Employment Rights (Dispute Resolution) Bill [H.L.]

HL Deb 25 July 1997 vol 581 cc1577-611

11.6 a.m.

Lord Archer of Sandwell

My Lords, I beg to move that this Bill be now read a second time.

I hope I may be permitted to say a few words on a matter not directly related to the Bill. I understand that today was the last occasion when we were led in our prayers by the right reverend Prelate the Bishop of Liverpool. I believe that your Lordships would wish to place on record our deep appreciation of his contributions to our proceedings over many years. His wisdom, his experience and, perhaps above all, his compassion for those who are underprivileged or vulnerable have offered us guidance which has been appreciated in every part of the House. I am old enough to remember his impressive feats in a different capacity. It is not given to everyone to achieve the highest distinction in two careers, and to that he has added a capacity for friendship which many of us have been privileged to share. I am sure he will take with him the affectionate recollection of every Member of your Lordships' House.

This Bill is intended primarily to address a problem which is almost universally recognised. Attempts to diagnose the reasons for the problem and to suggest remedies have not always attracted quite the same degree of unanimity. However, the process of consultation and discussion since at least the end of 1994 has brought about something akin to a consensus. Even on matters of detail I believe that the differences between us are narrowing.

Industrial tribunals were established by the Industrial Training Act of 1964. Since then their jurisdiction has been increased year by year and statute by statute. Originally at least, they represented the confluence of two processes. First, there was some feeling among those representing employees that the judiciary prior to the 1960s had sometimes failed to understand, still less to share, their perceptions of what was just and they looked for a way of resolving employment disputes which depended less on the courts. Secondly, there was at one time a mistrust of tribunals, exemplified in the book by Lord Hewart, then Lord Chief Justice, called The New Despotism and published in 1929. It was still influential in some circles when I was a student, although I hasten to add that that was nearly 50 years ago.

That mistrust was evaporating by the 1960s. It has been accepted, at least since the Franks Report in 1957, that tribunals are a constituent part of the rule of law, and that they offer a number of advantages for a range of issues. They are less formal and rather more expeditious than the courts exercising more traditional jurisdictions; their members can offer an expertise and an experience in a specific field which it is difficult for the traditional courts to match; and the pattern of a legally qualified chairman and two members with experience and knowledge of the background against which disputes arise generates much confidence in those who appear before them.

The Donovan Report in 1968 recommended a substantial expansion in the jurisdiction of industrial tribunals to include all the disputes which were distributed then among a variety of jurisdictions, to provide, an easily accessible, speedy, informal and inexpensive procedure". for the settlement of disputes. Indeed, my noble friend Lord Wedderburn had already made a similar plea in his book The Worker and the Law. He may be cheered to learn that I have a well thumbed copy on my shelves.

Since then the nature and the quantity of cases coming before industrial tribunals have expanded until, in 1996–97, the number of applications was 88,910 and the forecast for the year 2000 is over 109,000. Their standards are high. The service which they provide is one of which they can be proud. Perhaps this may be the moment to declare at least a potential interest. I am privileged to chair the Council on Tribunals. Among the 70 tribunal systems which are within our supervision are the industrial tribunals. In a succession of annual reports we have commented on issues that have arisen in relation to them as to other tribunals. But I see and I hear of them in practice. The public receives a most commendable service in return for the resources invested. I wish to pay tribute to the leadership and hard work of the president, Judge Timothy Lawrence, which I see at first hand, and to all those who form part of the system, whether judicial or administrative.

Nevertheless, the expansion of their workload has led to delays in the hearing of cases. Those responsible for the administration of industrial tribunals have made serious efforts to respond. In 1991 an internal efficiency scrutiny made recommendations to address the problem relating to listing practice, the numbers of sitting days for full-time chairmen, and training for administrators. In its annual report for 1995 the Council on Tribunals referred to a number of initiatives by the president, Judge Lawrence, such as standard procedures where there are late entries of appearance, or where applicants cannot be traced. The proportion of cases reaching a hearing within 26 weeks has risen from 56 per cent. in 1993–94 to over 78 per cent. in 1996–97.

But the problem persists, and is particularly worrying since one of the advantages usually associated with tribunals is their expedition. A further concern is that, owing to the increasing complexity of some of the legislation which industrial tribunals have to administer, their claim to informality, which is sometimes equated with an absence of legalism, is under some pressure.

In December 1994, the Department of Employment, as it then was, published a Green Paper entitled Resolving Employment Rights Disputes—Options for Reform. It evoked some 200 responses. Virtually all of them agreed on the need to address the problems; most of them agreed in substance with the proposed direction of the Green Paper, although some discerned dangers in a number of the proposals and were concerned to suggest safeguards—including the Council on Tribunals.

In November 1995 the then Government brought together those proposals from the Green Paper which had secured substantial support, and published a draft Bill. It reflected many of the comments and qualifications that had been received. In July 1996 the draft Bill was circulated for further consultation. In response to that exercise, the department—now the Department of Trade and Industry—received 95 responses, mostly supportive, but some making further suggestions for safeguards.

The matter proceeded no further because the election intervened and the former government were no longer in a position to proceed. But the proposals were not by then greatly controversial, and the incoming Government considered the situation, made some amendments to the draft to reflect the comments that had been received in the course of the further consultations, and prepared a new Bill.

At this stage I should explain my symbiotic relationship with the Government in relation to the Bill. The Government would be pleased to see it on the statute book. So would I, and many others. But the Government, as your Lordships are already discovering, are faced with a heavy legislative programme. When I learnt that the Government did not intend to include the Bill in their programme for this Session but were prepared to make the text available to me, I ventured to introduce it, so that this House would not be denied an opportunity of considering it and, if it finds favour, of passing it for transmission to another place.

