would be one for which the trade union could ask for time off. The answer to that is that the proposal is considerably narrower than the present joint ACAS code. That code extends into all kinds of areas which we are not seeking to cover; for example, education, TUC courses, courses at the behest of individual trade unions and all those areas which are largely outside the workplace. We are insisting on paragraph 13 of the ACAS code. Paragraph 14 dealing with training of officials in aspects of industrial relations and paragraphs 15, 16, 17, 18, 19 and 20 are not being included in the new definition. We are saying that just one paragraph of the jointly agreed ACAS code should stand. That is not an extreme position.

I am not certain that I understood the drift of the argument of the noble Lord, Lord Campbell of Alloway. For part of the time he seemed to be saying that the term "recognition", or the area of recognition, was an extremely simple thing. At other moments he seemed to be saying that it had been much disputed. It was disputed at one time when there were laws giving trade unions certain rights of recognition. In fact the area of recognition and the boundaries of recognition make for a complicated issue. What it comes to in the end is that if an employer likes to say that this or that is not recognised, nobody can say that the employer is wrong. One cannot have recognition unless one has a prior act by an employer. Recognition means an act on the part of the employer. That is why we do not like the details of the boundaries of time off. We do not mind recognition being a qualification for any boundaries at all, but we do not like recognition to be the definition of what those boundaries should be.

Lord Harmar-Nicholls

Does the noble Lord recognise that what he is asking for would be granted if the tribunal was satisfied that it would be right to grant it. The tribunal would be there as an arbiter to decide whether or not a claim of unfairness was substantial. Does not the noble Lord recognise that?

Lord McCarthy

I do not recognise that, and I do not believe that the history of tribunals bears that out. It would be putting the tribunal in an impossible position if one expected it to say whether it was reasonable to recognise the union for this or that purpose. In the tribunal context, the tribunal is bound to take what the employer says are the boundaries of recognition. Without an investigation into what happens day by day in the plant, no tribunal could say whether de facto this or that was recognised.

If one has the term "recognition" in an Act of Parliament and one asks a tribunal to determine it, the tribunal is bound in practice and has, in defining managerial functions in other aspects of such work, to ask the employer what the employer does. If the employer says that it does not recognise for this purpose and that time off is not needed for this purpose, there is not much that a tribunal can do. All it can do is what we are suggesting the tribunal should be allowed to do —look at paragraph 13 of the ACAS code, go through sub-paragraphs (a) to (f) and see whether those are the purposes for which the individual shop steward wants time off. That a tribunal can arbitrate; it cannot arbitrate what a word such as "recognition" means.

So far as I understood the Minister he seemed to be suggesting that the only reason he cannot accept the amendment is that it would represent a burden on business. He actually used the phrase, "burdens on business". It is no answer to tell us that Section 28 gives certain rights without pay. Those rights are given to all employees. We are not talking about all employees. We are talking about trade union officials.

I took the consultative document to suggest that, if the Government were to legislate in that area, it would leave the rights of trade union officials—of shop stewards with recognised members —in exactly the same position as they were before and would only narrow the area concerning pay. But the Government have not done that and have not provided any sufficient arguments. We therefore feel inclined to press the amendment to a Division.

Lord Campbell of Alloway

Perhaps I may ask the noble Lord one question before we divide upon the amendment. Let us suppose that an employer has recognised union A. There is an internecine dispute between union A and union B and the employer is not, or may not be, disposed to recognise both unions. Must the employer give time off to both unions?

Lord McCarthy

I am pleased that the noble Lord asks me that question, although I do not understand why he has not got the point. Section 27(1)(a) of the 1978 Act states that there shall be a duty on the employer to permit an employee who is an official of an independent trade union recognised by the employer to take time off. If the employer recognises trade union B but does not recognise trade union A, he has no need whatever to give any rights to the unrecognised union.

Lord Campbell of Alloway

Then what is the object of the amendment?

Lord McCarthy

The object of the amendment is to give the tribunals and shop stewards something less subjectively determined by the employer than the single word "recognition". That is the object of the amendment.

3.51 p.m.

On Question, Whether the said amendment (No. 26) shall be agreed to?

Their Lordships divided: Contents, 83; Not-Contents, 115.

DIVISION NO. 1
CONTENTS
Amherst, E.	Foot, L.
Attlee, E.	Gallacher, L.
Aylestone, L.	Galpern, L.
Banks, L.	Gladwyn, L.
Birk, B.	Glenamara, L.
Blackstone, B.	Graham of Edmonton, L. [Teller.]
Blease, L.
Bonham-Carter, L.	Grey, E.
Boston of Faversham, L.	Hampton, L.
Bottomley, L.	Harris of Greenwich, L.
Bruce of Donington, L.	Hatch of Lusby, L.
Callaghan of Cardiff, L.	Hooson, L.
Campbell of Eskan, L.	Houghton of Sowerby, L.
Carmichael of Kelvingrove, L.	Hughes, L.
	Irvine of Lairg, L.
Carter, L.	Irving of Dartford, L.
Cledwyn of Penrhos, L.	Jay, L.
Cocks of Hartcliffe, L.	Jeger, B.
Dean of Beswick, L.	John-Mackie, L.
Donaldson of Kingsbridge, L.	Kings Norton, L.
Dormand of Easington, L.	Leatherland, L.
Ennals, L.	Listowel, E.
Ewart-Biggs, B.	Llewelyn-Davies of Hastoe, B.
Ezra, L.
Falkland, V.	Lockwood, B.
Fisher of Rednal, B.	Longford, E.

Lovell-Davis, L.	Seear, B.
McCarthy, L.	Serota, B.
Mackie of Benshie, L.	Soper, L.
Mais, L.	Stallard, L.
Mayhew, L.	Stedman, B.
Milner of Leeds, L.	Stoddart of Swindon, L.
Nicol, B.	Strabolgi, L.
Northfield, L.	Taylor of Blackburn, L.
Oram, L.	Taylor of Mansfield, L.
Parry, L.	Tordoff, L.
Peston, L.	Turner of Camden, B.
Phillips, B.	Underhill, L.
Ponsonby of Shulbrede, L.[Teller.]	Walston, L.
	Wedderburn of Charlton, L.
Robson of Kiddington, B.	Whaddon, L.
Rochester, L.	White, B.
Sainsbury, L.	Williams of Elvel, L.
Scanlon, L.

NOT-CONTENTS
Airey of Abingdon, B.	Hylton-Foster, B.
Alexander of Tunis, E.	Johnston of Rockport, L.
Allenby of Megiddo, V.	Killearn, L.
Allerton, L.	Kinloss, Ly.
Alport, L.	Kinnaird, L.
Ampthill, L.	Lauderdale, E.
Annaly, L.	Layton, L.
Arran, E.	Long, V.
Balfour, E.	Luke, L.
Barber, L.	Lyell, L.
Belhaven and Stenton, L.	Macleod of Borve, B.
Beloff, L.	Manchester, D.
Belstead, L.	Manton, L.
Bessborough, E.	Margadale, L.
Birdwood, L.	Marley, L.
Blatch, B.	Merrivale, L.
Blyth, L.	Middleton, L.
Boardman, L.	Monson, L.
Borthwick, L.	Morris, L.
Boyd-Carpenter, L.	Mottistone, L.
Brookes, L.	Mountgarret, V.
Brougham and Vaux, L.	Mowbray and Stourton, L.
Buckmaster, V.	Munster, E.
Butterworth, L.	Murton of Lindisfarne, L.
Caccia, L.	Nelson, E.
Campbell of Alloway, L.	Norfolk, D.
Campbell of Croy, L.	Norrie, L.
Carnegy of Lour, B.	Nugent of Guildford, L.
Carnock, L.	Orr-Ewing, L.
Cawley, L.	Oxfuird, V.
Clanwilliam, E.	Pender, L.
Colnbrook, L.	Peyton of Yeovil, L.
Cottesloe, L.	Porritt, L.
Craigavon, V.	Radnor, E.
Craigton, L.	Rankeillour, L.
Cullen of Ashbourne, L.	Reay, L.
Davidson, V. [Teller.]	Renton, L.
Denham, L. [Teller.]	Renwick, L.
Effingham, E.	Rugby, L.
Ellenborough, L.	St. Aldwyn, E.
Elliot of Harwood, B.	St. Davids, V.
Elliott of Morpeth, L.	Savile, L.
Fraser of Kilmorack, L.	Seebohm, L.
Gainford, L.	Shannon, E.
Gibson-Watt, L.	Sharples, B.
Gridley, L.	Shaughnessy, L.
Haig, E.	Skelmersdale, L.
Hailsham of Saint Marylebone, L.	Strathcarron, L.
	Strathclyde, L.
Harmar-Nicholls, L.	Strathspey, L.
Harvington, L.	Terrington, L.
Havers, L.	Teviot, L.
Headfort, M.	Thomas of Gwydir, L.
Henley, L.	Thorneycroft, L.
Hesketh, L.	Trumpington, B.
Hives, L.	Ullswater, V.
Hood, V.	Vaux of Harrowden, L.
Hooper, B.	Windlesham, L.

Resolved in the negative, and amendment disagreed to accordingly.

4 p.m.

Lord Wedderburn of Charlton moved Amendment No. 27: Page 11, line 11, leave out ("and in relation to which the trade union is recognised by the employer").

The noble Lord said: I shall speak also to Amendment No. 28, which deals with a similar matter. The purpose of the amendment is to look further into the depths of the change to the wording of Section 27(1)(a) of the 1974 Act that the Bill makes. The amendment is not as ambitious as the previous one. Its purpose may be described as an attempt to retain some core of objective meaning in Section 27.

My noble friend Lord McCarthy had to struggle hard to prevent the Committee getting into a fine old muddle about the previous amendment because—it is a problem that affects us all—the Government are suggesting an amendment to an existing section, and we are suggesting an amendment to that amendment. Part of the difficulty, I apprehend, with the previous discussion may have been that the Committee did not have the original section in front of it. That section, as I believe we finally established, relates to two things: first, the condition precedent; secondly, a right.

The condition precedent is wholly in the hands, and has been since 1980, of the employer. It is recognition of the union. Since then, there has been no legal duty to recognise the union. Once the condition is fulfilled and the union is recognised, there appears in Section 27 a right; namely, a right of the union representative who is also an employee not to break his contract of employment, and to be paid for a certain amount of time off in connection with industrial relations between the union, his employer and associated employers.

I break off there to say that we wish to know whether the omission of the words "and associated employers" in the Government's new text for Section 27(1)(a) is accidental, purposive or meant to change the section in that respect. I put that to the Minister now because it is a matter to which we may wish to return on Report.

"Associated employers" is within the definition of recognition within Section 32 of the 1974 Act. The section will be odd indeed if it is left in the form that it now is. It would be ridiculous to change the notion that any time off could deal with industrial relations matters with the employer's associated employers in a small group of companies, for example. We wonder whether the Government really have that in their minds since they have taken out those words in one place and left them in in another.

That apart, the amendments attempt to retain, not as much as the previous amendment, but some core of objective meaning in the right. Let me explain why I put it that way: if the union is recognised, in all modern industrialised labour law systems of which I am aware, some kind of union representative will have a right to conduct trade union activity and industrial relations activity with a right to paid time off from the place of work. Most systems have a far more extensive right than we do.

All the amendment asks for—it may be that the next amendment will be needed to make sense of it—is that the definition should cover that basic area of employment matters which is within Section 29 of the 1974 Act. That of course is the section which lists the permissible subjects for a trade dispute; but there is no dispute, I apprehend, with the Government on this point since they use the section to point to the list of matters which are everywhere, by employers and unions alike, regarded as a basic employment area of industrial relations.

Once the condition is satisfied—it is wholly in the employers' hands—then the right should at least apply to the core basis and, of course, any other matters upon which the parties reach agreement. I pause to say that sensible and good employers, of whom there are many, reach agreement on matters such as time off, and of course that is much the best way to deal with the matter. However, for those employers who do not, but who recognise unions and rely upon, as it were, their basic legal obligations, we say that there should be a basic legal obligation.

The amendment which the Government wish to make to the section would not leave any right or obligation. Let us take the case where the condition is satisfied: the employer says, "I recognise the union", and the shop steward says, "I want paid time off. I have not had any this year". It must be a reasonable time. There has not been much difficulty about that. In fact, I pause again to say that the complaints of some of my colleagues who are practitioners in that area of employment law is that there are so few cases on this matter before the industrial tribunals that there is not much honey or luxury to be obtained by fees in that area. There are not many cases.

If the Government's amendment is accepted, the employer may say, "Oh, I have decided that I do not recognise you on that matter". Pensions have been much discussed. The recognition would normally at least allow for some negotiations or talk about pensions. The employer may suddenly say, "No I am sorry. I do not recognise you. I have decided not to. I have decided to withdraw." That has happened. Trade unions know that the willingness of an employer to continue to talk about pensions is a delicate matter.

If that is the situation, and the employer is entitled to act as I have described, the union representative has no right; because if I have a right to time off but the employer has the right to stop me taking time off, the right is nullified. It is a liberty of action which is conditional upon the employer's agreement. The Government's text means that even when the condition precedent is satisfied there is no right.

There is no right because the second half of the section is also completely in the employer's hands. He can say, "No, I do not recognise you for that matter. I have withdrawn recognition on that matter. I do not agree. You cannot go." "You cannot go" means also that—this is where the trouble will break out, and good employers will not thank the Government for this—he cannot go on the training course which is linked, via paragraph (b) and the definition of duties in paragraph (b), to the content of paragraph (a). One again feels like making photocopies of the whole section because it would save so much time. Under Section 27(1)(b) the training courses have to be relevant to the carrying out of the duties in paragraph (a). Therefore, if the paragraph (a) duties are defined as wholly in the employer's hands, minute to minute, then training courses are also equally limited. That would be a great pity.

The TUC and trade unions will take that line. I believe good employers will take that line. I do not believe that many people will thank the Government for the disputes that will break out when management gets into a macho frame of mind and causes disputes. There will be more disputes on this issue if the Government's text is accepted.

As for clarity, perhaps I may say just two more things. First, there is, as I have suggested, little difficulty here with legal interpretation. The Court of Appeal this year heard the case of Adlington v. British Bakeries (Northern) Limited. In that case, the Court of Appeal again gave its approval to the test which has become, in the case of the 1980s, the central test as to whether or not there should be time off. I shall read part of one sentence which goes to the nub of the issue. The Court of Appeal stated: The test is whether the time off is required to enable the official"— This is under the present law, of course— to carry out his duties in relation to a matter which arises in relations between the employees and management".

There will always be the odd case or two, but that test has now settled in and in previous cases such as the Beal v. Beecham Food case it has not caused a great deal of difficulty.

As for the burden on business, the CBI, it is true, has said that it wants to confine the right, although I am not clear that the CBI has claimed that it wishes to destroy the right as the Bill would do. Even the CBI's documents—I looked at what I could find—show that in 1986 it thought that the section was potentially damaging as a burden to business. They did not actually say it had damaged any particular business. I should like to know of cases where it has caused this enormous burden. It may cause management some inconvenience. However, good management will say that good industrial relations cause a bit of inconvenience but in the end it is worth it.

The Government's text would make massive inroads, because of its character, into those situations where union representatives and shop stewards come from companies which are either members of a wide group or of an area. Those situations are perhaps covered by the bargaining with the Confederation of Shipbuilding and Engineering Unions. It is quite clear that under this text the shop stewards would encounter greater difficulty if different employers in different parts of the industry put different limitations upon their recognition in order to prevent meetings which would come within this section.

There is no anomaly in the present law. Our contention is that there would be an anomaly if the Bill were passed as it is. The anomaly is that Section 27 would become a false prospectus. It would say that if the precedent conditions were satisfied then employees would have a right. But in truth it would not be a right at all. There would be no right because the employer could always determine what the result should be.

Therefore these amendments are nothing more than an effort to say to the Government, "Will you not leave a small core of objective meaning, leaving your own words in the section, but omitting the words that give the employer the ability to determine, day to day, the content of the right according to whether the trade union is recognised?" I beg to move.

Lord Strathclyde

The first of these two amendments proposes to leave out the phrase, and in relation to which the union is recognised by the employer", from line 11 of page 11. This would remove the concept of recognition so that the test would be simply whether the duty was concerned with negotiations related to or connected with a matter within Section 29(1) of the 1974 Act. The likely effect is that, if the subject of the meeting for which paid time off is claimed falls within the list of industrial relations matters in Section 29(1) of the Trade Union and Labour Relations Act 1974 and other provisions of the current legislation are satisfied, the employer would be required to provide paid time off. This is unacceptable. The Government's intention in Clause 12 is to place a more reasonable limit on the circumstances under which an employer is required to grant paid time off for trade union duties than that which currently obtains. The amendment would negate this.

Amendment No. 28 proposes to leave out "and" in line 17 of page 11 and to replace it by "or". The effect of this amendment would be to require employers to provide paid time off for a trade union official of a recognised trade union to perform functions on behalf of employees which had not been agreed by the employer. This would of course negate the purpose of this part of the clause which is an integral part of the whole clause. The purpose of this part of the clause is the same as that which I have already described for the whole clause—that is, to give employers more control over the matters for which they are obliged to provide paid time off.

The noble Lord mentioned particularly the case law concerning the Adlington v. British Bakeries (Northern) Ltd. case. I want to make it clear that that case law, which emerged during the Committee stage in another place, led us to introduce amendments at Report stage in another place.

The Government's intention over the clause have not altered during the passage of the Bill. The effect of the amendments was simply to preserve a point of law which was brought into focus by the case of Adlington v. British Bakeries. While not reversing the Beal decision, the Court of Appeal in this case confirmed that there was in Section 27 of the 1978 Act a concept of nearness to negotiations. This meant that the tribunals were required to decide whether the paid time off which the union wanted was sufficiently relevant to negotiations with the employer to be covered by the time off provisions. This concept could have been lost with the original wording in Clause 12, so it was amended accordingly.

