HL Deb 14 February 1991 vol 526 cc227-30

4.2 p.m.

The Earl of Strathmore and Kinghorne rose to move, That the draft order laid before the House on 19th December 1990 be approved [7th Report from the Joint Committee].

The noble Earl said: My Lords, in moving the order I should like to speak at the same time to the draft Unfair Dismissal (Increase of Compensation Limit) Order 1991 and Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1991.

The legislation provides that the maximum payable under some of the elements of industrial tribunal awards and redundancy payments must be reviewed each year while others can be reviewed as and when the Secretary of State thinks fit. We think it right to increase all the monetary elements of those awards this year, though by varying amounts.

The first order, the draft Employment Protection (Variation of Limits) Order 1991, has been laid in accordance with Section 148 of the Employment Protection (Consolidation) Act 1978. The legislation requires the Secretary of State to review in each calendar year the upper limit on the amount of a week's pay for calculating redundancy payments, the basic and additional awards for unfair dismissal, and debts that can be paid under the insolvency provisions of the Act. The legislation also requires the Secretary of State to review the limit on the amount of guarantee pay due to an employee in respect of any day on which he is temporarily laid off.

In carrying out the review the Secretary of State must consider the general level of earnings in Great Britain at the time of the review, the national economic situation as a whole and any other matters he considers relevant. Although there is no statutory obligation on the Government to consult about the limits it has been our practice to do so. This time we have again sought the views of a wide range of organisations. We propose that the limit on the amount of a week's pay should increase from £184 to £198 and the limit on the daily amount of guarantee pay from £12.65 to £13.65.

I turn to the Unfair Dismissal (Increase of Compensation Limit) Order 1991 which has been laid before the House in accordance with Section 75(2) of the 1978 Act. It concerns the limit on the award which compensates successful applicants for the loss of earnings and benefits they suffer as a result of being unfairly dismissed. The limit on this award also applies to compensation payable in certain cases involving unreasonable exclusion or expulsion from a trade union, sex or race discrimination and refusal of employment on grounds of membership or non-membership of a trade union. This limit is not subject to annual review but may be increased from time to time. It was last raised with effect from 1st April 1989 and we consider that a further increase from the current level of £8,925 would be appropriate this year. We are therefore proposing a substantial increase to £10,000.

I turn finally to the draft Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1991. This has been laid before the House in accordance with Section 73(4B) and 75A(7) of the 1978 Act. Again the limits are not subject to annual review but may be reviewed from time to time.

The awards covered by the order apply to dismissal for trade union membership or activities or non-membership of a union. The minimum basic award will be increased from £2,520 to £2,650 and the limits which apply to the calculation of the special award will be increased from £12,550, £25,040 and £18,795 to £13,180, £26,290 and £19,735 respectively. I commend the orders to the House.

Moved, That the draft order laid before the House on 19th December 1990 be approved [7th Report from the Joint Committee].—(The Earl of Strathmore and Kinghorne.)

Lord Dean of Beswick

My Lords, I am grateful to the Minister for introducing the three orders. I shall not detain the House since we are discussing upgradings. But can the Minister give an indication of what the increases represent in percentage terms? Are they in accordance with the increase in the cost of living index? Having said that, we shall not oppose the orders as they provide for increases.

Lord Rochester

My Lords, I thank the noble Earl for having introduced the orders. In reviewing the limits on the amounts payable to employees under the 1978 Act the Secretary of State is obliged to take into account both the general level of earnings and the national economic situation as a whole. In fixing the increases at about 8 per cent. in the case of the first order the Government have acted reasonably. However, I cannot let this moment pass without referring briefly to the circumstances in which the increases are being made.

Under the first order the amounts are payable in respect of redundancy, the insolvency of employers and so on. The unemployment figures released today indicate all too clearly how great is the increase in the number of people who now qualify for payment. They are a stark reminder of the way in which the Government's economic policies have failed to protect employment and have thus exacerbated the very problem that the orders are intended to relieve. Having said that, we are willing to accept the orders.