Time was not available to me for further consultations, nor for such redrafting as I might have been tempted to undertake. But I may say at once that I am not necessarily wedded to every jot and tittle in the Bill. I look forward today to hearing the contributions of those noble Lords who propose to participate, and naturally I shall then consider carefully what is said. Some noble Lords were kind enough to advise me in advance of suggestions that they may make during the course of our debates. There are a number of noble Lords whose expertise in this field probably always exceeded mine, and is now certainly more up-to-date than mine. I shall welcome any advice that they may tender.

But I hope I may be forgiven if, in order to keep expectations within realistic bounds, I make three provisos. First, there may be procedural limitations on the amendments or additions to the Bill. Secondly, the Bill has emerged from a long process of consultation and I feel inhibited in introducing major revisions without consulting those whose interests are most likely to be affected. Thirdly, the Bill's prospects of completing its pilgrimage successfully are substantially improved by the fact that it enjoys the good will of the Government. If I were to do anything which might endanger that good will, the prospects of survival for the whole Bill would be substantially reduced. On a number of matters which many of us would like to see enacted, the Government have already embarked on quite separate consultative processes, and if my noble friend Lord Haskel were to indicate that some proposals should be the subject of separate legislation, I would respect that. Subject to those comments, my mind is open and welcoming.

I turn now to the proposals in the Bill. Essentially they fall into two categories. Part I is designed to improve procedures in order to make better use of the tribunals' time and resources so as to assist them in coping with the workload. Parts II and III are intended to provide alternative means of resolving certain disputes, both in order to reduce the workload confronting tribunals and because in some cases they may prove to be a more satisfactory method of resolving the issues.

If I were to embark on an exposition of all the provisions in the Bill, I doubt whether I should earn your Lordships' gratitude. I hope I may be permitted simply to indicate the more important of them.

Clause 2 empowers the Secretary of State to make regulations permitting tribunals in certain circumstances to determine proceedings without a full hearing. The first such circumstance is where the parties have given their consent in writing. One matter which has exercised my mind is whether it will be possible to ensure that the consent will operate only if each party had first received adequate advice.

Lord McCarthy

Hear, hear!

Lord Archer of Sandwell

I fully understand my noble friend's concern and I think it is something which he and I may have a number of discussions about as the Bill proceeds. I hope he will not be disappointed if I say that I have reached the conclusion, at least provisionally, that it would not be appropriate to write that condition into the Bill, for two reasons.

First, I think we should be reluctant in principle to compel a party to take advice if he or she does not wish to do so. There is a right not to be advised if that is the individual's choice. That is the objection of principle. The more practical objection is that, if the Bill were to provide that consent would be ineffective in the absence of advice, it would be necessary for the tribunal and other parties to the proceedings to ascertain in advance of proceedings what advice had been given and taken, by whom and with what qualifications, since otherwise the determination would be invalidated. That would entail either an unacceptable administrative burden on all concerned or a continuing uncertainty as to whether or not the determination was valid. But, while for those reasons I would not seek to include in the Bill a provision about advice, it does not follow that I would not wish to see parties strongly encouraged to seek competent advice before consenting.

The second situation in which provision is made for a determination without a full hearing is where the respondent has taken no steps to contest the case.

The third situation is where the applicant is seeking relief to which he or she is clearly not entitled, either because it is of a kind which the tribunal has no power to give or because it is clear on the face of the application that there is no entitlement—for example, if the applicant has not been in the respondent's employment for the requisite length of time.

The fourth situation is where the tribunal is bound by the decision of a superior court on the undisputed facts to dismiss the case.

It is thus hoped to minimise hearings which are simply wasted and to clear the lists for genuinely contested cases. In each of these situations existing rights of appeal or rights to apply to the tribunal for a review of the determination are, of course, preserved.

The fifth situation is where the proceedings relate to a preliminary issue.

In all these situations, what is proposed is that tribunals may be empowered in suitable cases to determine proceedings without a full hearing. It is not proposed to make that procedure mandatory; it would be for the tribunal to decide whether it was suitable in a particular case.

Clause 3 extends the situations in which a decision may be made by a chairman sitting alone. Perhaps I may interject here that, although in some of the circles in which I move the term "chairman" is now out of fashion, since it is used in statutes and in the Bill I propose to use it on this occasion.

Noble Lords

Hear, hear!

Lord Archer of Sandwell

My Lords, I am among those who believe that a tribunal of three persons brings strengths and advantages to proceedings relating to employment rights and I hope that the tribunal will continue normally to be constituted in that way.

The Green Paper suggested that in certain cases it should be mandatory for a chairman to sit alone. That proposal is not in the Bill. It would still be open to a chairman to sit in a tribunal of three if he or she thinks it appropriate in a specific case.

Clause 3 specifies a number of additional situations where it will be open to a chairman to sit alone. They relate to cases where it is unlikely that there will be major disputes of fact or arguments about what is fair or reasonable. Perhaps the most important relates to redundancy payments, where the dispute is normally over the application of a formula or sometimes simply where there has been a failure to pay money which is clearly due.

I turn now to the provisions relating to alternative methods of resolving disputes. Clause 7 empowers ACAS to prepare a scheme providing for arbitration in claims for unfair dismissal. At present it has no power to concern itself with arbitration in disputes between individual employees and employers. It will then be for the Secretary of State, if she approves the scheme, to make an order bringing it into effect. If that is done, the parties may, if they wish, agree in writing to submit their dispute to arbitration under that scheme and, if they do so, that will be an alternative to resolving the dispute by proceedings before the tribunal. They will in effect have agreed to exclude the jurisdiction of a tribunal.

I stress that no one will be compelled to submit their dispute to arbitration. This procedure depends on the voluntary agreement of the parties and the jurisdiction of the tribunal will be excluded only if the agreement comes about in the course of action by a conciliation officer or if it is done by way of a valid compromise agreement after independent advice.

I should also stress that the parties are not precluded, if they wish to do so, from submitting their dispute to a private arbitration not within the ACAS scheme as they may now; but, if they do so, the jurisdiction of the tribunal will not be excluded. This represents an important change from the proposals in the consultation paper. It was then proposed to enable parties to exclude the jurisdiction of the tribunal by referring the dispute to any form of arbitration. That proposal is now confined to arbitration within the ACAS scheme.