Lord Wedderburn of Charlton

I apologise to the noble Lord for interrupting, but I wish to be clear, because I may have misunderstood. The Minister says that the present wording was introduced because of the Adlington decision. Did I misunderstand that?

Lord Strathclyde

The original concept could have been lost with the original wording of Clause 12. It was because of that that the orginal clause was amended by the amendments which were brought in at the Report stage in the House of Commons.

The noble Lord mentioned training. I wish to point out that there will remain a requirement on employers to provide paid time off to trade union officials for relevant training. This is because the Government accept that relevant training for trade union officials can be an aid to the conduct of good industrial relations. However, the fact remains, as it has done throughout the debate this afternoon, that if a course is not relevant to industrial relations in the workplace, there is no good reason why an employer should be required to provide time off for the official to attend.

I hope that in the light of that explanation the noble Lord will allow us to continue and will withdraw his amendment.

4.15 p.m.

Lord Campbell of Alloway

This is not as complicated as it would appear from the speech of the noble Lord, Lord Wedderburn. I agree of course that there is no right to time off unless the union is recognised. The noble Lord says, "Oh, but it is open to an employer"—he did not use those words but that was the meaning—"to pretend that the union is not recognised when in fact it is". But, with respect, is it? There are ways in which a pretence of that nature could be and can now be dealt with.

This small core of objective meaning, as I understand it, is the ethos or the spirit behind the amendment which motivates the noble Lord's thinking. It is a small core of objective meaning which is directed to a pretence which is assumed and could otherwise be dealt with. With respect, I do not see the necessity for the amendment.

Lord Wedderburn of Charlton

The Minister confirmed some of the worst fears of those who are very concerned about this change. Perhaps I may say to the noble Lord, Lord Campbell of Alloway, that I do not agree that there should be no right to time off. There should be a right to time off. As a matter of fact, it is widely held these days that employers ought to recognise trade unions and bargain with them. That view is not held, I know, by the Government because they do not believe in collective industrial relations. They believe in decollectivised industrial relations. It has been said many times by Ministers that they believe in individualised industrial relations. They do not believe in trade unions taking part in collective bargaining on wages. If they did, they would defend the canons of Professor Hayek. The Prime Minister would not like that. Of course that is their line.

If we examine the legislation since 1982 at any rate—the argument of the noble Lord, Lord Prior, is a more complex matter—it is clear that it has as a major theme the decollectivisation of British industrial relations. That means putting the trade unions in a corner and hearing as little from them as possible. It means taking them off tripartite bodies, getting them out, with decentralised wage bargaining so that there is no central trade union strategy. That is a perfectly logical, coherent strategy. We just happen to think that it is evil and does a great deal of harm to ordinary working people and their interests.

There is a difference of principle between us. It is quite natural for the Government to move such a clause. We have smoked it out and seen what it is. There is no right to time off after this clause. When there is no such right under Section 27(1)(a), let us be quite clear about it, there is no right to relevant training, which is wider than what is permitted by the employer after the Bill is passed, under paragraph (a). So the employer controls time off, recognition and training. I can see from the look on the Minister's face that he is happy. This he calls a more reasonable limit on Section 27 which concerns time off. There is scarcely another system in the world that would view the matter that way and very soon we shall put it right when the roles between us are reversed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 28 not moved.]

Baroness Turner of Camden moved Amendment No. 29: Page 11, leave out line 20 and insert ("any such duties or functions as are mentioned in paragraph (a) or upon which the trade union or the employer is seeking consultation and/or representation.").

The noble Baroness said: We have already had a substantial amount of discussion on this clause, but I wish to bring to the attention of the Committee an aspect which has not been completely covered. The objective of Amendment No. 29 is to try to establish that time off will be available for other matters apart from direct collective bargaining and negotiations.

As I think has already been indicated by my two noble friends, good industrial relations consist of more than simply direct collective bargaining, although of course that is very important. In particular there is training, to which my noble friend Lord Wedderburn has just paid some attention. On the question of training there really is a case for providing a right to paid time off for a range of responsibilities in connection with industrial relations which should not be dependent simply on recognition for full collective bargaining. Union officials elected by the workforce should be equipped to respond to changes in the working environment. The Government repeatedly emphasise the importance of training yet it would appear in this clause that they do not want to provide facilities for it to be properly undertaken.

There is on record at least one case where the Employment Appeal Tribunal ruled that a shop steward who took time off to attend a training course on pension schemes should be paid for the time taken. That decision was reached even though at that time the company pension scheme was not a matter for negotiation. However, it was ruled by the Employment Appeals Tribunal that it was a matter about which employees might quite rightly seek advice from their shop steward. Therefore in that particular case, which went to appeal as I have just indicated, a decision was taken that the shop steward should have paid time off for that function.

Unless an amendment along the lines indicated in Amendment No. 29 is adopted by this Chamber, a decision by the Employment Appeals Tribunal on these lines would no longer be possible, as I understand it. That would be quite unnecessary and quite restrictive. I share the views expressed by both my noble friends. I support in particular what was said by my noble friend Lord Wedderburn—that unless this clause is amended it demonstrates completely our view that the Government are intent upon removing rights from trade unions, in particular from active trade unionists, and are intent upon preventing them from carrying out effectively a good industrial relations system and scheme at the workplace level. It is of course important to have such a scheme at the workplace level. That is what these rights are all about, and that is why they are important to us. We have put down a series of amendments to try to protect the rights to some degree. I beg to move.

Lord Boyd-Carpenter

I think, with respect, that the noble Baroness has somewhat exaggerated the effect of the clause. I am sure she is quite wrong to read into it such governmental intentions as she apparently does. As I understand it, we are simply concerned here with what purposes should permit an employee to demand paid time off from his employer. As I understand it, there is nothing to prevent an employee performing the interesting training or other functions to which the noble Baroness referred in his own time. All that is at issue here is whether his employer should be bound to pay him for that.

Baroness Turner of Camden

Does not the noble Lord agree that if an individual has to lose money in order to pursue these activities, which can lead eventually to the employer's benefit, he is less likely to want to undertake them?

Lord Boyd-Carpenter

If the activities appear likely to lead to an employer's benefit, the latter might well be prepared to pay for the time off voluntarily. But is an employer to investigate in advance whether the studies are likely to be to his benefit? Has the noble Baroness also considered that if time off is to be taken for union purposes that have nothing to do with an employer it is the union which should pay? Unions have their own funds and if a man is to stop work in order to carry out work which the union wishes him to do, on ordinary principles I should have thought it was for the union to pay the man sufficient to support him. What we are really concerned with here are not the substantial issues which the noble Baroness suggested but the simple fundamental rudimentary one of who pays. I think the Government are right in saying that the employer should not have to pay for union work, save where it has a direct relationship with a union which he recognises and deals with.

Lord Scanlon

I have listened with interest throughout the afternoon and I am grateful to the noble Lord, Lord Boyd-Carpenter, for at last coming clear on the issue. All afternoon I have wondered whether the issue concerns time off or who pays for that time off. We are now told that the issue concerns who pays. Have the Members of the Committee opposite considered for one moment that we are talking not only about trade unionists in manual occupations but also about staff workers on salaries? If time off is given one cannot deny pay to an individual without breaching his contract of employment if he is on a salary. The alternative therefore is to widen still further the differentials that exist between staff and non-staff. Surely that point must be taken on board by my noble friend.

Lord Strathclyde

Amendment No. 29 proposes to leave out line 20 of page 11 and to insert the proposed passage. This would require an employer to provide time off for trade union officials to receive training in relation to matters for which the union would like to be recognised, or in respect of functions which they would like the employer to agree they should perform on behalf of his employees even though in fact there is no such agreement. It would be quite inappropriate for an employer to be required to give time off for such training. Clause 12, most appropriately, gives a right to reasonable paid time off for training in aspects of industrial relations relevant to duties which are either concerned with negotiations with the employer about industrial relations matters or are concerned with the performance of functions relating to industrial relations matters which the employer has agreed the union may perform on behalf of his employees.

Members of the Committee opposite believe that the clause will have an adverse affect on the time off trade union officials are entitled to in order to undergo relevant training. As I have said, there will remain a requirement on employers to provide paid time off to trade union officials for relevant training. This is because the Government naturally accept that relevant training for trade union officials can be an aid to the conduct of good and sound industrial relations. However, the fact remains that if a course is not relevant to those duties of an official which are defined in Clause 12, there is no good reason why an employer should be required to provide paid time off for his official to attend it.

Just before he withdrew a previous amendment, the noble Lord, Lord Wedderburn, spoke to the effect that Clause 12 was an outrageous attack on trade unionism and followed a line that the Government had started in 1982. Other Members of the Committee opposite made similar comments. I think that line of argument stretches credulity. It is quite obvious that the clause continues to provide trade union officials with the right to paid time off to carry out their duties and to have relevant training. All the clause does is to make a modest and sensible adjustment which merely carries a condition, already embodied in existing legislation, through to its logical conclusion.

As I said earlier this afternoon, it is clear that all of the amendments have the same purpose, namely to frustrate the very necessary aim of Clause 12, which is to link the right to paid time off for trade union duties and training to the extent of recognition. That would ensure that an employer is not placed in the position of having to grant paid time off to trade union officials relating to matters for which the union is not recognised.

In the light of those remarks, I hope that the noble Baroness will not press her amendment.

4.30 p.m.

Baroness Turner of Camden

I find that response extremely disappointing. The TUC's view is that the clause as it stands would place severe limits on the rights to paid time off both for trade union duties and for training. The TUC points out that the clause would do so by removing the qualifying term "industrial relations" from the present legislation and replacing it with employer agreement on the extent to which the union is recognised. That is the core of our argument.

As the clause stands, the employer could give general recognition but could say "We do not recognise the union as far as pensions are concerned. Therefore, if you want to attend a seminar or training course on pensions the union can pay for you to do so but we are not going to give you paid time off". That is not a satisfactory situation.

As I understand it, particularly in the light of the EAT decision which I quoted earlier, that is not a situation that would apply under the present legislation. The government proposal would have the effect of weakening the existing provisions on paid time off for trade union duties. I believe that we are eminently justified in being critical of the Government for introducing the measures since there is no evidence that the existing provisions have placed a tremendous burden on employers. Nor are there many industrial tribunal cases on record. Plainly employers have not felt that it was an enormous burden.

This is just another example of the Government's anti-union prejudice. I say that quite categorically. However, I do not intend to press the amendment at this time. I shall take it away and think about it again before Report stage. With those remarks, I beg leave to withdraw the amendment.

Baroness Phillips

Before my noble friend withdraws the amendment I believe that it would be fair for my noble friend Lord Scanlon to have a reply to the point that he raised. It was similar to a point which I made. The Government make great play about not attacking the trade unions. The Prime Minister loves the trade unions—so long as they are in Poland. However, they attack trade unions all the time, in every piece of legislation.

If they are not attacking the unions, why will they not permit people who are "on the line", who are perhaps manual workers within the union, to attend to their duties during paid time when they will allow a director to carry out duties on behalf of his professional association, which is his trade union?

Lord Strathclyde

The point is that that is an agreement between the employer and the employee. Likewise, in the case of a director, it is up to the director to decide in conjunction with his managing director whether he should have paid time off, time off without pay or whatever he wants. We are not taking that away from current legislation. There is still a right to paid time off. If the noble Baroness suggests that we should do away with that right altogether and simply allow individuals to negotiate whether they should have paid time off, fair enough. But that is not what we suggest here. Therefore, there is no natural analogy between a director and another employee.

Amendment, by leave, withdrawn.

On Question, Whether Clause 12 shall stand part of the Bill?

Lord McCarthy

The Committee will not be surprised that we cannot leave the position as it stands. We have to oppose the Motion that the clause shall stand part of the Bill.

We have tried on three different occasions, in three different ways, to amend the clause. It is clear that we have not so far managed to carry the Committee with us on the distinction, so I must explain our position once again, briefly.

In the case of the first amendment we wanted to leave the situation in which, as my noble friend Lord Wedderburn termed it, the precedent conditions depend upon a prior act of recognition alone. We want to do that with all our amendments. We have focused not on the precedent conditions or the qualifications for trade union time off but on the area of time off.

In the first instance, we asked that instead of the present definition of the scope or the Government's proposal that the precedent conditions should be exactly the same as the definition of the area, both sides of the equation should depend upon recognition alone. We said that there should be a modest list of subjects which should be very largely related to collective bargaining in the firm. They have the legitimacy that they can be found in one paragraph of the jointly agreed ACAS code.

Had the Government said that that was not a very good form of words, as one speaker who participated in the debate said, because the words were not drawn up for that purpose, that would have been perfectly correct. Those words were not drawn up for inclusion in the statute. We chose them because they have a certain legitimacy and because they derive from a collective agreement between the two sides of the ACAS council. They have stood the test of time. There has been no complaint about them that we can see or that the Government can cite, although they are much narrower than the present conditions. But the Government said no.

The Government said that that would be the same as the existing agreement. I do not believe that the Minister gave an indication that he understood how far we had narrowed the scope. He also said that, anyway, the employers must be allowed to decide the boundaries of the scope of time off—not simply the preconditions but the defined area.

My noble friend Lord Wedderburn tried to take out the reference to recognition as defining area. He said, why not accept what the Government had put in the rest of the clause, the definition of a trade dispute? That would be a matter that the tribunals could determine. However, the Government said that they could not accept that, for very similar reasons. They said that the new definition would impose certain conditions on employers. The Minister found a new argument: he said that the definition that the Government proposed would allow all kinds of matters that might not be allowed by the amendment that my noble friend moved. For example, he said that training might be included. He did not and could not deny that in the government provisions it would be the employer who would determine whether training was in or out. It would be the employer who decided whether anything was in or out. That is what we object to. That is the whole thrust of our amendments. However, the Government affected not to be able to see that.

Finally, and most recently, my noble friend Lady Turner suggested once again leaving qualifications aside and moving only into the definition of boundaries and allowing those areas where a union did not have recognition but in which it sought consultation and representation. In practice that would be a modest amendment. If an employer said, "I do not recognise this area and therefore you cannot have time off", a tribunal could ask the trade union whether it was seeking recognition or consultation in that area. If the union said that it was there would be a case for the tribunal to decide. However, for very similar reasons the Government would not have that.

The only new evidence in support of the clause which the Government have trotted out today is contained in Section 28.

The Minister says that there is some justification for what the Government said at Second Reading; namely, that they are not taking away time off without pay and that in Section 28 there are certain rights of time off without pay. But neither at Second Reading nor in the consultative document did they say that they were leaving the employees' rights alone—and that is the relevance of Section 28; it is about the employees' rights and not the shop stewards' rights. They suggested that they were leaving the shop stewards' rights alone—that is my interpretation of their words at least—and that all they were touching was the pay issue; namely, the question of rights in respect of paid time off.

We see from the Bill, however, that they are restricting both paid time off and time off without pay. All that they are leaving alone is the individual employee's rights. It is true that that is specified in another part of the code of practice; namely, in section 21 of that code. However, if one examines those rights it appears absolutely clear that they are not the kinds of rights which are of much use to shop stewards. They very largely concern attending meetings, participating in ballots, taking part in union elections at the place of work and going to meetings in association with other employees. They are directly related to the employees. They do not deal with representation or consultation. They do not deal with all the issues which we are trying to persuade the Government to consider and which I believe a reasonable interpretation of their statements would suggest would be left alone so long as they were not covered by paid time off.

In those circumstances we feel we must press this matter to a Division.

Lord Strathclyde

It seems almost extraordinary that, having discussed four separate amendments over the past hour and a half, Members opposite still want to continue this discussion and oppose the Question that the clause stand part. The noble Lord, Lord McCarthy, has dealt with the unions for a great deal of time and naturally I understand that he feels very strongly about this matter. However, I believe that he is stretching the point and perhaps I may go through the clause yet again to explain exactly what we are doing.

This clause represents an aspect of our policy of deregulation that we have been pursuing for some years. Specifically it is part of our policy of deregulation in the field of industrial relations, especially employment protection and individual rights legislation. The Government's intention in Clause 12 is to relieve employers from requirements to grant paid time off for trade union officials to deal with matters in relation to which the union is not recognised by an employer. On this side of the Committee we have justified that remark time and again.

As I said, Clause 12 is just a small element of the deregulation and not a major step. We have always made clear that we have no intention of dismantling the whole framework of employment protection. That policy can be seen at work in this proposed clause. The basic principle of paid time off for trade union officials remains in place but we need always to ask ourselves why it is necessary to depart from the tenet that terms and conditions of employment are matters to be determined by the employer and the employees concerned in the light of their own individual circumstances.

Having asked ourselves that question in the case of the requirement for paid time off in Section 27 of the 1987 Act, we considered that while that statutory right was appropriate some minor change was necessary. We embodied that change in Clause 12.

This is a modest, useful and sensible clause. I commend it to the Committee.

4.44 p.m.

On Question, Whether Clause 12 shall stand part of the Bill?

Their Lordships divided: Contents, 109; Not-Contents, 81.