Lord Boyd-Carpenter

My Lords, I hope that my noble friend will be able to give some further explanation of the figures, particularly those in the Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order. In one of the other orders that we are discussing—the Unfair Dismissal (Increase of Compensation Limit) Order—a quite substantial increase is made, to a round figure of £10,000. That is understandable.

However, if one looks at the order to which I previously referred, the Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order, one sees somewhat finicky increases, if I may be allowed to say so, to not very obvious figures; for example, £2,520 to £2,650; and £25,040 to £26,290. Those figures have an air of precision which I suspect is slightly bogus. Finally, in Article 2(4) there is an increase from £18,795 to £19,735.

Two points arise. Surely, when one increases these figures, which, as my noble friend explained, is not done annually but when Her Majesty's Government believe it to be the due time, it would be sensible to increase them to a round figure and not add to the complexity of administration by adopting these apparently precise and detailed figures involving quite small denominations. Surely, that would be the more sensible: and practical way and would save a certain amount of time on administration.

Secondly, I should be grateful if my noble friend can explain whether the figures to which I referred relate to a particular percentage of increase. I must confess that I am not enough of a mathematician to be able to make the calculation for myself. I rather suspect that the noble Earl may be in the same position However, I see that reinforcements are on the way to him. Perhaps he can say whether the very odd looking figures before us represent exactly the same percentage increase or whether there is any variation in the percentage elements in those increases.

These are important matters for the people concerned. The sums are quite substantial and apply to people who, for one reason or another, face very real personal difficulties. Therefore I think it right that your Lordships' House should pay some attention to them. Although I am sure that the intentions of the Government are wholly admirable—as all the intentions of the present Government are wholly admirable—before your Lordships' House accepts the proposition that is sought, perhaps it ought to be satisfied that the increases are made on a rational and defensible basis and one that will not cause unnecessary administrative delay or expense.

The Earl of Strathmore and Kinghorne

My Lords, perhaps I may reply first to the noble Lord, Lord Dean of Beswick, and give him some examples with regard to the first order. The current maximum limit on a week's pay is £184 and, as I said in my opening speech, this will rise to £198. That is an increase of 7.5 per cent. The figure of 7.5 per cent. also refers to redundancy payments and insolvency payments and a basic award for unfair dismissal. However for guarantee payments, as I said, the current maximum is £12.65 which is increasing to f13.65—an increase of 7.9 per cent. I hope that that gives the noble Lord an idea of some of the percentage increases.

The noble Lord, Lord Rochester, rightly referred to the problem of unemployment and increasing unemployment. It is important that these payments and awards should reflect the real world in terms of cost of living, earnings and the economy in general. Following widespread consultation, we believe that these increases are appropriate.

I shall now attempt to give an answer to my noble friend Lord Boyd-Carpenter. As he pointed out, he may not be a mathematician; and I certainly am not. The limit payable on a week's pay has been increased regularly and the current proposals represent what we consider to be equitable, taking into account all the relevant circumstances. The proportionate greater increase in the compensatory award reflects the fact that this award was not increased in 1990 while the smaller increase in the basic and special awards recognises that those awards are already high. In general there is no magic formula by which we can arrive at the correct level of increase. It is a matter purely of judgment, balancing various factors and trying to arrive at a sensible compromise.

In the light of what I have said, I hope that noble Lords will be satisfied.

Lord Boyd-Carpenter

My Lords, before my noble friend sits down, will he explain why it was not possible to have rounded figures and why we must have such detailed and small figures which must cause a good deal of unnecessary trouble and perhaps some confusion to the beneficiaries?

The Earl of Strathmore and Kinghorne

My Lords, I do not have a specific answer to that point. I refer to what I said earlier; namely, that there is no magic formula by which to arrive at these figures.

On Question, Motion agreed to.