It is intended in the first instance to confine the subject matter of this provision to claims for unfair dismissal. As at present drafted, the Bill proposes to empower the Secretary of State to extend the provision to other forms of dispute and she would do so by an order subject to the negative form of parliamentary control.

It appears to me that there are two objections to that. The first is one of principle. The Council on Tribunals has long taken the view that a new jurisdiction should be created, where possible by primary legislation, and failing that by order subject to the affirmative procedure. What is proposed in Clause 7 is the creation of further jurisdiction.

Secondly, while your Lordships may think that arbitration may be eminently suitable to resolve some disputes relating to unfair dismissal, often more informally and more expeditiously than would be possible with industrial tribunals, that is not true of all types of dispute, where sometimes the legislative provisions are complex. A proposal to extend the option to other jurisdictions should be subject to full parliamentary control. Accordingly, I propose to move an amendment in Committee providing that any such order should be subject to the affirmative procedure.

One other provision, designed among other purposes to reduce the workload of tribunals, is found in Clause 13. It provides that in unfair dismissal cases, if an employee fails to avail himself of an internal procedure for appealing against dismissal, or if an employer prevents an employee from availing himself of such a procedure, that may be taken into account by the tribunal in deciding the compensatory award.

The purpose of that provision is to encourage parties to resolve the dispute at its source, where possible, in preference to complaining to the tribunal. That is a general principle which runs through many systems of jurisprudence. The question is asked, "Have you availed yourself of the more immediate remedies?"

But there are three safeguards in the Bill: first, the amount of any reduction or supplementary award is limited to two weeks' pay; secondly, the provision operates against an employee only if he has been notified in writing of the existence of the internal procedure; and, thirdly, the tribunal has a general discretion to take into account all the circumstances of the case. The tribunal will, of course, take into account the ACAS code of practice on disciplinary practice and procedures, as required by Section 207 of the 1992 Act. That code declares it good practice to give notice of disciplinary action in writing and the employee should at the same time be told of any right of appeal. It also indicates that management should seek to secure the involvement of employees at all levels in introducing or changing new disciplinary procedures.

Your Lordships will be pleased to hear that I mention only one other provision. I apologise for the length of time that I have delayed your Lordships but it is a somewhat lengthy Bill.

Clause 1 of the Bill proposes to rename industrial tribunals as employment tribunals because that term conveys more clearly what their function is intended to be. Some of your Lordships may remember that in 1968 the Donovan Commission suggested a change of name to "labour tribunals" but their suggestion was never implemented. This appears to be a suitable opportunity to address the question.

One has only to glance at the provisions which now form the jurisdiction of industrial tribunals to see how far we have come since the 1960s. There are rights for which some of us in this Chamber were campaigning for many years. The pendulum has swung backwards and forwards but in many ways we are a more just community than we were 30 years ago. Yet, justice depends on the effectiveness of its procedures and the price of effective procedures is eternal vigilance. The Bill is designed to tighten some procedural nuts and bolts. I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord Archer of Sandwell.)

11.30 a.m.

Lord Wedderburn of Charlton

My Lords, I congratulate my noble and learned friend on bringing forward this important measure and hope that the Government will find ample time for its examination. It is more than a privilege to follow him so directly in the batting. It had been suggested to me that, although this was a Friday, I might find myself placed further down the list as some kind of nightwatchman. But there is no need for time to allow more coverage of the many points which he has explained to your Lordships. I understand that the Bill has found a certain degree of broad consent from the TUC and the CBI, subject to certain caveats. Of course, nobody is perfect, as my noble friend would be the first to say. It is, of course, our task to detect and correct any defects.

The structural origins, as my noble and learned friend made clear, lie in the Conservative Government's Green Paper of 1994 and in the Bill of 1996, which has to some degree a similar structure to the present Bill. But it must be said that parts of that Bill had the look of a cost-cutting exercise. In my view, my noble and learned friend is to be congratulated on deleting some parts of the Bill which were also rather unfair in terms of the costs that they put upon applicants.

However, it will be necessary when we come to Committee to look very carefully at the proposals for chairman-only hearings or, in one case, chairman plus one wing member instead of the full three. The presidents of the tribunals have highlighted, as key to the system, the tripartite nature of the tribunals. Perhaps I may interpose a comment on the statistics. My noble and learned friend is correct in saying that the number of cases has gone up sharply. But studies of the tribunals suggest that the increase in the number of cases owes as much, if not more, to the increase in the nature of the jurisdictions which have been added—especially, of course, the Wages Act—as well as to social reasons, when certain types of case are likely to emerge from social change, such as redundancy. In that respect, it seems to be more than arguable that the tribunals are dealing with the average unfair dismissal case today with level pricing, a charge for the tribunals' account, as it were, which is slightly less than it used to be 10 or 15 years ago.

The last major research exercise on the tribunals was the work of Professor Linda Dickens at Warwick in 1985. I shall come back to that in a moment. But the Bill is being introduced at a time when the Department of Trade and Industry itself has commissioned research in Manchester, at UMIST, under Professor Goodman on the relationship between the tribunals and in-house procedure clauses on unfair dismissal, the outcome of which could be extremely important to Clause 13. I sent the Minister a note about one or two matters but I am afraid that at the time I was too full of antibiotics to expand on that. If we could have his response on the position of the Manchester research sometime before Committee, it would be more than welcome.

We must remember that, since their creation in 1964, the tribunals have become what the Ministry of Labour then predicted one year later; a nucleus of labour courts for individual protection rights. In parenthesis, perhaps I may say how sad it is that we are the only jurisdiction among comparable countries that does not have a ministry or department of employment or of labour which focuses national attention upon employment and industrial relations as a whole.