DIVISION NO. 2
CONTENTS
Abinger, L.	Lauderdale, E.
Alexander of Tunis, E.	Layton, L.
Allenby of Megiddo, V.	Long, V.
Allerton, L.	Luke, L.
Alport, L.	Lyell, L.
Ampthill, L.	Macleod of Borve, B.
Arran, E.	Manton, L.
Balfour, E.	Margadale, L.
Barber, L.	Marshall of Leeds, L.
Belhaven and Stenton, L.	Merrivale, L.
Beloff, L.	Mersey, V.
Belstead, L.	Middleton, L.
Bessborough, E.	Monson, L.
Birdwood, L.	Moran, L.
Blatch, B.	Mottistone, L.
Boardman, L.	Mountgarret, V.
Borthwick, L.	Mowbray and Stourton, L.
Boyd-Carpenter, L.	Munster, E.
Brookes, L.	Murton of Lindisfarne, L.
Brougham and Vaux, L.	Nelson, E.
Campbell of Alloway, L.	Norfolk, D.
Campbell of Croy, L.	Norrie, L.
Carnegy of Lour, B.	Northbourne, L.
Carnock, L.	Nugent of Guildford, L.
Cawley, L.	Orkney, E.
Clanwilliam, E.	Orr-Ewing, L.
Coleraine, L.	Oxfuird, V.
Colnbrook, L.	Pender, L.
Cottesloe, L.	Pennock, L.
Cox, B.	Peyton of Yeovil, L.
Craigavon, V.	Platt of Writtle, B.
Cullen of Ashbourne, L.	Porritt, L.
Davidson, V. [Teller.]	Radnor, E.
Denham, L. [Teller.]	Rankeillour, L.
Ellenborough, L.	Reay, L.
Elliot of Harwood, B.	Renwick, L.
Elliott of Morpeth, L.	St. Davids, V.
Ferrers, E.	Savile, L.
Gibson-Watt, L.	Seebohm, L.
Gridley, L.	Sharples, B.
Haig, E.	Skelmersdalc, L.
Hailsham of Saint Marylebone, L.	Strathcarron, L.
	Strathclyde, L.
Harmar-Nicholls, L.	Strathspey, L.
Harris of High Cross, L.	Swansea, L.
Havers, L.	Teviot, L.
Henley, L.	Thomas of Gwydir, L.
Hesketh, L.	Trumpington, B.
Hives, L.	Ullswater, V.
Hood, V.	Vaux of Harrowden, L.
Hooper, B.	Westbury, L.
Johnston of Rockport, L.	Whitelaw, V.
Kimball, L.	Windlesham, L.
Kinnaird, L.	Wise, L.
Knollys, V.	Young, B.

NOT-CONTENTS
Airedale, L.	Callaghan of Cardiff, L.
Amherst, E.	Campbell of Eskan, L.
Ardwick, L.	Carmichael of Kelvingrove, L.
Attlee, E.
Aylestone, L.	Carter, L.
Birk, B.	Cledwyn of Penrhos, L.
Blackstone, B.	David, B.
Blease, L.	Dean of Beswick, L.
Bonham-Carter, L.	Donaldson of Kingsbridge, L.
Bottomley, L.	Dormand of Easington, L.
Bruce of Donington, L.	Ennals, L.
Buckmaster, V.	Ewart-Biggs, B.

Falkland, V.	Mayhew, L.
Fisher of Rednal, B.	Milner of Leeds, L.
Foot, L.	Mulley, L.
Gallacher, L.	Murray of Epping Forest, L.
Galpern, L.	Nicol, B.
Gladwyn, L.	Northfield, L.
Glenamara, L.	Parry, L.
Graham of Edmonton, L. [Teller.]	Peston, L.
	Phillips, B.
Grey, E.	Ponsonby of Shulbrede, L. [Teller.]
Hampton, L.
Harris of Greenwich, L.	Robson of Kiddington, B.
Hatch of Lusby, L.	Rochester, L.
Houghton of Sowerby, L.	Sainsbury, L.
Hughes, L.	Scanlon, L.
Hylton-Foster, B.	Seear, B.
Irvine of Lairg, L.	Sefton of Garston, L.
Irving of Dartford, L.	Stallard, L.
Jay, L.	Stedman, B.
Jeger, B.	Stoddart of Swindon, L.
John-Mackie, L.	Strabolgi, L.
Leatherland, L.	Taylor of Blackburn, L.
Listowel, E.	Taylor of Mansfield, L.
Llewelyn-Davies of Hastoe, B.	Tordoff, L.
	Turner of Camden, B.
Lockwood, B.	Underhill, L
Longford, E.	Walston, L.
Lovell-Davis, L.	Wedderburn of Charlton, L.
McCarthy, L.	White, B.
Mackie of Benshie, L.	Williams of Elvel, L.
Mais, L.

Resolved in the affirmative, and Clause 12 agreed to accordingly.

4.52 p.m.

Lord Wedderburn of Charlton moved Amendment No. 30: After Clause 12, insert the following new clause:

("Assistance for proceedings by employers.

There shall be added to section 20(7) of the Employment Act 1988—

"(f) a complaint to a tribunal under sections 24 and 27 of the 1978 Act, or a complaint under section 67 of that Act where the ground, or principal ground, relied upon is a ground falling within section 58." ").

The noble Lord said: We thought it proper to put down this amendment to a Bill relating to employment. It is what I called yesterday a fairness amendment. It is a matter on which we believe that there is quite widespread feeling that the Government have got it wrong and have gone over the top.

I repeat what I said yesterday. The amendments in this category do not seek to set out the law as we would wish it but to centre on a matter of practical importance. It concerns a new institution, the need for which we say has never been made out; namely, the office of Commissioner for the Rights of Trade Union Members. The name is a bit of a mouthful. It is an office which in conferences on trade union law is being referred to as the CROTUM. The CROTUM was established in the Act of 1988 with the sole task of assisting members of trade unions to sue their unions in the High Court. That is the function of the office. A member can have legal advice and representation paid for.

The first report of this office has just been published. It covers only four months. I believe that the Government have made£2 million available for the budget of the office over the year. The Minister will correct me if that is wrong. However, if it is right, it is a sizeable percentage of the nearly£4 million available for the entire work of the Equal Opportunities Commission, and of the even larger sum that is available to the Commission for Racial Equality. These bodies disclose their budgets in their reports. It appears that this budget is to be put to the Commons in a separate paper.

It is also interesting to observe that the CROTUM may be hard pressed to spend all this money since the report discloses that in the first four months of business there have been only 10 applications for help, six of which were outside the terms of reference, and only two of which are being supported in proceedings at the outset. At this rate the clients of the commission will plainly be able to afford the luxury of funds to engage the most fashionable Queen's Counsel to represent them in court; or, if the Master of the Rolls does not use his veto, perhaps soon the most expensive solicitor.

Although we doubt the need for any office of this kind, we accept its existence. We still believe it to be a slur upon trade unions. Indeed, the commissioner has commented in her first report: If union members do not feel the need to come to me for assistance it may simply indicate that unions are respecting their members' rights". That was from a report in the Employment Gazette.

The point of the amendment is this. The office exists. If all this money is to be spent on the defence of workers' rights in their capacity as trade unionists, should it not be spent a little more fairly? Our amendment is entirely concerned with trade union rights: the right to be a member of a union; the right to engage at work in the activities of an independent trade union; and the right to time off work for a representative of a trade union. Because of the form of the legislation that we are citing, it also covers the rights of non-unionists which are defended in the same sections of the 1978 Act. The matters concerned are discipline and dismissal on union-related grounds.

The addition that the amendment makes to the existing law is essentially this. While the 1988 Act afforded financial assistance through the CROTUM to union members to protect their rights against their own union, this amendment would give them parallel assistance by the same machinery to protect their trade union rights against dismissal or unlawful discipline exercised by their employer. We say that it is an unfair use of public money to protect trade union members in the one direction against alleged abuses by unions, and not to allow for protection in the other direction—against the alleged abuses of the employee members by the employers.

Indeed, the need in the second dimension is demonstrably greater. Whereas, in the first four months of the office, applications to the CROTUM numbered 10—even the total inquiries on the telephone numbered only 37—it appears that every four months in 1987–88 some 300 complaints related to union membership, dismissal or unlawful discipline were made to industrial tribunals. Such applicants have to bear the costs of the case. They have no legal aid, under the normal legal aid system, in the industrial tribunals in cases against the employer. Legal aid, together with assistance from the CROTUM, is available in the parallel situation of High Court cases brought against unions by members, but the applicant in the tribunal defending his trade union activity rights against the employer has no help except from his union.

Lord Harmar-Nicholls

; Hear, hear.

Lord Wedderburn of Charlton

The noble Lord says "hear hear", but perhaps he would also note that the sections cover non-unionists. This is not changing the dimensions of the legislation. He may throw the union members to the wolves and say, "Their unions can always support them". This does happen, but not always. However, he is then left with the non-unionists suffering what in our view is an injustice.

Out of 25,000 complaints of unfair dismissal in 1987–88—some of which certainly contained elements of trade union rights infringement other than those I have cited—only 2,400 were successful. Of the successful applicants, 54 per cent. appear to have been unrepresented. The precise details are very hard to ascertain on published statistics, but I believe that I have put a fair picture to the Committee. From that picture, how can one possibly justify the spending of the public money of this office in defence of trade union rights, in the broadest sense, against a union (where the complaint is against a union) but not making those funds available in cases where there is no legal aid and where a member or non-member who alleges a complaint may or may not receive assistance from a union or some other source?

Lord Harmar-Nicholls

Perhaps I may ask a question. I am rather confused. Surely a member pays his trade union contribution in order to get help from his trade union in circumstances such as that. If the trade union does not undertake that obligation, having received the prescription, that means that it does not think that there is a case to fight. Is that not the real situation?

Lord Wedderburn of Charlton

There are three types of situation and the noble Lord has rightly cited one of them. The one he cites may not be particularly relevant to my case; namely, a trade union member who complains about a breach of Section 23 or Section 27, if he is an official, and whose union takes up his case. I agree that that may well be so.

I say that there are two other types of case and they will certainly come to more than 10 examples in four months. The two other types of case are those who allege infringement by the employer of one or other of the rights in this congeries of sections, either in respect of trade union activity or in respect of their status as a non-unionist. No aid is given to them. Trade unions, indeed other bodies, sometimes decide not to support complaints. Where no legal aid is available not then to give any public money seems to me unfair when it is being given to the parallel case on the other side when legal aid is available in the High Court. That is all it is. It would not perhaps cause a great deal of extra expenditure. As I said it is a limited amendment.

Our fairness amendments are limited and the noble Lord must not suspect them of having any ulterior purpose. They are straightforward. The provision would not apply to most trade union members, but it would apply to the trade union member who does not have the support of his union. When he does not get that support he is left on his own. He does not have legal aid and he does not have the CROTUM. Why not? It applies to the non-unionists who complain under these sections and they do not have the CROTUM against the employer. Why not? When a member complains against the union he does, even if he is very rich. Some unions have very rich members—not the Association of University Teachers, I hasten to add—but he may have great assets somewhere else or help from a friend—from the noble Lord, in some cases perhaps, not committing champerty, I am sure.

There is an injustice here and it is the kind of thing that the Government fall into. We think they fall into it quite honestly but with ideological blinkers. They are always giving aid against unions to people and we are saying that here is a case which concerns just a few people. We care about the individual and the test for the Government is whether they care about these few individuals who should be helped by the CROTUM. I beg to move.

5 p.m.

Lord Strathclyde

In moving this new clause the noble Lord, Lord Wedderburn, has returned to a matter which was considered by this House during the passage of what became the Employment Act 1988 when a rather similar amendment was moved at that Bill's Report stage.

The Commissioner for the Rights of Trade Union Members was established under the 1988 Act so that union members need not be at a material disadvantage in taking certain proceedings against their union, its officials or trustees. The relevant proceedings are set out in Section 20(7) of the 1988 Act.

The proceedings listed in Section 20(7) of the 1988 Act all concern complaints which would at first instance be heard in the High Court. They are not generally proceedings taken by individuals seeking personal redress which could take the form of monetary compensation such as a tribunal can award where unfair dismissal or denial of statutory rights to time off has taken place. They include matters such as a union's failure to hold a proper ballot before calling on members to take or continue with industrial action, to hold proper election ballots for certain positions in the union, or to accord members their rights to inspect their union's accounting records. None of these issues involves proceedings against an employer.

The proceedings which the new clause seeks to add are quite different. They would all be heard, at first instance, by an industrial tribunal, and relate to complaints that an employer has unfairly dismissed, or otherwise discriminated against one of his employees, including where this has been done on grounds relating to union membership.

The purpose of the commissioner is to provide, on application, material assistance without which union members might be unable or unwilling to take certain proceedings which may be necessary to prevent abuse of union power against union members. Her assistance can redress the disadvantage union members might otherwise face in bringing High Court proceedings when faced with the superior resources and facilities available to their union. The case for establishing the commissioner was set out in these terms in the 1987 Green Paper Trade Unions and their Members.

The present provisions of the Employment Act 1988 are appropriate to this role. The Government have made no proposals, and have no plans, to extend the commissioner's assistance to any proceedings that would be heard, at first instance, by an industrial tribunal.

The industrial tribunal system, which is available to union members, and others, complaining about employers' actions in breach of the sections of the 1987 Act cited in the new clause is much less formal, and less expensive, than the High Court.

In addition, an individual contemplating a complaint to an industrial tribunal might be able to draw on assistance from various sources, such as the legal aid "green form" scheme to help prepare his case and, if the person is a union member, such help as his union might be prepared to offer.

For all those reasons there is simply no need to extend the commissioner's assistance, which involves help towards the much more substantial cost of getting legal advice and representations for certain High Court proceedings, as the new clause proposes.

It has been argued that since the commissioner has been involved in few proceedings to date, that in some way justifies extending the scope of her assistance as proposed in the new clause.

The commissioner's office is small, and its running costs are minimal—around£0.3 million a year for staff, premises and similar expenditure. Even though her office opened for business only in December 1988, however, there has been a steady, and increasing, stream of inquiries, as the commissioner herself pointed out when publishing her report on her work during the last four months of the 1988–89 financial year.

If the mere existence of the commissioner helps to ensure that unions do not deny their members' rights, without any assisted proceedings coming to court, the Government would be well pleased. I hope that the noble Lord will withdraw his amendment.

Lord Wedderburn of Charlton

The amendment has done one thing and that is to establish the Government's attitude. With great respect to the Minister, I thank him for his reply but just to tell me that this would extend actions against an employer as an objection, of course, is right. That is what it is for. To say that the parties would come together in an industrial tribunal and not in the High Court is, with respect, a mere formality not worthy of debate. However, to say that the existing jurisdiction of the CROTUM cannot give rise to direct actions for compensation by the applicant is something that I accept. That is correct, and under the amendment it would extend to compensation actions in the industrial tribunals.

However, I must point out to the Minister that although that valid point has been made, it does not carry the Government very far, and I say that for the following reason. If they look at the types of action that will be brought in the High Court with support from the CROTUM and especially at an action which concerns a breach of the rules to recover union property contrary to the 1988 Act, that could equally found an action in some circumstances where compensation by way of damages might be a remedy available to a member within the compass of his written statement of claim in the High Court. Even within the present compass of the commissioner there is the possibility under a number of headings of an action in the High Court extending into a similar area.

The idea that we should not discuss it because it was discussed in 1988 reminded me of the advice in the famous book of Professor Cornford entitled Microcosmographica Academica. I cannot quote it but it goes roughly like this: "Thinking of not looking at it now for fear of what we might do, you should never cure a small injustice today for fear that you will take an even more just step tomorrow." The Minister appears to think that having got it wrong in 1988, if we went a little further today we might open up a most terrible justice. That may be right.

I shall naturally withdraw the amendment, but in doing so I wish to say that we shall keep an eye upon this matter. We hope that the Minister will say to his right honourable friend that the full report and the full budget of this office will be given the usual publicity. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 [Period of employment necessary to qualify for statement of reasons for dismissal]:

Baroness Turner of Camden moved Amendment No. 31: Page 11, line 25, leave out ("two years") and insert ("nine months").

The noble Baroness said: Clause 31 extends from six months to two years the qualifying period of service needed for entitlement to a written statement of reasons for dismissal. Frankly, I do not understand the reasons for this. Ideally all employees should receive a written statement of the reasons for their dismissal. I understand that the proposal in the clause was originally put forward by the Government in the 1986 White Paper: Building Businesses not Barriers.

I expect that the Government will argue that the clause is being introduced because they wish to remove barriers and burdens on business. But I do not accept that providing a written statement of reasons for dismissal is a burden on business. Surely it is good management practice to do so. That certainly is the view of the British Institute of Management and I understand that it opposes the clause.

Nor do I accept the argument also advanced by the Government that the qualifying period for a written statement should be the same as that for claims of unfair dismissal. That statement was made on Second Reading. In my view, that link is irrelevant. Individuals should have the right to know why their employment is being terminated. A written statement is valuable whether or not the individual is eligible to make a claim for unfair dismissal. There is a possibility that the real reason for dismissal could be sex or race discrimination or trade union activities for which no qualifying period is needed. However, without a written statement giving the employer's reason for dismissal the individual will be in a weak position to pursue a claim.

Not only the TUC and the British Institute of Management oppose the clause; the Law Society also does so. In its briefing on the Bill the Law Society states: It is our view that logically all dismissed employees should be entitled to a written statement of the reasons for dismissal".

However, in order to meet the Government part of the way I have tabled an amendment reducing to nine months the two-year period that they propose. From our standpoint that would be an improvement in the position. Two years appears to be an impossible time during which an employee would be without such an important right. For those reasons, I beg to move the amendment.

Lord Rochester

As the noble Baroness has explained to the Committee, the qualifying period for the right referred to in the clause has, by the Government's measure, become the same as that applying to complaints of unfair dismissal. The Government treat the matter merely as a technical change. However, it is not good enough to regard it as a tidying up exercise, particularly when one remembers that this Government raised the qualifying period for unfair dismissal to two years. In my view, this is another example, as was last year's Employment Act, of the way in which a Bill works to the advantage of the employer and to the disadvantage of the employee.

The provision is opposed by a number of reputable organisations. The Department of Employment Research Paper No. 53 of 1985, dealing with unfair dismissal and employment practice in the 1980s found: very little sign that employment protection legislation was inhibiting industrial recovery or contributing to the high level of unemployment by discouraging employers from taking on new people". In the following year another survey concluded that the main barrier to employment was lack of finance and high interest rates. I suggest that instead of restricting the rights of employees still further, as in the clause, the Government will be better advised to concentrate their attention on those vital problems because today they are more crucial than ever to our competitiveness.

