HL Deb 21 July 1995 vol 566 cc525-7

1.57 p.m.

Lord Chesham rose to move, That the draft order laid before the House on 28th June be approved [25th Report from the Joint Committee].

The noble Lord said: My Lords, the Secretary of State is required to review each year the limits on certain payments under the legislation while other limits can be reviewed as and when he thinks fit. The order increases the maximum amount of most of the awards that industrial tribunals can make to individuals whose statutory employment rights have been infringed. It also affects the amount of redundancy payment payable to employees.

As your Lordships may know, the limits that must be reviewed annually are the limits on the amount and duration of guaranteed payments, the limit on the weekly amount payable from the National Insurance Fund and the insolvency payments in respect of certain debts, the limit on the amount of a week's pay used to calculate redundancy payment, the basic award of compensation for unfair dismissal and the additional award for an employer's failure to comply with an order of re-employment.

As has been the usual practice, the Secretary of State for Employment consulted widely with employer and employee bodies and with others who have an interest in this matter. He has also been required to take into account the general level of earnings, the national economic situation as a whole and any other relevant matters. As a result of all these considerations we propose that the limit on the daily amount of guaranteed pay should increase roughly by the RPI index from £14.10 to £14.50 and that the limit on the amount of a week's pay should increase from £205 to £210. There has been no significant pressure for changes to the duration and period of guaranteed pay. The Secretary of State for Employment laid a report on 19th June in which he explained why these limits would remain at their existing level for five days in any period of three months.

The legislation also enables the Secretary of State to review from time to time limits on the compensatory award for unfair dismissal and the special award which may be made in some cases where dismissal is for trade union or health and safety reasons. The opportunity of the consultation was taken to consider these limits at the same time as those for which an annual review is required by statute. The general compensation limit was last raised two years ago. The special award reflects fundamental protection against being dismissed for trade union membership, or non-membership, or because of trade union activities, or since the Trade Union Reform and Employment Rights Act 1993 for certain health and safety matters.

The level of the limits here act only as compensation for the individual, but are a real deterrent against employers acting in such a way. As with the other limits, we consider it right that there should be a modest increase in these awards this year. The proposed new limits will be as set out in the order. I beg to move.

Moved, That the draft Order laid before the House on 28th June be approved [25th Report from the Joint Committee].—(Lord Chesham.)

2 p.m.

Baroness Turner of Camden

My Lords, I welcome the noble Lord, Lord Chesham, to his first stint at the Dispatch Box on an employment question. I am sure that we shall hear a great deal more about employment from him in future. I would also like to thank him for the way in which he has explained this order.

We on this side welcome it, although perhaps in rather a tepid way, on the ground that it represents an improvement and, I suppose, it is better than nothing. However, the order gives me the opportunity to express my concern about the disappearance of the Department of Employment. It seems to me that, at a time when the employment scene is changing so drastically; when people are so insecure, even those who have jobs; and when everyone, including the Government, are talking about flexibility in employment, which is more like casualisation—we had a debate about that in this House quite recently—entirely the wrong signals are being sent out. The impression will certainly get around that the Government are not really concerned about employment problems and that these can be subsumed in other departments—in education, the DTI, the environment and so forth. It simply confirms the point of view that some of us have held for some time, that employee rights are rather low on the Government's agenda and now that they are simply not there at all. I believe it to be a very retrogressive step and it is one which I am sure the Government will regret.

Turning to the order itself, the Government could have done a little better. Some of the limits have not really kept up with inflation, as I am sure the Minister must know. Moreover, as regards unfair dismissal, about which we are concerned because of the general employment situation, there has been, as I believe the Trades Union Congress has said, a total failure to uprate in line with the RPI. The limit is now £11,300, but if it had kept pace with inflation, it would have been of the order of £27,000. However, the limits on compensation awards for sex discrimination and race discrimination have had to be removed as a result of European decisions, so why should we not remove the limit as regards this particular area? As far as other limits are concerned, I gather that in some instances there has been no increase since 1992, so the increases now given are hardly munificent.

As I said at the beginning, we welcome the order on the basis that it is an improvement on what was there before, but we believe that it would have been possible for the Government to have done better.

Lord Chesham

My Lords, I thank the noble Baroness for the kind words welcoming me here. I am glad that she has some welcome for the proposed increase, even though it is not as large as she would have liked. Any increase in these limits must be set in the overall context of the country's economic priorities. Our first priorities must remain the strengthening of the economy and avoiding any unreasonable increases on the burdens of business.

As regards her other comments, it is a little difficult for me to respond to the situation of the Department of Employment. We have done what we can to raise the limits. In fact, where the majority of the maximum limits are involved, the actual amounts paid out are averaging around £2,700 as against £27,000, which is the maximum amount allowed. While they could be higher, the average amount being paid out is considerably less than the maximum amount. I commend the order to your Lordships.

On Question, Motion agreed to.