The rights of the weaker parties in employment law now depend significantly on the maintenance of the integrity of those tripartite tribunals. In understanding this Bill, one special difficulty—I put this point to my noble and learned friend as a matter to be thought about before Committee—is that the memorandum which accompanied the Conservative Bill in 1996 gave all kinds of illustrations about matters which on the face of the Bill itself are obscure. The best example is the creation of a new kind of judge called "a legal officer" who will decide interlocutory issues. I believe that was first discussed by the Justice report in 1987. I am sure that your Lordships will know that interlocutory issues are frequently crucial in litigation.

Because the Bill tells us nothing about the qualification or nature of those legal officers, although the schedule says that they are to be paid, it is rather difficult to know how to discuss them. Can we discuss them with reference to the 1996 memorandum or not? The text is the same as in the Bill but, for the rest, they are mysterious figures, hidden away, their wellbeing as uncertain as the health of SchrÖdinger's cat.

There is also a special problem in relation to the proposal, which is surely the central and major proposal of the Bill, for alternative dispute resolution of unfair dismissal cases with the assent of both parties by way of arbitration under an ACAS scheme having binding effect. The 1996 memorandum on that contained an annex outline—rather an unsatisfactory outline—of a scheme. But, naturally, the Bill does not hold any such assistance for us. Perhaps we may have a similar scheme from the department before Committee. It would be useful because, first, a number of trade unions and some employers have objections to extending the new procedure of arbitration to discrimination cases.

Lord Archer of Sandwell

My Lords, perhaps the noble Lord would allow me to interrupt him. We are all in a difficulty over this because the scheme will be prepared by ACAS and not by the Department of Trade and Industry. Until ACAS is empowered to prepare the scheme, it is very difficult to predict what scheme it will prepare. Although I fully understand my noble friend's point, we are probably all in the same difficulty here.

Lord Wedderburn of Charlton

Yes, I did not want to make the difficulties even more difficult, but I shall do so. The problem in 1996 was that the scheme appeared to be outlined by the Government with the approval of ACAS, although it was not explicitly said to be the case. I understand that the Government may not wish to do that. I am asking for some informal, non-binding, tripartite document which suggests vaguely, better than the legal officers, some idea of what the scheme would look like. I put it to my noble and learned friend (who knows it very well as he helped to draft the Bill) that the 1996 scheme is based upon a text in the Bill which is not so different from the present one. I simply ask whether we are to look at that as a possibility or are we to be told, "No, that is out; it is something else and we shall tell you when the time comes"? I will be frank with my noble and learned friend: when we come to this matter in Committee, I shall suggest that there should be consultations with the department of state and ACAS at rather different and additional times to those required by the clauses.

It is fashionable and to a great extent true that "legalism" has overcome the tribunals. I do not believe that that has much to do with the introduction of lawyers—I must speak carefully because I am a lawyer. We all know plenty of legalistic barrack-room lawyers who are not lawyers, and we all know many lawyers whose great ability has been to put legalism aside and find a commonsense answer. One only needs to think of Lord Goodman, whose expertise in that direction was incomparable.

To reverse the trend towards undue legalism research suggests that reform in procedure must be matched by reform in substantive law. Unfair dismissal is one area where we may put the lawyers out of the door; we may bring arbitration in; but we shall make little difference if we do not change the substantive law of what is the definition of an "unfair dismissal". The history of the French tribunals—the Conseils de Prud'hommes— suggests the same.

That is why I wonder about those who believe so strongly in the new arbitration scheme. I am not against it. It is rather like sliced bread. It is impossible to be against it in the form in which it stands in the present Bill. Experience of wholly voluntary arbitration which ousts the tribunals altogether (as Professor Dickens suggested in her work) is not a firm guide for a scheme which is, as in the Bill, legally-based arbitration. I mean by that arbitration which is within a structure, within a statute, based not merely upon the consent of the two parties. Legally-based arbitration is subject to the High Court by way of judicial review, if not in other ways. It may be necessary to ensure that the interpretation of the law by arbitrators—especially if it is open only to judicial review—does not diverge to the assumptions or interpretations of the law for those cases which have chosen to go the parallel route.

Although the arbitrator will concentrate upon the facts, nevertheless, no determination by an arbitrator can avoid a finding of the legal base of his or her arbitration award. In other words, we have two legally-based channels for disputes. A certain finesse must now be introduced if we are not to wait until we find that there is a clash between the two channels and depend merely upon judicial review. I do not have an answer. It may be worth spending the summer finding an answer to the possible clashes between the two legally-based ways of solving employment disputes.

Perhaps I may put forward two final points. First, the position of the employee as the weaker party is the constant care of legislation—that must be so—in relation to tribunals. But that makes even more important so-called compromise agreements where employees are allowed to abandon their rights in agreements with other parties. That is quite a new phenomenon; it did not exist before 1993 as compromise agreements. The Bill extends the notion of qualified compromise agreements, largely by removing the restriction on the advice which must be given being advice given by a qualified independent lawyer.

Most people will respond positively to that—they like ejecting lawyers from things. The trouble with the Bill is that it just leaves it at that. So long as the person giving the advice is properly insured under a contract of insurance or an indemnity provided for by members of a professional body (against his or her negligence, obviously) it seems that anyone can now give independent advice. I have made inquiries, and not only would that cover a suitable arrangement with union officials, which I take to be the object of this clause—it is sensible, if there is proper insurance, to have union officials who are very much experts in this subject giving advice—but it would also cover accountants, dentists and osteopaths being able to give independent advice. The prowess of dentists and osteopaths on points of employment law is not noted, at any rate so far as concerns the books on points of employment law. That is the first important area of compromise agreements.

Secondly, we find that deductions from compensation for unfair dismissal may be made when an employee has failed to make use of an in-house procedure. My noble friend has managed to shorten the clause by saying that a maximum of two weeks' compensation will be involved. But that may occur where an in-house procedure has been provided by the employer and the employee has not made use of it. When we come to Committee, I shall propose that that part of the Bill is unfair to employees. Except for a general jurisdiction of the tribunals, the test of whether it is a proper in-house procedure is merely the choice of the employer. The Bill says "provided by the employer". It should be the case that such in-house procedure agreements on unfair dismissal, if they are to be a ground for diminishing the compensation of an employee, should be negotiated with an independent trade union or there be in place some equivalent manner of testing its propriety.