Finally, I submit that current legislation concerning the need for written statements giving the reason for dismissal is not onerous for employers. It may be helpful to employees in enabling them to explain their situation to prospective employers. In my view, the qualifying period for entitlement to statements as to the reasons for dismissal should be left as it stands. But at least let the Government accept the proposal that it should be extended from six months rather than to two years.

5.15 p.m.

Viscount Mountgarret

I do not support the amendment, although the suggestion for extending the period to nine months is most reasoned. The proposal does not appear to achieve the result which my noble friend and his colleagues desire. There are many areas in which employees are engaged on work which cannot manifest itself in a comparatively short space of time.

One must be fair also to employers. I recognise that there is a belief that there are no bad employees but only bad employers, but that is not generally true. Employers must be given a chance to ensure that the person whom they are employing is capable of and good at the job. For example, I know that in respect of a farm worker or gardener found in my walk of life it is difficult to assess within six months or nine months whether he is competent at the job. The efforts of that person can be seen only after a comparatively long time and it is only fair to the employer that he should be able to adjudge the situation.

Although I understand the reason, I hate the fact that one must give written warning to an employee. Once words have been spoken or written one cannot retract from the statement. If one warns an employee of bad work one has spoilt a certain relationship. It is not nice to feel that one must do that within a short space of time in order to remain within the law. An extension of the period to two years assists both sides in trying to assure, first, that the employee is competent at his job and, secondly, that the employer is satisfied. I do not agree with the amendment.

Baroness Gardner of Parkes

I understood the change in terms of bringing the period of time into line with that in respect of the industrial tribunal procedure. Under that procedure you cannot bring a case until you have been in employment for two years. Any written statement about why you were dismissed prior to that may be of benefit to you. However, it causes a great deal of work and has no effect on the tribunal because you are not eligible to bring a case if you have been in employment for only nine months.

Lord Strathclyde

My noble friend Lady Gardner of Parkes is right. I am pleased that the noble Baroness and the noble Lords opposite are prepared to go some way towards meeting our objectives by proposing a qualifying period of nine months instead of the current six months. However, the Government cannot support their amendment because it fails to address the primary purpose of the clause. It is to align the qualifying period for the right to a written statement of reasons for dismissal with that for the right to complain of unfair dismissal to an industrial tribunal.

The purpose of the written statement provision is to help someone to decide whether or not he has a case for making such a complaint. It makes no sense for a person to have the right—

Lord Wedderburn of Charlton

No.

Lord Strathclyde

Perhaps the noble Lord would like to tell me what else it is for.

Lord Wedderburn of Charlton

The noble Lord invites me to interrupt him, so I shall do so with pleasure.When dealing with other amendments we shall make the position clear. The employee needs to know the reasons for his dismissal—that is quite apart from unfair dismissal—in order to obtain another job, vindicate his character, meet any charges and obtain social security benefit. We shall come to that matter later. Perhaps the noble Lord does not know about that. If he does not, I suggest that he informs himself. Is it not utterly preposterous for the noble Lord to say that the only occasion on which one needs to have the reasons for one's dismissal is when one is going to an industrial tribunal? That does not recognise life at all. Only 27,000 people go to the tribunal. Far more are dismissed and they want to know why. Is that unreasonable?

Lord Strathclyde

I knew it was a mistake to give way to the noble Lord, Lord Wedderburn. I shall come to those points in the course of the next few amendments. I am sure he is well aware of that.

With regard to existing employees I assure the Committee that although the implementation details have yet to be finalised, the Government have no desire to remove any protection which is already enjoyed. I believe that the noble Lord, Lord Rochester, mentioned the Law Society.

Lord Rochester

I did not, but I am happy to agree with the findings of the Law Society on this matter.

Lord Strathclyde

It has been suggested by the Law Society that without a statement of the reasons for dismissal some employees will find it harder to obtain another job. That was echoed by the noble Lord, Lord Wedderburn. Let me underline that we are changing the statutory requirements in relation to written statements. There is nothing to stop an employer giving such a statement to someone he dismisses despite the fact that there is no statutory entitlement.

Baroness Seear

The noble Lord can never have been inside a works. A foreman may become fed up. He has words with an employee and says, "You are out". If he has to put in writing why he is dismissing the man he will think before he says, "Get your cards and go". That is real life. I fear that the noble Lord has never been near real life.

Lord Strathclyde

I disagree with that statement entirely. As I said to the noble Lord, Lord Wedderburn, we shall continue to examine exactly what is meant by the written statement and what it is used for. Noble Lords opposite will contend that it is used for a whole range of things and I maintain that it is not.

Let us take the example of a reference which a former employer may be asked to supply to a prospective employer. Nobody will accept a dismissal notice as a reference. If an employer is to employ somebody, he will ask the former employer for a reference. After all, not every individual has a written statement of the reasons for his dismissal. The employer only has to give that if requested to do so by the dismissed employee.

I believe that I should refute that the lack of written reasons will affect claims for unemployment benefit. A person's entitlement to benefit can be affected by the reasons for his leaving his job. For example, if he left voluntarily or was dismissed for gross misconduct his benefit could be suspended for a certain period. Benefit offices are responsible for seeking from the claimant's former employer an explanation as to why the claimant left so that a decision can be taken on benefit entitlement. Those inquiries are carried out directly with the employer. There is no link whatever with the written statement provisions which we are now discussing. I assure Members of the Committee that the changes which we are making in employment protection legislation will not have any effect on the benefit entitlement of a recently dismissed employee.

I emphasise that there is no desire here to make it more difficult for a dismissed employee to obtain unemployment benefit. The dismissal note had no bearing on that fact before, has no bearing now and will have no bearing in the future when this becomes law. In the light of that, I hope that the noble Baroness will withdraw the amendment.

Baroness Seear

The noble Lord did not answer my point that this matter is of considerable importance in the internal operations of disciplinary and dismissal systems. This is a controlled exercise; namely, that an employer has to put in writing the reasons for dismissal. Now there will be no protection until two years have elapsed against arbitrary dismissal. As happens again and again, a foreman becomes fed up and tells someone that he must go. If he has to put that in writing he hesitates before doing so for no good reason. The noble Lord has not answered that point.

Lord Strathclyde

I do not follow that thinking. I do not see why that should be. Currently the written notice has no legal enforcement whatever. So why does it make any difference?

Baroness Seear

The noble Lord has been brought up in a totally legalistic system of industrial relations. However, he must understand that a great deal goes on inside industry which has not much to do with legal enforcement. However, these are valuable controls over the way in which people behave and for ensuring just dealings between people in positions of responsibility and their subordinates. That is the point I am trying to make; I cannot make it more clearly.

Viscount Mountgarret

I wonder if my noble friend is really getting the point across. I do not wish to be impertinent in suggesting that he does not know his business, but this matter is rather confusing. There may be a feeling that an employee is dismissed and is then given written reasons as to why he is dimissed. That is not so. I hope that I shall be corrected if I am wrong. I believe that the current situation is, and will be, that before an employee is dismissed, he must receive not one but two written notices of why he is dismissed. Is the noble Baroness correcting me?

Baroness Seear

The point is that now a person has no access to a tribunal until two years have elapsed after starting the employment. His legal rights do not commence until that time. And that is what we are concerned about.

Viscount Mountgarret

I take the point of the noble Baroness. However, under present legislation there is no requirement upon an employer to give written notice of complaint or intention to dismiss up to six months. As I understand it the Government wish to extend that requirement to two years. The point I make is that it is desirable to extend it to two years because in many areas of employment it is difficult to ascertain whether or not an employee is actually proving his worth. As I said when I intervened, I find it rather sad that when an employer has to try to mark his card, he must put it in writing to an employee why he is dissatisfied. If you put it in writing or speak verbally you cannot undo it. You sow the seeds of mistrust. I prefer to have an opportunity of being given rather longer for a bedding-in period to ensure justice from the employee's and the employer's points of view. That is why I do not agree with the amendment.

Lord Wedderburn of Charlton

Perhaps the noble Viscount will accept that the situation which he describes is not one to which those supporting the amendment are insensitive. There is a problem in many employments as to the probationary period. There is a problem as to the probationary period within which a person shows more than reasonable proof that he is competent to do the job or that he is someone to be relied upon. I believe that that period will differ in many different employments.

Accepting that there is such a difficulty which the employer has to look to, a reason for the worker's dismissal in that period will exist. It may be a forecast that he will not be any good or that he has been found to be dishonest. It may simply be that the works can no longer afford a certain number of workers and he is redundant. Whatever the reason, is it not right that he should be given it straight? I appreciate and understand that both the employer and the employee may be embarrassed. But to tell someone that he no longer has a job without giving proper notice is unreasonable. That is what this is about. It is not about gumming up the probationary period. It is concerned with whether or not the person who has lost his job should be given the honest reason—and it may be a perfectly good reason. Does that not meet half way the arguments of the noble Viscount?

5.30 p.m.

Lord Strathclyde

We are perhaps getting away from the essence of this discussion. The noble Baroness, Lady Seear, chastised me for not knowing enough about how industry works and how people are sacked. What we are talking about is a right that was introduced by the Labour Government in 1975. It is a right that had a fundamental link between the right to go to an industrial tribunal and the provision of written reasons for dismissal so that the employee could decide whether or not there was a case. That was all. There was no suggestion that perhaps the manager would have some thinking time if he had to write a letter. It was purely so that the employee could make the decision. That is all that we are talking about now.

The qualifying period to go to an industrial tribunal is two years. Surely it must make sense that the qualifying period to obtain a written statement must also be two years. That is all that is at stake.

Baroness Gardner of Parkes

We have drifted around on this subject. My noble friend Lord Mountgarret has perhaps tended to confuse the issue of the written warning that has to be given up to the two-year period. As I understand it, the amendment addresses itself purely to this: after you are dismissed—and you can be dismissed at any time up to two years without prior notice—it is then a question of when you are entitled to receive a written reason as to why you are dismissed.

I believe that the period of nine months is not enough but I am not sure whether two years is not too long. It is just a matter of Civil Service neatness to try to have two years in order to match the time within which one can take a dismissal to a tribunal. It might be advisable for the Government to consider a shorter period. We have also tended to overlook the point that someone who is dismissed can ask for the reason, whether or not it is in writing. I am amazed at how often, in industrial tribunals, when people are asked why they have been dismissed—these are people who are entitled to have the reason given in writing—they reply that they did not ask. Many people do not ask but just say, "That was it, and I went".

The noble Baroness, Lady Seear, made a valid point. People in this country, and perhaps throughout the world, do not like to commit themselves in writing to anything that is not soundly based. Perhaps such a requirement would prevent an employee being dismissed in, say, a moment of bad temper. However, I do not support the amendment. Nine months is too short but I do not see why the period has to be fixed at two years just for the sake of neatness.

Baroness Turner of Camden

I am disappointed with the Government's response to this amendment. As the Minister said, we have attempted to go some part of the way towards meeting a case made by the Government with which we fundamentally do not agree. That is why we tabled an amendment reducing the period from two years to nine months; though we share the view of the Law Society and others that there appears to be no reason at all why individual employees should not have the right to know, in writing, why they are being dismissed irrespective of length of service.

I fail to see the link between the enabling period to go to an industrial tribunal and the question of providing reasons for dismissal. It is true that the two periods were the same in 1975 when the Labour Government first introduced this legislation, but there seems no real reason for maintaining that link because, as my noble friend Lord Wedderburn has already explained to the Committee, there are numerous reasons why an employee ought to be told why he is being dismissed quite apart from the possibility that he may feel he has a case for unfair dismissal to take to a tribunal.

There is the employee's feeling of self-respect, justification, and knowledge that he may not have performed effectively. He may need this knowledge if he is to pursue other jobs on the labour market, not just as a reference but for his own satisfaction in order better to pursue his career. As we said earlier, this is an employee's right. There seems no reason why it should not be a statutory right.

If, as the Minister said, the clerk concerned with social security receives from the employer the reasons why the employee has been dismissed, why should that employee not also receive those reasons. There is no logic in saying that those written reasons should not be available to the employee. Nor do I believe that it can be argued that it is a burden on business. In fact, as the noble Baroness, Lady Seear, indicated, it can sometimes be helpful to an employer to have an obligation placed upon those who supervise staff not to be too hasty. If the reason for dispensing with an employee has to be written down it would have a restraining influence on arbitrary actions in the employment environment.

For all those reasons I cannot accept that this is an unreasonable amendment. We have gone part of the way to meet a basic case with which we disagree but the Government have not been prepared to accept that. In those circumstances I have no alternative but to test the feeling of the Committee.

5.36 p.m.

On Question, Whether the said amendment (No. 31) shall be agreed to?

Their Lordships divided: Contents, 80; Not-Contents, 111.

DIVISION NO. 3
CONTENTS
Addington, L.	Bruce of Donington, L.
Airedale, L.	Campbell of Eskan, L.
Ardwick, L.	Carmichael of Kelvingrove, L.
Attlee, E.
Aylestone, L.	Cledwyn of Penrhos, L.
Blackstone, B.	Cocks of Hartcliffe, L.
Blease, L.	David, B.
Bottomley, L.	Dormand of Easington, L.
Brooks of Tremorfa, L.	Ennals, L.

Ewart-Biggs, B.	Mayhew, L.
Falkland, V.	Milner of Leeds, L.
Fisher of Rednal, B.	Mulley, L.
Foot, L.	Murray of Epping Forest, L.
Gallacher, L.	Nicol, B.
Galpern, L.	Northfield, L.
Glenamara, L.	Oram, L.
Graham of Edmonton, L. [Teller.]	Parry, L.
	Phillips, B.
Grey, E.	Pitt of Hampstead, L.
Hampton, L.	Ponsonby of Shulbrede, L. [Teller.]
Harris of Greenwich, L.
Hatch of Lusby, L.	Rea, L.
Hooson, L.	Robson of Kiddington, B.
Houghton of Sowerby, L.	Rochester, L.
Howie of Troon, L.	Sainsbury, L.
Hughes, L.	Seear, B.
Irving of Dartford, L.	Sefton of Garston, L.
Jay, L.	Serota, B.
John-Mackie, L.	Stedman, B.
Listowel, E.	Stoddart of Swindon, L.
Llewelyn-Davies of Hastoe, B.	Strabolgi, L.
	Taylor of Blackburn, L.
Lockwood, B.	Taylor of Mansfield, L.
Longford, E.	Tordoff, L.
Lovell-Davis, L.	Turner of Camden, B.
Macaulay of Bragar, L.	Underhill, L.
McCarthy, L.	Walston, L.
McGregor of Durris, L.	Wedderburn of Charlton, L.
McIntosh of Haringey, L.	Whaddon, L.
Mackie of Benshie, L.	White, B.
Mais, L.	Williams of Elvel, L.
Mason of Barnsley, L.	Winterbottom, L.

NOT-CONTENTS
Abinger, L.	Hood, V.
Ailesbury, M.	Hooper, B.
Allenby of Megiddo, V.	Hylton-Foster, B.
Allerton, L.	Johnston of Rockport, L.
Alport, L.	Kimball, L.
Arran, E.	Kinnaird, L.
Ashbourne, L.	Knollys, V.
Auckland, L.	Lauderdale, E.
Balfour, E.	Lawrence, L.
Belhaven and Stenton, L.	Layton, L.
Belstead, L.	Long, V. [Teller.]
Birdwood, L.	Luke, L.
Blatch, B.	Lyell, L.
Blyth, L.	McCoU of Dulwich, L.
Boardman, L.	Macleod of Borve, B.
Borthwick, L.	Manton, L.
Boyd-Carpenter, L.	Margadale, L.
Brookes, L.	Marshall of Leeds, L.
Brougham and Vaux, L.	Merrivale, L.
Caithness, E.	Mersey, V.
Campbell of Alloway, L.	Middleton, L.
Campbell of Croy, L.	Montgomery of Alamein, V.
Carnegy of Lour, B.	Morris, L.
Carnock, L.	Mottistone, L.
Cawley, L.	Mountgarret, V.
Clanwilliam, E.	Mowbray and Stourton, L.
Coleraine, L.	Munster, E.
Cox, B.	Murton of Lindisfarne, L.
Cullen of Ashbourne, L.	Nelson, E.
Davidson, V. [Teller.]	Norfolk, D.
Denham, L.	Norrie, L.
Elliot of Harwood, B.	Nugent of Guildford, L.
Elliott of Morpeth, L.	Orkney, L.
Gainford, L.	Orr-Ewing, L.
Gardner of Parkes, B.	Oxfuird, V.
Gibson-Watt, L.	Pender, L.
Glenarthur, L.	Peyton of Yeovil, L.
Gray of Contin, L.	Piatt of Writtle, B.
Gridley, L.	Radnor, E.
Haig, E.	Rankeillour, L.
Hailsham of Saint Marylebone, L.	Reay, L.
	Renton, L.
Harvington, L.	Renwick, L.
Henley, L.	Rugby, L.
Hesketh, L.	Saint Albans, D.
Hives, L.	St. John of Bletso, L.

Savile, L.	Teviot, L.
Seebohm, L.	Thomas of Gwydir, L.
Selborne, E.	Trumpington, B.
Sharples, B.	Ullswater, V.
Skelmersdale, L.	Vaux of Harrowden, L.
Strathcarron, L.	Westbury, L.
Strathclyde, L.	Whitelaw, V.
Strathspey, L.	Wise, L.
Swansea, L.	Young, B.
Swinfen, L.	Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.44 p.m.

Lord Wedderburn of Charlton moved Amendment No. 32: Page 11, line 26,leave out subsection (2).