Because of the special character and importance of my noble friend's Bill, I have dwelt on parts of it. I wished to give some idea of the points we should look at in Committee, but none of those remarks leaves me in any doubt but that your Lordships will wish to give the Bill unanimous approval on this, its Second Reading.

11.48 a.m.

Baroness Turner of Camden

My Lords, I welcome the intentions behind the Bill so ably introduced by my noble and learned friend Lord Archer. Of course, it is necessary that unfair dismissal claims should be processed more speedily than at present. As we heard, there is already a large backlog of cases waiting to be heard by industrial tribunals and the situation in regard to cases going to appeal is even worse.

There are reasons for that heavy load of cases. We are living through an era of destabilised employment. Unemployment figures may be reducing, but the lack of security for those in employment remains as great as ever. That is not only a product of globalisation and technology, although they play a part. The previous government made a virtue of so-called "flexibility". It may have been right for employers, at least in the short term, but not for employees. Constant downsizing was bound to lead to increases in the number of people who felt that they had been dismissed unfairly.

I do not subscribe to the view that there is now no alternative to the instability that is a feature of many working environments. It is socially unacceptable since it is hardly possible to create the conditions for stable family life without stable employment. Those are issues which the new Government will have to tackle—from a quite different philosophical standpoint, one hopes, than that of their predecessors. The Conservative Party does not yet realise the part that lack of job security played in their downfall; it had begun to affect people who hitherto regarded themselves as being in safe employment and who were largely Conservative supporters.

Pending discussion of these vital issues, the noble and learned Lord, Lord Archer, is right to urge that something must be done to deal with the cases which have accumulated and to press for alternative procedures. The radical proposal is that unfair dismissal cases should be dealt with by a system of arbitration. As we have heard, industrial tribunals, when first established, were intended to be informal courts where individuals did not need to incur the cost of legal representation. However, as everyone knows—this was referred to by my noble friend Lord Wedderburn—the situation has rapidly changed and has become much more legalistic. Although, in my union, we preferred to have members represented by trade union officials who understood the working environment and the union agreements covering their terms and conditions, most employers chose legal representation. Many union officials, including myself, who represented members before industrial tribunals felt that we did very well because we understood the conditions which governed the way in which our members worked and the agreements we had negotiated.

Arbitration may be a better way of dealing with some cases of unfair dismissal. Certainly it should be speedier. The length of time, in most instances, spent awaiting hearings at industrial tribunals makes a mockery of the provisions in legislation for reinstatement. After a gap in time—even longer, of course, if the case goes to appeal—reinstatement simply ceases to be a realistic option even though it is within the powers of the IT and the EAT to award it. I was once a member of the Central Arbitration Committee. We did not consider individual unfair dismissals, but we did deal with a range of other disputes—I think effectively. However, the CAC was ultimately written out of most of the relevant legislation by the previous government who did not really like arbitration and favoured unrestrained employer power.

I understand the TUC believes that the simple arbitration process suggested in the Bill is suitable for straightforward unfair dismissal cases only. However, as we have heard, the Bill makes provision for extending by order the arbitration scheme to include sex, race and disability discrimination. Those can be very complicated matters.

I recently raised on a Question in the House the whole matter of the law relating to sex discrimination cases, particularly as it affects equal pay for work of equal value. There is a case for looking closely at the procedures in conjunction with the Equal Opportunities Commission. The Government have already indicated that they are prepared to do that. Race and disability discrimination may also present problems. I am therefore glad to hear that my noble and learned friend Lord Archer is seized of the difficulties here and is considering introducing his own amendment.

Clause 3 of the Bill appears to extend provision for chairmen to sit alone on cases. I am not too happy about that. The wing members not only bring to the consideration of cases a great deal of experience of industrial relations—that is why they are chosen—but make what I believe is an important contribution to the perceived fairness of the proceedings. I hope that what is proposed will receive careful consideration.

I have some concern about internal appeal procedures. Some internal procedures have been unilaterally imposed by employers. They may not even be known to the employee until the employer seeks to claim that they should have been utilised. Or the employee may mistrust the procedures because he or she was not involved in their original negotiation and may regard the procedures as a piece of window dressing by employers, having no real validity. Employees could have their compensation reduced on the basis of an appeals procedure in which they had no real trust. I would like appeal procedures agreed with an independent trade union. It also seems fair that the employer should have to set out the appeal procedure in writing to the employee when issuing the dismissal notice, advising the employee of the legal consequences of failing to use the procedure. It would simplify matters if a statutory form of words could be used.

While on the matter of compensation, is it not time that we looked at the limits? The current ceiling of £6,300 for the basic award and £11,300 for the compensatory award means that the higher paid, long-serving employee may suffer extensive financial loss. Compensation for pensions alone could reach quite substantial sums. If there has been unfairness in dismissing an employee, the burden of that wrongful act should fall on the employer and not on the employee, particularly when the employee concerned may be in the older age bracket, perhaps with a long history of service, and unable to find alternative employment very quickly.

I agree with what has been said about the extension of compromise agreements. One of the unions has pointed out to me that it has some reservations about how the process works now and that it is very fearful of the emergence of freelance operators who present themselves as experts in this area.

The Bill could profit from amendment. On the other hand, I commend my noble and learned friend Lord Archer for bringing it forward. It is clear that something has to be done to deal with a long waiting list, a situation which is unfair to all concerned. I am glad that we are to have the opportunity to debate the Bill in Committee. We are fortunate that in this House there are many noble Lords who have great expertise. In particular, we shall, I am sure, benefit from the advice of my noble friend Lord Wedderburn, who is pre-eminent in this area. I welcome the Bill and look forward to having the opportunity to discuss it further in Committee.

11.56 a.m.

Lord Gladwin of Clee

My Lords, I must first declare an interest. I am a member of an industrial tribunal. I am also a member of the Employment Appeal Tribunal.

The right of an employee not to be unfairly dismissed was first introduced in 1971. The tribunals were seen to be the method whereby employees who felt they had been unfairly treated could get swift, informal and effective determination of their complaints. The primary remedy that we saw—I say "we" because as a trade union official I represented members before industrial tribunals—was the power of the tribunal to order the reinstatement of a worker who had been unfairly dismissed. As has been said, the reality today is very different. Informality has gone and there is a widespread use of lawyers. My experience is that employers still use lawyers when, frankly, the personnel director could do just as well. There is constant reference to case law made by superior courts—the Employment Appeal Tribunal, the Court of Appeal, the House of Lords and the European Court of Justice.

The main problem today is delay with regard to the length of time that can elapse between the registration of a complaint of unfair dismissal and its determination. Months can go by before a case comes before a tribunal. If the losing party decides to appeal, much more time elapses. Therefore, reinstatement is no longer an effective remedy. That is why it is used only in 1 per cent. of the cases that come before industrial tribunals.

Reinstatement or re-engagement—they have the same value—is an effective remedy only if it is awarded four to six weeks after the employee has been unfairly dismissed. It has to be done when the employment relationship is still warm. If it has gone cold and time has elapsed, it is no longer an effective remedy.

We are all familiar with the reasons for the delay. The workload has increased and it is still increasing. It is due to the widened jurisdiction. We now deal with sex, race and disability discrimination cases. Also there is the growing number of small businesses which seem to be unaware of employee rights and the need to have internal discipline and grievance procedures. I am bound to say that there is the unwillingness of governments adequately to provide the necessary resources to meet the growing caseload. Therefore, I welcome the Bill introduced by my noble and learned friend Lord Archer because it seeks to reduce the caseload.

I also welcome it because it could be the first step to reducing what I regard as the quite unfair and unjust requirement that a worker must have two years' employment before he can exercise his employment rights. We once had a commitment to those rights being established at day one. That is perhaps impractical, but we really ought to move to where we started, which was, after six months' employment, rights then become effective. I hope that the Front Bench will take note of that point.

As I said, I welcome the Bill, but there are a number of concerns, some of which have already been expressed. I welcome the proposal that ACAS should provide voluntary, binding arbitration to the parties to an unfair dismissal dispute as an alternative to going to an industrial tribunal. But I question—even with my noble friend's amendment which we shall see at Committee stage—whether at this stage or ever racial, sexual and disability discrimination cases are suitable for ACAS arbitration. I am not sure.

As I indicated, the remedies that are open to industrial tribunals are reinstatement, re-engagement and compensation. Reinstatement is going back to where you were the day before you were unfairly dismissed. Re-engagement has the same value as that award. I have had the experience where one has decided that there has been unfair dismissal, but to say to the employer that he must take the employee back in the position he was in was impractical. So the alternative is re-engagement, which, as I say, may be with an associated company or in a different place of work. But it has the same value as reinstatement.

However, in the Bill we have what seems to be a third remedy—or perhaps a fourth remedy—"or otherwise re-employed". If that is designed to give the arbitrator flexibility when making his award, I submit that re-engagement should suffice. It is dangerous to move away from the well understood remedies which are provided by the Employment Rights Act. I believe that those words should be taken out of the Bill. But we shall come to that at Committee stage. It is dangerous to drift away. The fear is that there will be an alternative remedy which could act to the detriment of the employee who has been unfairly dismissed.

My third concern relates to Part III, Clause 13 of the Bill. It is what I call the "fines and bonuses" clause. We have heard of it already in this debate. It gives the tribunals the power to penalise employees who have been unfairly dismissed by reducing the compensation by not more than two weeks' pay if they have not used the employer's procedure for appealing against unfair dismissal. That is the fine. Similarly, if the employer has prevented the employee from using his procedure, the tribunal can make a supplementary award to the employee of up to two weeks' pay. That is the bonus.

In my opinion this is a minefield. It will be most unwelcome to industrial tribunals. It will prove to be a nightmare for them. For example, what is "procedure"? All the evidence will need to be assembled to argue the case whether they went through the procedure or whether the employer prevented the employee from going through the procedure. There is already enough evidence that has to be amassed to deal with the argument about mitigating the loss where a compensation award is being made to an employee who has been unfairly dismissed. To extend that to an argument about whether he was prevented from using an internal procedure—all for two weeks' pay—is not worth the candle.

I believe that that provision should come out of the Bill. It does not address the problem. Many cases of unfair dismissal come before industrial tribunals because employers have no internal appeals procedure. This clause is silent on that. It relates only to circumstances where, allegedly, there is in place an appeal procedure. What is the penalty for employers where there is none? What is needed is encouragement for (or even a requirement that) all employers to have an internal appeal procedure which conforms to an ACAS code of practice. That needs to be looked at again.

My final concern is Clause 3 in Part I of the Bill which extends the categories of cases where the chairman should sit alone—that is to say, without the two lay members. In my experience chairmen welcome and benefit from the presence and participation of, as they are sometimes called, "the industrial members". Disputes over redundancy payments and the transfer of undertakings regulations should be heard by a full tribunal. These are issues which are best settled with the industrial members present because their knowledge and experience are vital. Chairmen should not be under pressure, as they are now, to sit alone in order to improve the throughput figures of tribunals.

I repeat my welcome for the Bill. I hope that before Committee stage discussions can take place on some of the issues that have been raised to make a good Bill even better.

12.7 p.m.

Lord McCarthy

My Lords, I also welcome this Bill on three counts. First, it is a good and commonsensical Bill. It tries to improve the speedy, effective disposal of disputes and, if it works, it will save public money. That makes a significant contrast to the Bills on industrial and labour relations that we have had over many previous years. That is my second reason. I hope that it marks the end of the dismal parade of anti-worker Bills, which I always called "The eight brides of Frankenstein", the best parts of which were for the most part dictated by European directives which the government did not want to introduce.