The noble Lord said: This amendment is a request for information in the sense that Clause 13(2) gives the Secretary of State a new power by adding to Section 149 of the 1978 Act. That affords the Secretary of State the power by order to vary or exclude certain parts of the 1978 Act. Most are either technical matters or those going to the exclusion or qualification of particular groups of workers.

I believe I am right in saying that the only orders made under Section 149 relate to redundancy payments for local government employees in 1983 and 1985 and the order of 1985 for the variation of qualifying periods as regards unfair dismissal. The Government are taking this new power under Section 149 giving the Secretary of State power to vary or exclude in respect of the section.

What is the purpose for which the Secretary of State wants this power? Is he going to vary the section so that the employer has no obligation to give reasons for dismissal to certain groups? Is the Secretary of State merely going to vary the two-year period by extending it? What does he have in mind? We are mystified as to why he should want this power as regards this section. I shall be happy if the Minister can explain.

Lord Strathclyde

This amendment would retain the current position whereby any change to the length of the qualifying period for the right to a written statement of reasons for dismissal has to be made by primary legislation. There are of course arguments of speed and convenience which can be made in support of the proposal to provide for any future changes made by statutory instrument. There is also logic in our proposal. The Secretary of State already has power to vary the qualifying period for the right to make a complaint of unfair dismissal by means of a statutory instrument subject to affirmative resolution. He has had that power since the unfair dismissal provisions were first introduced in 1971 in the Industrial Relations Act. Clause 13(2) simply means that the long-standing arrangements for making changes to the qualifying period for claims of unfair dismissal will also apply to any necessary changes in the qualifying period for the right to a written statement.

Any order to amend the qualifying period will have to be laid in draft and approved by a resolution of each House; so noble Lords will have the opportunity to consider and debate the detailed provisions. The proposal does not reveal a hidden agenda of further proposals for changes in the qualifying period for the right to reasons for dismissal. Clause 13 will simply ensure that the rights to written reasons for dismissal and to claim unfair dismissal will be on all fours as regards the length of the qualifying period and the mechanism for making any future changes in the length of the qualifying periods. Our proposals are aimed at clarifying and simplifying the legislation. We have no plans at this stage for further changes in these qualifying periods.

With those reassurances I hope that the noble Lord sees that our proposal is logical and sensible and that he will not press this amendment.

Lord Wedderburn of Charlton

I am grateful to the Minister. I am not sure that we agree that the proposal is logical and sensible. But at least it is clear. This is an amendment to oil the mechanism. At the moment the Government have no plans to increase the period, but every year there are new Bills and I suppose that, every quarter, we can expect a few statutory instruments. It is quite clear that the Government have oiled the mechanism so that the change in the length of the qualifying period both for unfair dismissal and written reasons can continue jumping along from two years to we know not what.

I am happy that the Minister has explained the position carefully. I thank him again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Wedderburn of Charlton moved Amendment No. 33: Page 11, line 27, at end insert— ("(3) Subsection (2) of section 53 of the 1973 Act shall not apply to an employee who:

1. (a) is summarily dismissed without any notice or is dismissed without lawful due notice, and within fcurteen days of such dismissal claims that he was unfairly dismissed or
2. (b) is denied unemployment benefit on the ground that he was guilty of misconduct.").

The noble Lord said: I intend to move the amendment briefly. I wish however to treat it with the intensity that it deserves. The amendment says to the Government, "Whatever else you do, surely there are two groups of people who are entitled to written statements of their dismissal". We are talking about the involuntary loss of the job of an employee at the decision of the employer. We are not necessarily speaking of unfair dismissal—simply of dismissal. The amendment refers to the case of the employee who does not receive a notice to which he is lawfully entitled; namely, at summary dismissal or at short notice.

A second type of case has already come before the Chamber and unusually, has been very clearly revealed. There is often some dispute but it appears to be common ground that where an employee is dismissed without notice and the employee goes to the social security office, the first question is whether he has made the necessary contributions. I am thinking of case that I know of.

The Committee will know of the matters to be gone through in that respect. If the employee jumps that hurdle, the benefit officer may say, as has happened in a couple of these cases, "We have heard from your employer that you were dismissed for misconduct". I do not say that it is true in every case. Indeed I would say that it is not true probably in the majority of cases. I guess; one does not know. However, in a large number of cases the employer, not having given reasons to the employee, is bound to give reasons in a sense—and nearly always does give reasons—to the social security office.

And so, two things have happened. The employee has been dismissed without knowing why—I shall take the cases within the confines of my amendment; in this case there had not been proper notice —and/or goes to the unemployment benefit office and is told that he was guilty of misconduct and that that was the reason for his dismissal. He says "I've never heard of that. It's news to me". He is told, "Oh, there is an allegation that you have been fighting on the shop floor". He was the kind of person of whom that might well have been true. He looked as though he would fight. However, it was not true in this case. He eventually found out what the charge was but he did not receive his benefit. It was held up for a long time. Is it suggested that that kind of justice is proper?

We say, first, that where the employer is in breach of the contractual obligation or the obligation of minimum notice written in by the 1978 Act, the employee should be entitled to a reason, and a reason in writing. I appreciate the points that have been made and I was trying to be helpful when I interrupted the noble Lord who spoke earlier. Of course there are difficulties of embarrassment and difficulties in ending a probationary period, but the person dismissed is entitled to the reason in that circumstance.

Secondly, we say that he is entitled to a clear reason in circumstances where the employer is communicating with the benefit officer. If the employer can give the reason to the benefit officer, why on earth should he not be under an obligation to give it, and to give it in writing? Giving it in writing means that the person concerned can consult with an adviser over what has happened. If he goes to his trade union office or to his local citizens' advice bureau—I wish that Ministers would read more of the reports of the Citizens' Advice Bureaux; one which has just been published is relevant to such cases and to the whole Bill—and says, "My employer has told the local unemployment benefit office that I was fighting", the circumstances must be examined. However, if he goes along and says that he has been dismissed and shows a piece of paper which says that he was dismissed for fighting, at least the advice can start from something concrete. The piece of paper will show that the employer has said that and no doubt is prepared to substantiate it.

We have chosen two narrow areas. We have chosen people who have been thrown out on their ear without notice and people who are told that they are guilty of misconduct and are then deprived of unemployment benefit. It occurs to me that the drafting is open to challenge. Perhaps subparagraph (b) should read: is denied unemployment benefit on the ground that he was guilty of misconduct or of having left his employment without just cause". We are putting the amendment forward as a matter of principle. I hope that the Government can be a little unbending in considering real people. One of the people I am thinking of is a single mother. She was thrown out of her job without notice and was later denied unemployment benefit. I cannot for the life of me see why the Government cannot accept that, whatever may be previous law and regardless of periods of probation and qualification, such a person, if she wanted it, should be entitled to a piece of paper saying that she was sacked because of incompetence or because she had been fighting. I cannot see how anyone could possibly oppose that in principle. It is in principle that I move the amendment. I beg to move.

Lord Strathclyde

I am not sure that I recognise the type of case referred to by the noble Lord, Lord Wedderburn, and the law as it stands today and the way he described it. It sounded like such an outrageous abuse that I would be more than happy to look into it further.

This amendment seeks to exempt two categories of employee from the requirement to serve any qualifying period in order to qualify for the right to a written statement of reasons for dismissal on request. First, it seeks to exempt those dismissed without any notice or without lawful due notice provided that they claim within 14 days that they have been unfairly dismissed. This is misguided. Those who do not have two year's continuous employment will generally not qualify for the right not to be unfairly dismissed, but under the amendment tabled by the noble Lord in order to qualify for a written statement of the reasons for dismissal many employees will no doubt submit a claim of unfair dismissal although it has no prospect of success. I cannot believe that this is what the noble Lord intends.

Secondly, the amendment seeks to provide those who have been denied unemployment benefit on grounds of misconduct the right to written reasons for dismissal without serving the normal qualifying period. This is based on a serious misconception. Although we have touched on this point this afternoon, perhaps I may re-emphasise that the provisions on written statements of reasons for dismissal have no bearing on a person's entitlement to unemployment benefit. The regulations on unemployment benefit are completely separate and entirely different.

The legislation provides that anyone who leaves his employment voluntarily without just cause can be disqualified for up to 26 weeks from receiving unemployment benefit. The legislation also provides that benefit may be disqualified in cases where a person loses his employment through his own misconduct. Whether these rules apply is a matter for the independent adjudicating authorities. They are the adjudicating officer in the first instance; on appeal, the Social Security Appeal Tribunal; and on further appeal on a point of law, a social security commissioner. When a person first makes a claim for unemployment benefit a standard inquiry form is sent to the last employer seeking reasons why the claimant left his employment. Claimants are allowed to comment on those statements given by their former employer. A case will be referred to adjudication only where the employer has given written confirmation of the reasons for dismissal. Where, despite reminder, this is not given, benefit would be paid in full, including any necessary arrears.

I hope that I have cleared up this problem of losing unemployment benefit and that, in the light of my remarks, the noble Lord will be able to withdraw his amendment.

Lord Wedderburn of Charlton

I am grateful to the Minister for one thing—for his offer of help in the case to which I referred. It has been looked into. It is complicated, but matters are now much better than they were. As a matter of fact, as often happens in life, there were mistakes in what happened as much as evil purpose. It would have been much clearer if at a certain point the person concerned could have asked for a statement of the reasons for dismissal. That is how real life works. The Minister described to me the jurisdictions of the adjudication officers, the appeal tribunal and the social security commissioner. That does not help me to follow his argument that a written statement of misconduct has no bearing on unemployment benefit. Why, because he says so. I can tell him that it has a bearing on unemployed persons. They want to know.

Then the Minister says that, after the employer has told the adjudicating officer, the unemployed person is allowed to comment on the reasons that have been given in secret. Has he ever heard of natural justice? Does he know what its requirements are? To put it in its broadest terms, they are notice of the charge, an opportunity to reply to the charge and a fair opportunity of advice within an unbiased setting. But the procedure does not meet the terms of natural justice. Where an issue of misconduct is raised in regard to those who are without jobs and who, from their bedsitting rooms, do not look forward with any great joy to appeals to commissioners which take considerable time, one cannot say that there is no value in their knowing the reason for their dismissal. They want to know, though, as has been said this afternoon, it is quite true and extraordinary that a number of people who are dismissed accept dismissal and do not ask the reason. That has been my experience and is the experience of others with much greater experience whose work I have read.

The submission of unfair dismissal claims has nothing to do with the amendment. Paragraph (a) of the amendment touches not on cases concerning unfair dismissal, but on those concerning failure to give notice. In law, that is a matter of wrongful dismissal, which falls within the jurisdiction of the county court and the High Court, not of the industrial tribunal, at least until the Government make the order to transfer those actions to the industrial tribunal. It may be that someone who is summarily dismissed will bring an unfair dismissal claim in the tribunal, but, if people do not know the reasons for their dismissal, it is highly likely that they will fill in Form 1 in order to see the reason for their dismissal. I have heard people talk of such cases. Where no reason is given, people say "It wasn't fair that I was dismissed. I don't know why I was dismissed. I'll fill out Form 1 to get the respondent's answer and then we'll see what the employer says". But it is a waste of time if there is a good reason.

It is absurd to cite such arguments. We shall withdraw the amendment, but this is a matter that tests the Government at a different level. They always prate about the individual, as though he was their concern. Here is the individual, and they are not particularly concerned, judging from the answer that the Minister gave us. We must look again at this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 34 not moved.]

Clause 13 agreed to.

Lord Wedderburn of Charlton moved Amendment No. 35: After Clause 13, insert the following new clause: —

("Secondary action by employees.

The Employment Act 1980 shall be amended as follows—At the end of section 17(2) there shall be added the words, "and if no associated employee of that employer is such a party".").

The noble Lord said: This is another fairness amendment, which relates to the Employment Act 1980 and to secondary action which has now become a term of art in our law. Perhaps I may preface my remarks by again saying that the amendment does not attempt to produce the law as we would see it.

This is an area where many people think—and, as I shall show in a moment, it is considered internationally—that the Government have gone too far. The problem arises because Section 17 of the 1980 Act defines secondary action in relation to a trade dispute when a person, especially the union, induces a worker to break a contract of employment, but, under that contract of employment, the employer is not a party to the trade dispute.

The amendment does nothing to change that structure, but there are two ways in which real life gives it a rather different meaning from that which it appears to have. In real life, a business is organised as a group of companies with each company separate from the others, each company is a separate employer and, if workers take action against one company rather than another, they will normally be found to be taking secondary action. If they take action in a situation in which all the subsidiaries are involved, they frequently find that employers are involved who are not employers under the contract of employment of workers party to the trade dispute with their own employer. The situation has been manipulated, although that may not have happened often. It was manipulated in the famous Wapping dispute, one of the fiercest industrial battles of recent times. When the employers moved their work, set up 11 subsidiaries and never denied the suggestion that the reason for having the distributive company, the supply company, the printing company and various other companies for different purposes was to inhibit the legality of industrial action which was successful in certain respects.

In 1980, in reply to that suggestion, the noble Lord, Lord Prior, said that there was an exception in the section. There were in fact three exceptions, but only one is relevant here; namely, what is sometimes called the gateway to legality, where secondary action is permitted if it interrupts the contract with a first supplier or first customer of the employer in dispute. When the noble Lord, Lord Prior, was Secretary of State, he brought to his press conferences great charts—we all remember them—that showed how the exception would operate.

We are now some nine years on and it is right to say that it is generally accepted that that exception has never been known to operate in any major industrial dispute or major legal case. It is defeated by a congeries of reasons, the most important of which is exactly the same point as the first; namely, that the exception does not operate where the business is organised as separate subsidiaries in a group of companies or as separate companies—associated companies or employers, as they are called in the Act and in our amendment. That merely means companies that are under the same control or where one controls the other.

That was so in 1984 in the case of Dimbleby v The National Union of Journalists. If the union had taken action, as it thought it had, in a form that would interrupt the contract between Dimbleby and another enterprise, it would have been within the exception. However, it was found that the contract between Dimbleby's and the enterprise of T. Bailey Forman was with a different subsidiary from the company which was the employer in dispute and which had sacked the journalists. The variety of subsidiary companies therefore prevented the application of the exclusion.

I am happy to go into the facts of the Dimbleby case if the Minister wants me to, but I do not think that he will deny that, in that case as in a number of others, the definition of secondary action includes only the employer to the trade dispute. It does not include as a party the associated employer of that employer. That makes it almost impossible to satisfy what were said in 1980 to be the purposes of subsection (3) of Section 17, which has never been operative; namely, to allow a form of secondary action where there is a direct link between the enterprises.

That was very much at the core of the view of the Conservative Party itself in 1958 when, in a well known document on trade union law called A Giant Strength—one of the pillars of the historical literature on the subject—the Inns of Court Conservative Society, whose anonymous authorship is well known to include those who are now most eminent lawyers in the land, said: Once it is conceded that the strike is necessary to place countervailing bargaining power in the hands of a workman against his master, it is difficult to see why it is improper for the workers in industry A to use their power in support of the workers in industry B in the expectation or on the assurance that the workers in industry B will reciprocate in due course; … Further, the old conception of a separate industry, and certainly of one industry isolated from the rest of the economy, is outmoded".

It continues: The power to strike sympathetically is politically, socially and economically justified if, without it, employees will have insufficient bargaining power; but not otherwise. On this test, in conditions of full employment and a delicately balanced economy … it is almost certainly unnecessary".

The society tests it. It does not say that it is out of the question. The same approach would lead to saying that at least it should be allowed where one faces the real employer. I use that phrase as the title, as it were, of the second part of my argument. It is found in the report of the committee of experts of the International Labour Organisation, an agency—the Minister said something; I am not sure what it was—of the United Nations which cannot just be put aside by the Government. I understand that the Government have not yet made their formal answer to that document, but it deserves to be looked at by the Committee.

In April this year the committee of experts looked at our law on this matter in relation to Convention No. 87 on freedom of association and protection of the right to organise. It said, having looked at the changes in the law, especially to Section 17: Taken together, these changes appear to make it virtually impossible for workers and unions lawfully to engage in any form of boycott activity, or 'sympathetic' action against parties not directly involved in a given dispute. The Committee has never expressed any decided view on the use of boycotts as an exercise of the right to strike. However, it appears to the Committee that where a boycott relates directly to the social and economic interests of the workers involved in either or both of the original dispute and the secondary action, and where the original dispute and the secondary action are not unlawful in themselves, then that boycott should be regarded as a legitimate exercise of the right to strike. This is clearly consistent with the approach the Committee has adopted in relation to 'sympathy strikes'. It would appear that more frequent recourse is being had to to this form of action … because of the structure or the concentration of industries…. The Committee considers that a general prhibition of sympathy strikes could lead to abuse and that workers should be able to take such action provided the intial strike they are supporting is itself lawful".

The committee later says that it asked the Government to introduce amendments: which enable workers to take industrial action against their 'real' employer and which accord adequate protection of the right to engage in other legitimate forms of industrial action such as protest strikes and sympathy strikes, as guaranteed by Articles 3, 8 and 10 of the Convention". That is why I used the phrase "the real employer". I may be able to sum this point up. There is a parallel with the previous debate on time off at a different level of industrial relations.

The amendment is not an attempt to get rid of the Government's section on secondary action. It leaves that as it is. It says that if we are to have such a rule, then is not the ILO committee of experts reasonable when it says that it should operate with respect to the real employer. The real employer is the company, with its associated companies. It is either those that it controls or those that control it. The legal personality of each company is frequently put aside by the law. It is put aside every week in tax law. It is put aside in other areas of the law when legislation demands or courts decide.

It so happens that in the Dimbleby case this place decided that it could not judicially make an exception, rightly or wrongly. I say that workers are entitled to have their collective rights, whatever the Government may think of them, and that they should operate on the basis that the ILO has suggested; namely, in respect of their real employer. The real employer is the economic entity—the group of companies: the employer and the associated employers with that company. That is the purport of the amendment.

I doubt whether the Government will accept the amendment. Perhaps they will comment on it. It will be interesting to see what line they pursue in resisting what we believe, on the basis of the ILO report, to be an unanswerable case. I beg to move.

6.15 p.m.

Lord Rochester

I have some sympathy with the amendment in so far as its aim is to draw attention to the actions of employers that, by the expedient of setting up what may be a number of associated companies, can claim, successfully that they are being subjected to secondary action in a way that I do not believe the Government intended in their earlier legislation. That was the situation, as the noble Lord, Lord Wedderburn, has reminded us, which obtained in the celebrated dispute at Wapping. There have been other similar instances. It may be that that point will be better dealt with in the Bill that we are promised in the next Session of Parliament, when it may be possible to deal in greater detail with the whole question of secondary action; but, like the noble Lord, I shall meanwhile be interested to hear what the Minister has to say on the matter.

Lord Brightman

I also appreciate the merits of the proposed amendment, provided that "associated employer" means only that one employer is a wholly owned subsidiary of the other employer. I should like to ask the noble Lord, Lord Wedderburn of Charlton, whether that is his understanding of the amendment. If so, I suggest that "associated employer" should be defined in the amendment.

The expression "associated employer" embraces a large spectrum, and if an amendment along those lines is to be put into the Bill it is necessary that it should be explained. My understanding of the amendment is that it is intended to apply only where there has been manipulation; that is to say, that one employeer is a wholly owned subsidiary of the other employer.

Lord Strathclyde

The new clause seeks to extend the scope for lawful organisation of secondary action. The Government believe that there can be no case for such a step, and the new clause is therefore unacceptable.

The present law on immunity for inducing secondary action was introduced in order to tackle one of the most unacceptable features of industrial action during the 1970s—the indiscriminate inducement of industrial action among workers whose employer was not party to the trade dispute as a means of bringing pressure to bear on the employer in dispute.

It is worth recalling that the law still enables the inducement of industrial action to have immunity form civil proceedings if it takes place in contemplation or furtherance of a trade dispute between workers and their own employer. It is sometimes all too easy to forget that fact. In any circumstances in which there is such a dispute, immunity for inducing interference with contracts will be available.

Section 17 of the 1980 Act, however, removes the statutory immunities which might otherwise be available for inducing interference with contracts from inducement of certain secondary action. Such action is defined in Sections 17(1) and 17(2). Section 17(2) provides that inducement of secondary action, in relation to a trade dispute, takes place only when it involves interference with a contract of employment and the employer under the contract is not a party to the trade dispute.

Other provisions in Section 17 provide for exceptions to that rule; for example, if the inducement is targeted in certain specified ways and the action is likely to achieve the relevant purposes the statutory immunities may still be available.

In particular, the section makes immunity possible for inducing industrial action by workers at an associated employer of an employer in dispute, or at the associated employer's customers or suppliers, where both the following conditions are satisfied: first, the principal purpose of the action is to prevent or disrupt the supply of goods or services which, but for the dispute, would have been supplied by or to the employer in dispute; and, secondly, the action is likely to achieve that purpose. This is very far from giving carte blanche in terms of immunity for organising industrial action among employees of an associated employer of the employer in dispute.

The new clause seeks, in effect, to extend the scope for lawful organisation of secondary action so that it would be available for inducement of employees of any employer associated with the employer in dispute. This would be a very significant extension, and one for which the Government see no justification.

What is meant by "associated employer"? The answer is to be found in Section 30(5) of the 1974 Act, which states: For the purposes of this Act any two employers are to be treated as associated if one is a company of which the other (directly or indirectly) has control, or if both are companies of which a third person (directly or indirectly) has control". There is nothing in this that would necessarily imply that events relating to a trade dispute in one company would be of direct relevance to the affairs of an associated company. Noble Lords opposite may argue that this is always and invariably the case and attempt to justify the new clause on this basis. But that is in reality mere surmise on their part. The better test is whether the inducement of industrial action among employees of an associated employer satisfies the relevant tests set out in Section 17, which I have already described.

We have heard much from the noble Lord, Lord Wedderburn, about cases which demonstrate—so it is claimed—that employers have split up existing companies or set up new companies in order to reduce the scope for lawful inducement of industrial action against them. I have to say that mere assertion does not make a case. Employers may have a multitude of reasons for organising or reorganising their businesses; for example, to create separate profit centres or to devolve managerial authority in respect of particular operations. Nothing I have heard has convinced me that industrial relations legislation has played any really significant part in the nature of such decisions.

The noble Lord may find it offensive that companies should be allowed lawfully to organise their businesses as they see fit in order to ensure that their prosperity and secure employment can be provided, but this Government do not.

The noble Lord also went on to argue that the International Labour Organisation has in some way condemned United Kingdom law on immunity for organising secondary action. Such assertions are far from the truth. An ILO committee of experts commented on aspects of UK compliance with ILO Convention 87 in a report issued earlier this year. Such committees frequently make similar observations and remarks about legislation in a number of countries, including several of our EC partners.

Lord Wedderburn of Charlton

Will the Minister allow me to intervene? Would he name those countries in the EC and the issues on which they have been condemned?

Lord Strathclyde

I am sure that I shall be able to do so, but perhaps the noble Lord will permit me to continue. The UK Government are sure that nothing in this legislation is incompatible with the guarantees afforded by ILO Convention 87. The Government are in the process of responding to the ILO committee's report, and as part of this response explain why its views may have been based on misunderstanding or misinterpretation of the relevant law and the context in which it operates.

Perhaps I may briefly respond to the intervention of the noble Lord, Lord Wedderburn, concerning our European Community partners. I cite, as one example, West Germany and the right to strike. Of course, at the root of all this are the views of the Labour Party towards secondary action as a whole. The conference that we saw a couple of weeks ago included the new concept of a genuine interest. I do not propose to cover that argument now.

Our belief is that there is no justification for making it easier to organise secondary action than is currently the case under the law as it stands. If the noble Lord is determined to press this new clause, he will be seeking to make it easier to organise more and more damaging strikes. Unless that is his true intention, I hope that he will see fit to withdraw the amendment.

Lord McCarthy

Before the noble Lord sits down, in the light of what he has just said will he answer this question? If the Government were finally to be condemned by the last committee in the ILO which considers the matter, so that there is nowhere else to go, would they take any notice and repeal the legislation, or would they ignore it?

Lord Strathclyde

That is an entirely hypothetical situation. We shall have to wait to see what the response of the Government is.

Lord Wedderburn of Charlton

The Minister's last remark is rather alarming because either the Government will take action on it or they will have to do what the employees in the Foreign Office would tell them to do —that is, to honour their international obligations by denouncing the basic convention on freedom of association. I cannot believe that Her Majesty's Government are contemplating that. I do not know.

Perhaps I may start by saying how grateful I am to the noble Lord, Lord Rochester. He is quite right in saying that in some respects the matter would be better dealt with under the next Bill which we now know will be coming. The only trouble is that when I was drafting the amendment we did not know that there would be another Bill. These Bills arrive so fast and furious now that one never knows quite when to put the amendments in. No doubt we shall come to it again.

I appreciate the point of the noble and learned Lord, Lord Brightman. The Minister has already read out the definition in Section 30(5) of the 1974 Act. I apprehend that there is exactly the same definition in Section 153 of the 1978 Act. It is a rather curious definition because it only includes companies. As has been found in a number of cases, other employers do not come within the purview. It concerns companies and the text is control —the holding of a subsidiary company. A recent decision of the Employment Appeal Tribunal sticks to the notion of 51 per cent. in recognisable hands. That is where control of different companies is distributed among different members of a family and one cannot find quite 51 per cent. in both companies. These were not said to be associated companies. However, we all know that these definitions have a habit of producing such problems.

Control of a holding and subsidiary character, or two subsidiaries with one controller of companies, is the test. I appreciate the point of the noble and learned Lord, Lord Brightman, that some narrower, delimiting definition should be used here. With respect, I would resist his definition of "wholly owned", because it would be so easy to put it aside by stepping outside the wholly owned character; that is even if one defined it in what I might call a taxation way, to be loose at the edges.

However, it may be that some sensible definition could be formed. For example, it seems to me, with great respect, that the only point the Minister had was when he touched upon but did not develop the point that groups of companies holding subsidiaries may be conglomerates. It may well be that the interests in one company of their employees may be wholly different from those in another. I was interested that one of the major points made by the Minister was that our amendment might allow for secondary action where—if I may use the example of a group—the employees of a subsidiary had interests which had no direct relevance to the interests of the employees of the holding company who were, let us say, primarily in dispute. That interested me very much.

This is all from the point of view of the Minister. I can see from his point of view that it is a very interesting test. It rather implies that if there is direct relevance, what the Inns of Court Conservative and Unionist Society said in 1958 still has a great deal of sense. It was that that is secondary action which should be allowed. We may hear more about direct relevance in the future debate; it is a very important phrase.

As regards Section 17(4), the exception in the 1980 Act for associated employers was a special one, as made clear in the Dimbleby judgments, especially by the late Lord Diplock. It requires substituted goods and a contract at a time when the supply is interrupted. That is a particular area and was always meant to be. The point we are making is more general. That leads me to say a few more words about the ILO. I am sure that many people, not merely in this Chamber but also in Geneva, will read Hansard with great care.

I am grateful to the Minister for answering my question as regards which other European partners have got into difficulty, let us say, with the ILO committee of experts and freedom of association committee. I had forgotten the example that the Minister produced. It was the example of the civil servants—the Beamte—in the Federal Republic of Germany who do not have any right to strike. I had forgotten that as I am not accustomed to cases where workers have no right to strike. But that is where we have got.

Frankly, the Minister is only trying to make me cross when he says there is no criticism of the Government in the ILO report. He has read the report; he knows that it recommends that the Government should change the law. That is what the report is about. It is not just an odd comment off the cuff late at night after a good bottle of brandy in Geneva. This is a direct request—it is true that that is forwarded to the other ILO bodies—to change the law not merely on Section 17 but also on Section 29 which defines a trade dispute as the law now stands. It also asks for a change on something as outrageous as Section 3 of the 1988 Act where a union is unable to apply its rules, even after a ballot in which the vast majority have voted for a strike, to dissociate itself from the minority who have remedies in court. The report has some extreme comments on that situation. All the comments add up and the ILO sees the relevance of all these things as one picture.

The Government know very well that they have been criticised. They should not try to sidestep that criticism. They should try and answer it if they can, not simply try to defend every scintilla of every word they have put on the statute book since 1980. I should have thought that by now the Government would get the feel of things. I should have thought the Government would realise that people are fed up, especially in this area, with the Government's attitude of not giving way one iota. We shall pursue matters in future in this area with the benefit of the Minister's reply but not, in my view, with the benefit of the great wisdom of the Government's policy. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

6.30 p.m.

Clause 14 [Redundancy payments: assimilation of age limits for men and women]:

Baroness Turner of Camden moved Amendment No. 36: Page 11, leave out lines 32 to 43 and insert— ("(1) An employee shall not be entitled to a redundancy payment if he or she has before the relevant date attained the age of 65.").

The noble Baroness said: We now enter a different arena altogether. With the leave of the Committee, I wish to speak to Amendments Nos. 36 and 37, although they are not grouped together, as they cover pretty much the same ground. I am indebted to Age Concern for briefing on the issues covered by the amendments. I am sure that it will be well known that this organisation has already achieved a great deal for our older citizens and has interested itself in the position of the older employee.

Clause 14 introduces into redundancy law the concept of a normal retiring age contained in the Employment Protection (Consolidation) Act 1978, Section 64(1)(b). In operation this is a complicated concept, so complicated that many industrial tribunals and many personnel and trade union officials, let alone workers, find some difficulty in understanding and applying it. As properly understood, the concept can create significant injustice as part of an exclusion rule can deprive older workers of the protection available to younger employees. Where an employee is deemed to be over normal retiring age, he can be arbitrarily excluded from any right to redundancy payment without the protection of the law.

The concept has created hardship in practice. Judgments have accepted that employers are entitled to raise or lower the age at which employees are to be mandatorily retired. So long as reasonable notice is given and the new policy is carried out, the reasonable expectations of employees are taken to have changed and the new retiring age is then put into policy. One particular case which Age Concern quotes is Hughes v. the DHSS 1985 where this view is upheld.

There would be nothing to stop an employer arbitrarily changing the retirement age from 60 to 55, or perhaps even lower, and thereby depriving employees of their right to redundancy payments. The purpose of Amendment No. 36 is to ensure that all employees under the age of 65 have the same treatment in redundancy law. The purpose of Amendment No. 37 is to define the words "normal retiring age" so that employers cannot lower it as a means of bypassing the protection for older workers envisaged in the previous amendment.

We had some debate about discrimination on age grounds last night. Unfortunately, the debate took place rather late at night and for that reason the amendment was not pressed by the noble Baroness, Lady Seear, and her noble friends. Nevertheless, I had the impression that the Government were reasonably sympathetic to issues of age discrimination. Certainly, in view of the changing demographic situation to which reference has been repeatedly made during discussion of the Bill, there is a necessity to do something to ensure that the older worker has some protection. With those comments, I beg to move.

Lord Boyd-Carpenter

The noble Baroness oversimplifies this issue by simply suggesting that redundancy payments should be available to anyone under the age of 65, provided they are discharged in the ordinary way. There are quite a number of occupations which have an earlier age of retirement. I shall refer to one obvious example which I am sure the Committee will be aware of. In our foreign service, retirement—in my view, most misguidedly—is insisted upon at the age of 60 by the Foreign Office. If someone is retained beyond the age of 60, as occasionally happens in the case of ambassadors of considerable quality and then he is dismissed, it would be rather odd that he should then receive a redundancy payment, having already passed the age at which he might be expected to be retired.

I believe the Bill as it stands deals with this complicated matter as effectively as possible. I am quite sure that simply substituting a blanket age of 65, regardless of the normal age of retirement of the person concerned, would cause far more injustice and difficulty than can be expected from the present law. I hope, therefore, that the Committee will reject the amendment.

Lord Strathclyde

The aim of this amendment is to make a redundancy payment payable to an employee up to the age of 65, whether or not he or she has passed the normal retiring age in his firm. However, a redundancy payment is paid to compensate an individual for the loss of a job which he or she had a reasonable expectation might continue. When an employee reaches retiring age that expectation no longer exists, so there is really no loss which falls to be compensated. Of course it would be unusual anyway for a person to be made redundant after passing retiring age. Normally, such a person would have retired and left.

It is increasingly common for people to retire at an age below 65, and when such an age is reached it is right and logical that redundancy entitlements should cease provided that age is non-discriminatory between men and women, as is the case with unfair dismissal.

In order for an age limit below 65 to apply there must be a normal retiring age applicable within the firm and to the particular job. For instance, if a firm has a normal retiring age of 62 for all its executive and clerical staff but that age does not apply to cleaners and catering employees, then those ancillary workers will be covered by the 65 age limit.

I should like to echo the words of my noble friend Lord Boyd-Carpenter. Our proposal fairly reflects the purpose and spirit of the statutory redundancy scheme. Therefore I do not believe that the amendment should be accepted.

Turning to Amendment No. 37, initially I had some difficulty in understanding .he meaning of the new clause. I am grateful to the noble Baroness for explaining the intention. I note that when the Bill was in Committee in another place the Opposition brought forward similar amendments to the concept of a normal retirement age in relation to unfair dismissal claims. If the intention of the Opposition is to repeat their proposals, with some variations, Amendment No. 37 goes only part of the way.

As drafted, the amendment would make sense only if at the same time amendments were made to Sections 57 and 64 of the 1978 Act to allow for the "reaching of retirement age" to be one of the reasons an employer must give to justify dismissal. That alone would be reason enough for me to urge the Committee to reject the amendment on the grounds that it would increase the risk of an employer having to defend complaints of unfair dismissal from employees who had simply been retired.

Let us look more closely at the amendment. It seeks to define the concept of normal retirement age by reference to the reasonable expectations of the employees in the occupation concerned. The noble Baroness claims that there is a good deal of confusion about the meaning of "normal retirement age" and that a definition is needed to reduce uncertainty. I do not agree with that assertion. It is for industrial tribunals to determine the meaning of "normal retirement age" in a particular case, and in doing so they will doubtless take account of the conclusions of the House of Lords in the Waite v. GCHQ case in 1983. In that case it was concluded that if there is a contractual arrangement on retirement at a specific age the presumption will be that that is also the normal retirement age, but that if in practice employees holding the same position as the complainant regularly retire at a different age, such employees could reasonably have come to regard that different age as their normal retiring age. I am not, however, aware of a significant volume of cases in which the uncertainty is such as to require changes to the law. Moreover, I believe that the amendment would tend towards greater confusion and uncertainty, for both employers and employees alike. Therefore I hope that the noble Baroness will feel able to withdraw the amendment.

Baroness Turner of Camden

It is not my intention to press the amendments tonight. I am grateful for the explanation given by the Minister for opposing them. I shall study his explanation with some care and decide whether or not we should proceed further on those questions at Report stage.

I believe that there is some misunderstanding as to what the second amendment seeks to achieve. Our intention is to prevent a situation whereby an employer can decide on a certain normal retirement age for a particular individual which might not apply to other employees. I thought that the amendment made it very clear that: 'normal retiring age' means the age at which those employees, in the same position as that employee, reasonably expect to be retired as on the same day on which this Act is passed". In other words, we do not want rights that an employee might otherwise have to be bypassed simply because the employer arbitrarily alters—as he can now—the normal retirement age. That was why we put down the amendment and linked it with Amendment No. 36, which sought to ensure that employees could not be robbed of entitlement to redundancy payments if they were deprived of employment on redundancy grounds below the age of 65.