The third reason why I welcome the Bill is that for the first time since I have been a Member of this House I have a chance to declare an interest. I have always wanted to declare an interest. I cannot say that I am a lawyer, but I am an arbitrator and therefore I have an interest. If I say hard or difficult things about arbitrators, that comes from experience.

I have a number of questions which I shall fire at the noble and learned Lord, Lord Archer, and the noble Lord, Lord Haskel. I do not expect them to answer them all today. But I hope that they will think about them and that they might get in touch with some of us about them. I hope that they will tell us whether they find the questions acceptable in general terms in order to give us some idea of the sort of amendments that we might profitably move in Committee.

My first query is to indicate surprise that there is nothing in the Bill about the procedure for encouraging exemptions. The procedure goes back to the 1978 Bill. It is still there and yet, as we all know, only in one case involving the Joint Industry Board for the electrical contracting industry does the exemption procedure operate. I do not know why the Government do not put in the Bill or say in this House that they support the notion of the exemption procedure. It may be it is to be improved in various ways. But in a way it is a matter of common agreement between all sides of the House, because in the previous government's green paper, which has been frequently quoted, on page 25 they talked about the possibility of encouraging exemptions. They stated: Another possibility is whether any change should be made to the arrangements (in Section 65 of the 1978 Act) under which dismissals procedures may by agreement be 'opted out' of the statutory provisions on unfair dismissal. Exemption from the unfair dismissals legislation currently requires the making of a designation order by the Secretary of State; and is subject to several safeguards". The safeguards are then listed. Paragraph 4.29 then states—and this is absolutely true—that the performance standards (in the exempted procedures), represent considerable advantages, both for employers and employees, compared with the industrial tribunals". That is what the previous Conservative Government said. The quotation continues the Government suggests that the voluntary exemption procedure should be considered more widely by employers and trade unions. The Government has always taken the view that industrial disputes are best resolved by the parties concerned, without the intervention of the state. The evident success of the JIB voluntary procedure sets an example which, if adopted more widely, might produce considerable benefits". That is unanswerable. I have operated within the context of the JIB voluntary procedure. It is standard form, if necessary, to award reinstatement and re-employment because there is speed and efficiency and because the people who operate that procedure know it very well.

Lord Archer of Sandwell

My Lords, has my noble friend considered Clause 12 which, unless I have misunderstood the position, takes some of the points that he is making?

Lord McCarthy

Yes, my Lords, it does take some of those points and if we had more time—we may consider this in Committee—I could list the ways in which I regard the exemption procedure as superior to Clause 12. It is much more professional and allows for the problems to be tackled in a much more specified and detailed way. It can result in the establishment of standing tribunals. It does not deal with only one case if one employee wants to use it; it is an overall agreement. That is why I regard it as an advance on anything in the present Bill.

I should like the Government to tell me—today if they can but, if not, subsequently—their attitude towards attempting to encourage the exemption procedure. We are talking about caseload. The Government are bothered about the caseload and it has been estimated that between 30 and 35 per cent. of the caseload comes from the public sector. If, as a result of government encouragement, employers in the public sector were to offer exemption procedures to the unions in the public sector, we might be able at a stroke to remove 35 per cent. of the caseload. We cannot do that with Clause 12.

I come to my second question which relates to inducements for workers to contract out under the present Bill. What are the inducements for workers? We all know about the inducements for employers. They do not have to appear at the tribunal. If the case goes against the employer, that will not become public and will not appear in the local newspapers. So, what are the inducements for workers to enter the new system proposed in the Bill? We can imagine what they might think, so I am asking the Government and the noble and learned Lord, Lord Archer, whether it might be possible in Committee to introduce some specific inducements into the legislation. Could we say that if you enter an arbitration procedure—could it not be part of the eventual ACAS procedure? —the matter is resolved within a specified time? Why could we not have time limits? Could we say that re-employment and reinstatement might be built into the procedure? Could we say that the provisions will apply to those who have been employed for less than two years? We could say lots of things to induce workers to move into the procedure, because if we do not, they will not do so. Unless we can convince workers that the new system will be better and quicker, the only workers who will move into the new procedure will be those who are put under pressure to do so by their employers.

That brings me to my next question. How are we going to ensure that pressure is not put on people to move into the new procedure? The noble and learned Lord, Lord Archer, has already discussed this so I shall not do so at length. If I understood him correctly, he said that he would like to do something on that point but is worried about whether we can say that someone must have advice. What qualified advice could someone have? Could they have a lawyer or could they demand the right to go to a free, law advice centre? If they can, I should like the Government to say today that they recognise that there is a problem and that workers could be suborned or pressurised to enter this procedure which is to the very obvious advantage of employers. I hope that in Committee the Government will be able to put something on the face of the Bill to help to defend workers against the pressure that they might be placed under. That is my third point.

I come now to my fourth question. If we are moving into arbitration—I should declare a double interest here—who will the arbitrators be? Will they be those from the ACAS list? Here I must declare a non-interest because I do not want these arbitrators to be from the ACAS list because we are not lawyers. I believe that the arbitrators must be experienced arbitrators and that they must have some legal competence. They must know what the law is. Indeed, I would not mind if they were legally qualified arbitrators as long as they were also experienced. I can think of many lawyers with industrial experience who operate within the system. I should like the arbitrators to have certain qualifications. There is nothing unusual about that with regard to the unfair dismissal procedure; for example, outside arbitration—that is, in industrial tribunals—people have to have special qualifications to be able to serve on tribunals dealing with race and sex discrimination cases. We can pick and choose the arbitrators that we have. Do the Government agree that that is right?