However, in view of what the Minister said, I shall not press the amendments but I shall look carefully at what he said and take further advice. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.>

[Amendment No. 37 not moved.]

Clause 15 [Abolition of redundancy rebates]:

6.45 p.m.

On Question, Whether Clause 15 shall stand part of the Bill?

Lord Rochester

I shall speak very briefly to the Motion, of which I have given notice. Employers with fewer than 10 employees are at present entitled under the 1978 Act to rebates on their statutory redundancy payments, which they can recoup from the Redundancy Fund to which they have contributed. My noble friends and I were not happy when earlier legislation confined payment of redundancy rebates solely to those very small firms, feeling that they should be of more general application.

Now the relevant provisions of the 1978 Act are to be repealed so as to remove the entitlement altogether. It is such a short clause that the best way of obliging the Government to justify their action seemed to be to question the inclusion of the clause in the Bill. That is what I am now doing.

In the Explanatory and Financial Memorandum to the Bill the abolition of redundancy rebates for employers with fewer than 10 employees is estimated to result in savings to the Redundancy Fund of £7.5 million per annum. That represents only 5 per cent. of the overall total paid in rebates to employers in 1986–87, which is the last year for which I have figures. Yet in future no help of that kind will be available to the small firms involved.

Might that not be damaging, for a number of reasons? The business concerned might be harder to sell. In some cases firms might even be forced into bankruptcy when they would otherwise be contemplating only a few redundancies. It might even be that some small businesses, seeing that rebates were suddenly to stop, would conclude that if they were to receive any compensation from the Redundancy Fund they had better act quickly and put the redundancies through as soon as possible. That would help nobody.

It is with those points in mind that I must ask the Government how they justify the inclusion of the clause in the Bill.

Lord McCarthy

It is with considerable pleasure that I support the noble Lord who has just sat down. I am very pleased that the party that he represents has thought fit to put down the Motion. If they had not done so—because we might have thought that the topic had been debated again and again both in this Chamber and in another place —we might not have had an opportunity to ask the Government why they propose this measure at this particular time. When one looks through the various statements which have been made it is remarkable how rarely the Government have been forced to give any explanation for what they now propose to do.

It is worth retreading the ground that we have covered in order to reach this point. As the noble Lord said, from 1965 we had a bipartisan policy on redundancy payments. It was started by a Conservative government although passed into effect by a Labour government. It was a bipartisan policy which provided that industry in general would contribute to a redundancy fund, and those employers who felt it necessary to declare workers redundant would be able to withdraw from that fund.

At the time when this measure was introduced, the pay-back was 75 per cent. The pay-back has been consistently reduced: from 75 per cent. at the beginning to 50 per cent. in 1969, 41 per cent. in 1977 —it is not only Conservative governments which have reduced the pay-back—35 per cent. in 1985, and, as we know, in 1986 it was abolished altogether for all firms employing more than 10 people. We have never been given a serious answer to the question of why this pay-back has been first reduced, then almost wholly abolished and finally even that small remaining amount of pay-back given to firms employing fewer than 10 people is about to be scrapped.

This provision in the Bill was not even mentioned at Second Reading in this Chamber when the Bill was introduced by the noble Lord, Lord Trefgarne. It was not explained in any way by the Secretary of State, as recorded in Hansard of 11th January 1989 at col. 861. He merely told the other place that the Government were doing it. I may have missed the passage somewhere, and if I have it is because it is a very small entry, but so far as I know there is nothing in the authoritative tome Burdens on Business that prepares us for it at all. Until this moment the only reason why we have any animation of the Government's ideas is because during the Committee stage in the other place the Member for Ludlow tabled an amendment (which we might have put forward in this Chamber if we had thought about it) in which he tried to continue this redundancy payment clawback on a small scale for two years.

The reason he gave was to me the perfectly acceptable one that the Government had said when they retained it in 1986 that they did so because small businessmen, as the noble Lord said, might very well be declaring people redundant in a near insolvency situation. In fact he was quite frankly particularly representing farmers and the National Farmers' Union, which had made special representations on this matter because it felt that in the current state of the agricultural industry many farmers might find it necessary to declare workers redundant—small farmers who might come well within the bounds of the 10 worker criterion and who might require the quite small but still significant assistance from the redundancy payments measure.

It is interesting that the Minister of State, Mr. Cope, admitted that the payment was retained in 1986 for those reasons. He admitted that the conditions under which it was retained still applied and that the Government had had representations from the National Federation of Self-Employed and Small Businesses, the Country Landowners' Association and the National Farmers' Union. Yet he said that he could do nothing.

At this point it is worth quoting his remarks. He said that the arguments about small firms—those which had been placed before us—with which he sympathised, centred on whether we should still be involved in the social engineering from which the practice of subsidising solvent employers arose 20 or more years ago. Of course. The explanation followed. He said that that time had passed and we should close that chapter in our financial history. In the end there is in fact no reason at all.

Why help only the insolvent, near bankrupt and bankrupt employer? Why should the employer be driven into bankruptcy to claim from the redundancy fund? In fact, why not let this last remaining piece of bipartisanship stay where it is for a few more years in order to help some people who are stuck in a redundancy situation? I support the motion.

Lord Strathclyde

I appreciate the aim of noble Lords who oppose the Question, That this clause stand part. I can see why they regard what we are doing away with and creating as a financial burden on small firms. However, I believe that that is based on a misconception. The noble Lord, Lord Rochester, asked for a justification. I sincerely hope that I shall be able to give him one.

As the noble Lord, Lord McCarthy, pointed out the rebate was done away with in 1986 for all employers except the smallest (those with less than 10 employees). The reason was that, in our view, the rebate amounted to a subsidy for the making of redundancies which we felt was no longer appropriate in current labour market conditions.

At that time we made an exception for small firms, feeling that some relief might be helpful; however, I would stress that the sums of money at stake are relatively small. As I have already said, the rebate payable at the moment on an average statutory payment is of the order of £490. I doubt whether such an amount is of more than marginal significance to any small company.

However, the point that I particularly wish to impress on the Committee is that there already exists within the legislation provision for redundant employees to be paid directly by the department where the employer is unable for any reason to make the payments to which the workers are entitled under the Act. If an employer disappears, dies or has gone insolvent, on the other hand—and perhaps this is the most relevant situation—if the employer is still trading but has serious cash flow problems, then the payments can be made direct from the Redundancy Fund.

In 1988–89 —I appreciate that the noble Lord, Lord Rochester, did not have these figuresߞ24,500 such direct payments were made, at a cost of £32 million, not merely to small employers but right across the board. I feel that this procedure is the right way to deal with the problem to which I presume this argument is directed.

I trust that I have said enough to persuade the Committee that the clause should be allowed to go through.

Lord Rochester

I am grateful to the noble Lord, Lord McCarthy, for supporting me in persuading the Minister to explain the reason why the Government have included this clause in the Bill. I am not altogether satisfied with the explanation that he has given, relying as it does so much simply on the sums of money involved. However, we have more important clauses in the Bill to discuss. Having succeeded at least in getting the Minister to offer some explanation as to the reasons for including this clause in the Bill, I do not now propose to pursue the matter further.

Clause 15 agreed to.

Clauses 16 and 17 agreed to.

Clause 18 [Pre-hearing review of proceedings before industrial tribunal]:

Baroness Turner of Camden moved Amendment No. 38: Page 14, leave out lines 11 to 14 and insert ("by the tribunal itself.").

The noble Baroness said: The object of Clause 18 is to provide for pre-hearing reviews of industrial tribunal cases in place of the present pre-hearing assessments. At present, pre-hearing assessments are comparatively rare but when they take place it is possible for tribunals to give a costs warning to the applicant. No doubt the reasons why they are not widely used is that, generally speaking, they seem to have served little purpose.

The tribunal is very reluctant to give a costs warning after a brief hearing where arguments are put without hearing any evidence. ACAS has expressed concern about how far the proposed system of pre-hearing reviews would resolve the problems said to arise with pre-hearing assessments. Obviously the Government want to weed out cases that they think should not go to ITs at all. However, if the use of pre-hearing reviews spreads, it could seriously impede the conciliation process generally and lead to a two-tier IT system. Moreover, it is by no means unusual even now for cases regarded as non-starters at pre-hearing assessments to go on to a full IT hearing and to be won. However, what is even worse is that, as the Bill stands, it makes provision for the pre-hearing review to be conducted, by such a person as may be determined". In other words, it is by a single individual, usually the chairman sitting alone.

The purpose of my amendment is to ensure that if there are to be pre-hearing reviews they should be conducted by the tribunal. It is not satisfactory that such a hearing should be left to a single individual, no matter how highly qualified. As it stands, the clause would appear to give industrial tribunal chairmen sitting alone the powers to determine jurisdictional questions. These issues are often of considerable importance to employees because they affect the scope of the protection offered by employment law. The proposal to eliminate the two industrial tribunal side members from pre-hearing reviews could also seriously undermine the tripartite nature of the IT system.

The Law Society and the TUC have serious doubts about it. The Law Society states: There will be few cases where it could be appropriate for a Chairman sitting alone to determine questions on jurisdiction, the burden placed on Chairmen being too great, and therefore cases where jurisdictional questions arise should continue to be dealt with by the full Tribunal sitting to resolve them at the outset, as is presently the practice so that the views of the lay members may be given". These are serious considerations put forward by people who have a close knowledge of the present system. On those grounds I beg to move the amendment.

Lord Rochester

I should like briefly to support the noble Baroness. In addition, it may be worth adding that the British Institute of Management feels that it would be better if the present system of informal discussions were retained—those informal discussions which often now take place before a tribunal goes ahead—rather than have the formalised structure set out in the Bill.

However, if we are to have an institutionalised pre-hearing review, then I agree with the noble Baroness that it should be undertaken by an appropriate body. That body should be the tribunal.

Lord Strathclyde

Let me remind the Committee of the purpose of this clause. It enables the Secretary of State to give industrial tribunal chairmen, or, if appropriate, a full tribunal, the power to conduct a prehearing review of a case and to require a party to pay a deposit of up to£.150 as a condition of proceeding further with or defending the application. We intend that this new power should be used only where the case is thought to have little prospect of success or to be frivolous, vexatious or otherwise unreasonable. When the unfair dismissal provisions were orginally introduced the expectation was that industrial tribunals would provide a cheap, speedy and informal means of resolving certain disputes in the employment field. The tribunals have lived up to those expectations and provide a highly effective and speedy means of resolving a whole range of employment issues.

The proposals in the Bill are intended to make the tribunal procedure even more streamlined than it already is, by tackling directly the problem of ill-founded cases. By introducing a method of weeding out the small number of cases where there is an abuse of the system, we shall be concentrating resources more directly on the genuine cases.

The Opposition's amendment would restrict the new regulation-making powers of the Secretary of State. He would be unable to provide for the new pre-hearing reviews to be carried out by a tribunal chairman sitting alone. PHRs and the making of a deposit order could therefore only be carried out by a full tribunal.

The amendment would therefore frustrate to a substantial extent the Government's intention of ensuring that there are effective powers to deal with the problem of ill-founded cases. These proposals were the subject of a consultation exercise last year and a wide number of organisations responded with their views. I will not deny that there were some dissenting voices among those who commented. Nevertheless, there was sufficient general support for the idea for us to decide to proceed with implementing it.

The main purpose of the PHR will be to clarify the issues in dispute and to identify cases which seem unlikely to succeed. Such issues do not normally require the practical expertise of the lay members of industrial tribunals and can be dealt with more speedily and effectively by chairmen sitting alone.

Nevertheless, I must emphasise that we recognise that in some exceptional cases—perhaps where the issues involved are particularly complex or contentious—it may be appropriate for a full tribunal to conduct the PHR; and we have provided for that possibility in new paragraph lA(1)(a)(ii) of Clause 18.

The whole point of this clause is to make life easier for the industrial tribunal in dealing with genuine cases where there has been a problem. The amendment does nothing to help that cause. I therefore hope very much that noble Lords opposite will think further about the amendment.

Lord Wedderburn of Charlton

Before the Minister sits down, will he elaborate on one very important matter? The clause makes provision whereby regulations allow for more important cases to go to the full tribunal. Is it envisaged that the regulations would place among those more important cases those in which there is a jurisdictional issue, about which my noble friend Lady Turner spoke?

This matter has disturbed a large number of people. Jurisdictional issues include the exclusion of the jurisdiction of the tribunal in cases of industrial conflict, lock-outs, industrial action and a large number of other matters. It is the view of many people that those issues should certainly be heard by the tribunal. It would be quite wrong for the chairman to hear those on his own. Is the Minister prepared to say anything about those matters being put at least to the full tribunal?

Lord Meston

Before the Minister replies, is it intended that there should be a right of appeal from the single chairman to the full tribunal? In important matters such as jurisdiction cases, a chairman may decide that an application is out of time and that time should not be extended. In my view, there should be a right of appeal to the full tribunal.

Lord Strathclyde

The noble Lord, Lord Wedderburn, asked about the jurisdiction aspect of the tribunal. It will be up to the chairman of the tribunal to decide where he has jurisdiction and when a full tribunal should be asked to look at a case. On the point about appeal, yes, in all cases there will be methods of appealing against any decision.

Lord McCarthy

Will the Minister tell us what he means by methods of appeal? How do appellants appeal? Do they go to the tribunal? Do they go to the EAT: What do they do?

Lord Strathclyde

I shall have to look into the methods of appeal and let the noble Lord know.

Baroness Turner of Camden

I am not very happy with the Minister's response. I thought that we had made a fairly strong case on this side of the Chamber. We contend that it is unfair to an individual applicant, in a situation where he may feel that he had a good case, simply to be subject to the decision of a chairman sitting alone. As has been pointed out by a number of noble Lords on this side of the Committee, there is the major question of jurisdiction, which has already been raised by the Law Society. With respect, I do not believe that the Minister answered that satisfactorily at all.

Concerning appeals, I do not know what a method of appeal is. What is a method of appeal? I know of rights of appeal. But how do methods of appeal come into this legislation? I believe the Government are over-reacting to what they believe to have been a stream of ill-founded cases. My experience, including some experience in this area as a union official, is that, generally speaking, unions are loath to take cases on behalf of members unless they feel such cases are well founded. For an individual, going to a tribunal is quite a daunting experience. Only the most highly motivated individual is likely to go to a tribunal without backing from some quarter, either from his own resources or from a union. It is a myth to maintain, as the Government do, that there seem to be so many ill-founded cases that we have to introduce this new system to streamline the operation of the legislation. In order to do that we have to give one individual, the chairman, powers to make these decisions at pre-hearing reviews.

I do not intend to press the amendment this evening. We shall however think carefully about this. I feel there is scope for further amendments on Report. Having made those comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Cullen of Ashbourne)

If this amendment is agreed to, I cannot call Amendment No. 40.

Lord Rochester moved Amendment No. 39: Page 14, leave out lines 18 to 35.

The noble Lord said: The requirement that parties wishing to continue to participate in industrial tribunal proceedings after a pre-hearing review should pay a deposit, as proposed in the clause, raises a major matter of principle. The right of free access to industrial tribunals has long been regarded as an essential element in the fairness of the system. Until now no one has been able to claim that lack of money imposed a check on the search for justice. Once the principle is breached, the amount charged is open to variation and to accusations of political motivation, which may reduce respect for the system's impartiality.

It is noteworthy that the British Institute of Management and the Engineering Employers' Federation have both expressed reservations about the imposition of a deposit of up to £150 as proposed in the clause. It is true that in its submission the Institute of Personnel Management was concerned about the amount of time and money which could be spent by employers in dealing with frivolous cases. But the institute saw an improvement in the uniformity, the quality and the effectiveness of pre-hearing procedures and remedy, rather than the premature authorisation of orders requiring payment of a deposit.

Once a revision of those procedures has taken place it will be time enough to consider deposits of much less than £150, I should have thought, to be paid by applicants wishing to proceed against the advice of those conducting the preliminary hearing or by those who, perhaps at the last minute, withdraw or fail to appear within, say, 48 hours of a hearing. That is very far from what is proposed in subsections (2) and (3). And that is why I suggest to the Committee that those subsections should be left out of the Bill. I beg to move.

7.15 p.m.

Lord Wedderburn of Charlton

It seems right and sensible to us that we should support the noble Lord's amendment and not move our separate Amendment No. 40. It is clear that the amendments concentrate upon the same matter. It is perhaps the meanest part of a mean Bill to suggest that an applicant to an industrial tribunal should contribute to alleviating the burdens on business. The chairman, even when sitting alone, can decide that the applicant should pay 150 deposit as his entrance fee to the tribunal of justice. It is an ignoble and petty proposal. As the noble Lord has said, it will be a boomerang provision because it will bring the tribunals into disrepute.

What are the figures? The Minister may produce some more, but the only evidence that we have concerning the tribunals appears in the Employment Gazette. The tribunals have been able to impose costs since 1980 whenever there is a case they deem frivolous, vexatious and unreasonable. There are pre-hearing assessments to warn people that they may do so. It was interesting to hear the Minister on the amendment moved by my noble friend speak of the target. He spoke of cases that were vexatious, frivolous or had little chance of success. So the extra that the Government want to get at are those cases that have little chance of success and that are not vexatious, frivolous or unreasonable.

As has been said, there are already the pre-hearing assessments. In 1986ߝ87 only 294 cases are on record in which costs were ultimately pronounced out of 39,000 complaints. In 1987–88 costs were awarded in only 205 cases out of 34,000 complaints. In 1987–88 there were 781 pre-hearing assessments of which only 341 were warned that they might risk a costs award and some of which, a handful it is true, nevertheless went on ultimately to success.

An even more interesting figure is how the pre-hearing assessments come about. They can be brought about either by the demand of a party to the case or by the chairman of the tribunal. The number of cases in which the chairman decided tribunals ought to demand a pre-hearing assessment was only 281. Out of thousands of cases these are significant indicators. They are not proof. We have no figures sufficient for that. They are indicators that the picture of industrial tribunals clogged up by unreasonable claims brought by unprincipled people against burdened employers is a fantasy. It is a fantasy as anyone will say who knows anything about industrial tribunals. It is not true. So there is no need whatever for this type of clause.

There may be a need, as the noble Lord and the Minister have said, to consider the pre-hearing assessment arrangements and perhaps to improve them. But access to the tribunal on a deposit would seem to breach a golden principle. It is a principle which the Government have pronounced in all other areas. What did they do in respect of the Employment Act 1988? In a situation where there was little proof that union members had been debarred from going to the High Court in cases against their union, they nevertheless insisted on having a clause in the Bill—which we did not resist although we believed it to be unnecessary—providing that members should have access to the court no matter what the union rules. The Government did so because access to the courts was their principle.

When a multinational corporation goes to the High Court with a bad case but not one which can be struck out in accordance with normal rules—that is to say, because it is frivolous, vexatious or discloses no reasonable cause of action (which is exactly the same as the present tribunal situation)—judges are rightly reluctant to strike out causes of action because the view is that the person or company is entitled to the day in court. There must be a good argument for striking out and in any event those involved would go to the Court of Appeal.

Is it proposed that a High Court judge should have the power to impose a monetary condition upon the large company which appears with a case which is poor but not frivolous? If not, why not? As the noble and learned Lord the Master of the Rolls has made clear, there are problems in parts of the High Court and the Court of Appeal where it is difficult to deal with a large number of cases at a proper rate. Are there to be monetary deposits as a condition to litigate? Once that appears in the tribunal is it to spread, and if not why not?

We are now talking about cases which the Government have chosen to target for the imposition of a deposit. Let us remember that it was only because of the outcry that they were prevented from imposing a fee. Their original proposal was to impose a fee of £25. Of the bodies which responded the only ones which agreed to a deposit of £150 were those which did not like the fee. They wanted a deposit which the man or woman could recover. Therefore, the Government have already put forward a preposterous proposal and now they have put forward a proposal only minutely less than preposterous.

Further, the Committee should not forget that under the clause the Minister can vary the amount. It will not remain at £150 for ever. A survey reported in the Guardian in August showed that 75 per cent. of claimants involved in unfair dismissal cases in industrial tribunals are still unemployed. It does not mean that they will not obtain another job, but that is the position. It is from them that this special deposit is required in order to go to a tribunal of justice.

Were the issue not about employment law the Committee would throw out the proposal without a moment's hesitation. Were it about the ordinary courts of justice no one would consider it. But it is about industrial tribunals and employment law and it appears that we can take liberties with principle. I suggest that the Committee supports the comments of the noble Viscount on this sensitive and important matter.

Baroness Gardner of Parkes

I wish to see the Bill remain as it stands. My experience in industrial tribunals shows that at a pre-hearing assessment the person involved is warned that if he loses the case costs will be awarded against him. When costs are implemented after the case has been fully heard he then explains that he is living on unemployment benefit and can pay nothing. It means that in the end the costs do not exist because in many cases it is impossible to collect the money.

Yet employers may have sat through a case for many days, perhaps weeks. Often they have taken many members of staff to sit in court and present their case which, as a result of the pre-hearing assessment, was determined not to be sound. I do not comment upon the proposed figure, but it is right that there should be some way of making people prove the seriousness in advance of bringing the case after a pre-hearing assessment has decided that there is no good reason.

I must mention a particular case in principle because I cannot go into details at this stage. I am referring to the case of someone who has brought 60 to 70 such cases. At a public hearing I said, "According to this documentation you have brought your case 16 or 17 times?". The reply was, "No, many more". I said, "How many times?". The answer was, "Sixty to 70 times against employers from all over the country". It is a waste of time to have people sitting in court on each occasion re-justifying the decision that the case was not a fair case to bring.

I ask the noble Lord opposite whether there is a way in which people can be ruled out as being vexatious. Chairmen of tribunals have said that it is impossible, yet everyone has said that an ordinary legal case can be classified as being vexatious and therefore not heard. I shall be interested to hear the answer because the noble Lord, Lord Wedderburn, implied that there is already provision to deal with vexatious litigants. I should like to know more because at tribunals I have been informed that there is no such power. I believe that the principle behind the clause is good.

Lord Wedderburn of Charlton

Before the noble Baroness sits down I must apologise because I did not hear everything she said. However, I believe that she asked me whether the tribunal has equivalent powers to those of the High Court to strike out a case. Without going to the books I apprehend that its power is not equivalent to that of the High Court. However, it would be another matter if we were discussing a proposal concerning the tribunal's powers in respect of vexatious and frivolous cases and striking out. I should willingly join her in such discussions, but it is a different position from that of imposing a deposit of money on an unemployed person as a right to go to a tribunal.

Baroness Gardner of Parkes

The case I am making is that at the moment this appears to be the only type of power capable of dealing with such cases. I have asked a number of Members of the Committee who I thought would know the answer. They have told me that they believe there to be no parallel between the tribunal and the court of law. I should be interested to hear whether anyone in the Committee knows whether there is such a parallel.

Lord Meston

The noble Baroness is right; the tribunal has no power equivalent to that of the High Court to declare someone a vexatious litigant. I have had experience of people who have brought to tribunals numerous claims and who cannot be stopped, however vexatious. She is right in saying that there is a problem. Perhaps there should be an equivalent power enabling the tribunal to allow such people to continue only with leave. That may be a solution but it is only part of the solution to the problem. The fact that there is a problem is beyond doubt and I support the amendment.

It is a sad fact that a large number of applications to industrial tribunals fail completely. As the noble Baroness, Lady Turner, said, the other side of the coin is that a number of cases which appear to be non-starters succeed triumphantly. It is a question of balance, of making sure that the cases with merit go ahead and those with none are stopped painlessly, quickly and with the minimum of expense.

I have had to sit through an enormous number of hearings of hopeless, or near hopeless, applications to industrial tribunals. They are often conducted by unrepresented, angry and determined litigants. "Angry" and "determined" are only two adjectives; sometimes they are verbose, obsessive and have elaborate conspiracy theories and cannot be controlled. Cases of discrimination are particularly prone to that. They can be used by people who are still employed, and who have no complaint of unfair dismissal, as an opportunity publicly to air their grievances which turn out to have nothing to do with racial or sexual discrimination.

I have often tried to think of a better sifting and screening procedure but one must look at the issue in perspective. Many cases do not reach hearings but are settled by conciliation through ACAS. The stronger cases have the help of the unions or bodies such as the Commission for Racial Equality and the Free Representation Unit. However, there is still a hard core of cases—and this is the problem which must be addressed—where applicants are not attracted by conciliation. They want their day in court before the tribunal. Those are people with weak cases whose weaknesses they will not acknowledge. They do not have the help of their union because the union has better things to do with its time and resources and they do not have the support of responsible bodies like the Commission for Racial Equality, which equally is not tempted to part with its limited resources to back weak cases.

Another source of the problem is this. However weak or strong a case, no applicant can have legal aid. In other areas of the law and litigation, legal aid is a valuable way of sifting out cases without merit. Legal aid will help an applicant identify and articulate his best points, get rid of his worst points and settle. This is now a very sophisticated area of the law, like it or not. However with no lawyer to guide or give unpalatable advice that it is pointless to go on, these people go on and on and on. Those are the problems. It is no kindness to applicants with hopeless cases to allow them to go on. As has been said, it is expensive and time-consuming for the respondent. Frankly, racial discrimination is wicked but it is also hurtful and unfair to people who are unjustly accused of racial discrimination. I have seen people who are very hurt to be accused publicly of racial discrimination. Of course, those cases hold up the cases which have merit. Those are the problems.

What are the remedies? At present we have this optional pre-hearing assessment system and a power to give costs warnings. However, it is a fact that the pre-hearing assessment is seldom used and cost warnings are not always given. When they are given they do not deter the most determined applicant who has little to lose. However, I suggest that Clause 18 is not an answer. A maximum deposit of £150 will not deter. First, that is a relatively small amount; secondly, it is a maximum amount and there will have to be exceptions for those on social security or unemployment benefit; and, thirdly, as the noble Baroness, Lady Turner, mentioned a few moments ago, at that stage the tribunal will only have limited information and so cannot make a proper assessment.

Therefore, I suggest that the Government should look again at this clause and that the answer is not to require that people show money. They should show merit. The real answer is to make more and better use of the pre-hearing assessment and cost warnings.

7.30 p.m.

Lord Strathclyde

In his opening remarks the noble Lord, Lord Rochester, talked about justice. In this clause there is no sense of perverting justice in any shape or form. It is no good the noble Lords, Lord McCarthy and Lord Wedderburn, trying to pretend that there is because that is not so.

Perhaps I may explain. This amendment would frustrate our intention of giving tribunals stronger powers to deal with the problem of ill-founded cases. Since it substitutes no alternative proposal tribunals would be left with their existing powers to issue a costs warning where they believed that a case had little prospect of success or was frivolous, vexatious or otherwise unreasonable. My noble friend Lady Gardner of Parkes explained exactly what is wrong with the present system.

We made quite clear in our consultation exercise last year that the PHA and costs warning procedure had not worked well and needed to be replaced. For a start, the award of costs can obviously only be made after the hearing once the unnecessary expense has been incurred; and frequently the award of costs is ineffective because the employee does not have the resources to meet the bill. The new power to order a deposit will act as a deterrent to those bringing ill-founded cases before the case reaches a full hearing.

I really cannot see what are the objections to our proposal to enable tribunals to order deposits; and I must emphasise that they are deposits only. A deposit order will only be an option where a case appears at the pre-hearing stage to have little prospect of success or is thought to be frivolous, vexatious or otherwise unreasonable; and where a deposit is ordered it will be left to the discretion of the tribunal chairman carrying out the pre-hearing review to determine the exact level of deposit. The noble Lord, Lord Meston, made the point that £150 is a maximum. In some cases the deposit may be as low as £5 where that is considered appropriate.

Tribunals will be able to order either party to pay a deposit, so the new power will therefore apply to both employers and employees; and it is our intention that a deposit will only be forfeited if the person required to pay it loses the case and has an order for costs made against him. In other words, he will only forfeit the deposit where the tribunal carrying out the full hearing considers that the case was indeed frivolous, vexatious or otherwise unreasonable. In such cases the deposit will be paid to the other party in part settlement of the costs. In all other circumstances the deposit will be returned at the conclusion of the case to the person who paid it. I really do not see what the Opposition finds so objectionable about this proposal.

I have been asked what evidence there is that the problem of ill-founded cases exists and requires treatment. We made quite clear in the consultation document that the pre-hearing assessment procedure was not working as well as expected. The figures for the number of PHAs carried out in 1987–88 show a further decline. Under the new streamlined procedure chairmen will normally carry out pre-hearing reviews sitting alone without the lay members and this will enable PHRs to be carried out more swiftly than before. In absolute terms the number of ill-founded cases is not large; but employers regularly complain about the cost and management effort involved in defending such cases and our proposals address that problem directly.

The noble Lords, Lord Wedderburn and Lord Rochester, questioned the degree of support for our proposals, particularly among employers. It is accurate to say that there were some dissenting voices among those who responded to our consultation exercise on this subject last year. That is hardly surprising, and indeed it might be rather worrying if that were not the case. But there was sufficient general support for our proposals to enable us to proceed with implementation.

Perhaps I may be allowed to quote some examples. The CBI welcomed, the broad thrust of the proposals set out in the consultation paper on industrial tribunals". The Institute of Personnel Management saw the proposals as, a definite move in the right direction, and supported them all broadly. There was also support from the Institute of Directors, the National Chamber of Trade, the Association of Independent Businesses and the British Retailers Association, among others.

I reject entirely the argument that this proposal is a tax on justice. Surely the noble Lords on the Opposition Benches recognise that time and money spent defending and hearing ill-founded cases is a drain not only on employers' resources but also on the public purse. It is also ultimately unfair to those who wish to bring genuine cases to the tribunal. As things stand at present, an employee rarely has anything to lose by making a complaint to the tribunal and we are not changing that state of affairs. Our proposals simply aim to weed out unreasonable cases by making people think twice before they pursue them. By acting on the small number of people who abuse the system we shall ensure that it can work more effectively for the majority whose complaints are genuine.

Let me remind the Committee again that we do not expect there to be a pre-hearing review of every single case; nor do we expect a deposit to be ordered in every case which is the subject of a pre-hearing review. Furthermore, in ordering the deposit the tribunal chairman will have total discretion to set it at a level which he believes to be appropriate for that case.

Those are the fundamental facts of the case. It has nothing to do with perverting justice and it is nothing for any genuine applicant to be worried about. I do not see what the Opposition finds so objectionable about this proposal and I very much hope that the noble Lord will withdraw his amendment.

Lord Rochester

I shall try not to detain the Committee unduly because I am conscious that we have now reached the dinner hour. I am grateful to all noble Lords who have taken part in this short debate, particularly the noble Lord, Lord Wedderburn of Charlton, who denied that many unreasonable claims were being brought to industrial tribunals and who supported me in saying that, in his view, there was no justification for requiring people—some of them very poor—to pay deposits. The amount now contemplated is not the fee of £25 which was originally considered but a deposit of up to £150.

The noble Baroness, Lady Gardner of Parkes, was concerned about the number of vexatious claims which could be brought. I am grateful to my noble friend Lord Meston, with all his current experience of these tribunals, for saying that what is needed are adequate ways of dealing with frivolous claims rather than introducing the concept of paying a deposit. I was particularly interested in my noble friend's point concerning legal aid as being a good way of eliminating unreasonable claims.

The noble Lord, Lord Stratchlyde, said, among other things, that in appropriate cases deposits would be returned to the claimants. Perhaps he would be good enough to answer a question on that point. Where deposits are returned to claimants is it the Government's intention that the claimants should receive interest on those payments, given the high rates of interest which now obtain? The noble Lord may need guidance on that point.

In my initial speech I did my best to anticipate most of the points that were made by the noble Lord, Lord Strathclyde, in his concluding remarks; but perhaps he is now in a position to answer my question.

Lord Strathclyde

I understand there are no proposals at the moment to pay interest on the deposit. Furthermore, I understand that only a relatively short space of time of about three months is involved. I have not been able to work out the interest that would be due on £150, but perhaps I can put the argument this way. If someone is willing to put down that sort of deposit in the first place I am sure he would not mind forfeiting what must be a relatively small amount of money over three months.

Lord Rochester

I am not very convinced by that answer. My understanding is that more than a few months can elapse in cases going before a tribunal and I am not at all happy that no undertaking can be given that interest will be paid. There are a number of other points on which I am not satisfied, as must be plain to the Committee. In the circumstances, a good way of introducing the dinner break would be for me to divide the Committee.

7.44 p.m.

On Question, Whether the said amendment (No. 39) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 67.

DIVISION NO.4
CONTENTS
Airedale, L.	Broadbridge, L.
Ardwick, L.	Carmichael of Kelvingrove,L
Barnett, L.
Blease, L.	David, B.

Dean of Beswick, L.	Nicol, B.
Donoughue, L.	Parry, L.
Dormand of Easington, L.	Phillips, B.
Ewart-Biggs, B.	Ponsonby of Shulbrede, L.
Falkland, V.	Prys-Davies, L.
Galpern, L.	Robson of Kiddington, B.
Graham of Edmonton, L. [Teller.]	Rochester, L. [Teller.]
	Seear, B.
Grey, E.	Shepherd, L.
Hampton, L.	Stedman, B.
Llewelyn-Davies of Hastoe, B.	Stoddart of Swindon, L.
	Strabolgi, L.
Lockwood, B.	Tordoff, L.
McCarthy, L.	Turner of Camden, B.
McIntosh of Haringey, L.	Underhill, L.
Mackie of Benshie, L.	Wedderburn of Charlton, L.
Masham of Ilton, B.	White, B.
Mason of Barnsley, L.	Winchilsea and Nottingham, E.
Meston, L.

NOT-CONTENTS
Abinger, L.	Henley, L.
Arran, E.	Hesketh, L.
Astor of Hever, L.	Hives, L.
Balfour, E.	Hooper, B.
Barber, L.	Johnston of Rockport, L.
Beaverbrook, L.	Kimball, L.
Belstead, L.	Long, V.
Blatch, B.	Mackintosh of Halifax, V.
Borthwick, L.	Macleod of Borve, B.
Boyd-Carpenter, L.	Mersey, V.
Brookes, L.	Monson, L.
Brougham and Vaux, L.	Morris, L.
Byron, L.	Munster, E.
Caithness, E.	Napier and Ettrick, L.
Carnegy of Lour, B.	Nelson, E.
Carnock, L.	Oxfuird, V.
Cork and Orrery, E.	Radnor, E.
Craigavon, V.	Rankeillour, L.
Crathorne, L.	Reay, L.
Crickhowell, L.	Renton, L.
Cullen of Ashbourne, L.	Seebohm, L.
Davidson, V. [Teller.]	Selborne, E.
Denham, L. [Teller.]	Sharples, B.
Elles, B.	Skelmersdale, L.
Elliot of Harwood, B.	Strathclyde, L.
Elliott of Morpeth, L.	Strathmore and Kinghorne, E.
Ferrers, E.
Gardner of Parkes, B.	Teviot, L.
Glenarthur, L.	Thomas of Gwydir, L.
Greenway, L.	Ullswater, V.
Gridley, L.	Vinson, L.
Haig, E.	Westbury, L.
Harvington, L.	Wise, L.
Headfort, M.	Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

7.52 p.m.

[Amendment No. 40 not moved.]

Viscount Long

I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage of this Bill begin again at 8.50 p.m.

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

House resumed.