My fifth question is more complicated. I believe that the noble Lord, Lord Wedderburn, was also concerned on this point. The great advantage of arbitration—its abiding glory—is that it is essentially hugger-mugger. No one knows what you did or why you did it for the most part and you do not even have to give your reasons. It is quiet, confidential and private. If we are successful in moving from legal regulation to arbitration, do we want virtually all unfair dismissal cases to be dealt with hugger-mugger? That would mean that there would never be any principles and that we would never find out why the arbitrators did what they did. That is what happens in arbitration. Even more dangerously, do we want that to happen with race, sex or disability cases? What about those cases involving future European Union directives on workers' rights? They would normally go to industrial tribunals, but are they all to go now to arbitration? If so, that would mean that we would never know about them.

In the past we have had a whole series of cases where the decisions of tribunals, of the EAT or occasionally even the ECJ, have been given maximum publicity—and that has been a very good thing. I shall not list them, but there has been a whole range of cases in which lawyers have said things which all other lawyers said that they would not say. There have been enormous and significant advances in workers' rights relating to, for example, sex discrimination in the Marshall cases. I would not want such decisions in future to be hugger-mugger. I want them to be proclaimed because we are creating new standards. How far do we want to go in shifting, in the interests of expediency, swiftness, reinstatement and re-employment, from a public system where everybody knows what has happened to a new basis of jurisdiction which is hugger-mugger? I should like the Government to try to answer me on that point.

Lord Wedderburn of Charlton

My Lords, we might have judicial review.

Lord McCarthy

My Lords, the noble Lord may say that, but, with respect, it is not as effective and it takes a lot longer.

Finally, I should like to ask about the cheapness of the new scheme. I have looked at the previous government's Green Paper and I can see only one reliable figure, but, as I shall show, it is not reliable at all. Page 16 of the Green Paper states that the cost per case of industrial tribunals is £966 and that the cost per case of an ACAS cleared dispute is £263, which means that the latter is about four times as cheap. It will not do, because ACAS does not provide arbitration in most of these cases. What ACAS says is four times as cheap as conciliation. Of course conciliation is cheaper, but we are talking here about a new system. I hope that under the new system which will provide the worker with the right to obtain some advice there will be a legal chairman. If you have a legal chairman you must pay more money. I hope to provide incentives and inducements to workers to enter this system. We have absolutely no experience of what it will cost to operate an arbitration system for unfair dismissal or anything else. Those figures do not stand up. Perhaps the Government can try to provide more up-to-date figures in order that we can compare the relative cheapness of the two systems.

I support the Bill, but I want to see it improved. We do not want to see figures that demonstrate that we do not want the Bill at all because arbitration turns out to be more expensive. I do not think that it need be. We need to be more realistic. With those qualifications, I commend the Bill to the House.

12.21 p.m.

Lord Phillimore

My Lords, as a practising barrister I welcome this opportunity to make a few comments on the Bill. I therefore also declare an interest. I welcome the proposed change of name from industrial tribunals to employment tribunals, since that is clearly more consonant with the work done by them. Clause 2 appears to propose a substantive change, providing for the determination of disputes without an oral hearing. I have reservations as to whether in practice that will streamline cases. Furthermore, I do not consider it an appropriate form of hearing in cases where facts are often in dispute and the evaluation of witnesses is necessary and important, as in unfair dismissal and discrimination cases. It may be more appropriate for determining jurisdiction and preliminary points. However, even those are often better resolved with some oral evidence.

Where the person against whom proceedings are brought does nothing to contest the proceedings, the proposal seems to lead to a decision on the merits. The requisite material for such a decision is unlikely to be contained in the originating application. That would be the only material before the tribunal. However, I welcome a procedure that is akin to judgment in default of a notice of appearance, provided that the time limit for filing a notice of appearance is extended from 14 to 28 days. I suggest that that is particularly necessary in complex discrimination cases where complaints may go back over a number of years and involve several different managers.

In relation to preliminary hearings I respectfully suggest that the Bill may provide an opportunity to clarify paragraph 6 of the first schedule to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations 1993 and what is meant by, entitlement of any party to bring or contest the proceedings to which the originating application relates". A further point in relation to preliminary hearings arises from the proposal in Clause 5 to use a legal officer to deal with such matters. I share the concern of the noble Lord, Lord Wedderburn, about the proposal. It is a vital part of efficient case management that a preliminary hearing be dealt with by a legally qualified chairman with or without lay members. As for the proposal in Clause 3 to extend the categories in which a chairman sits alone, I suggest that cases under Section 11 of the Employment Rights Act 1996—which concerns references as to what should be included in the written statement of terms of employment to be provided by the employer at the request of the employee—should be excluded since often they involve complex questions of construction of agreements and the determination of factual issues where the assistance of lay members would be particularly helpful.

As for the arbitration proposals, I suggest the following: that the parties and arbitrators agree the terms of reference; that arbitrators decline jurisdiction in cases of substantial factual and/or legal dispute; that arbitrators should have power to remit a case to an industrial or new employment tribunal at any time; that there be no right of appeal but a right to complain about failure to comply with the outcome of the arbitration to an industrial/new employment tribunal; and that the administrating of oaths or affirmations should be permitted at the discretion of the arbitrator in each case.

I am concerned about the proposal in Clause 9 that "independent legal advice from a qualified lawyer" should be replaced by "independent advice" since this appears to remove the need for such person to have any qualifications at all. I suggest that that would be highly undesirable. I therefore share the concerns of other noble Lords. I am worried too by Clause 13 and the proposed reduction in compensation for failure to use internal procedures. The reasons for that concern were eloquently expressed by the noble Lord, Lord Gladwin. Subject to those comments, I commend the Bill.

12.26 p.m.

Lord Thomas of Gresford

My Lords, I join in congratulating the noble and learned Lord, Lord Archer, on bringing forward this very important Bill. From these Benches I give it a cautious welcome. I have never ventured into the field of employment law without making a deep study of the collected works of the noble Lord, Lord Wedderburn. I do not profess to have his expertise but, just as the noble Lords, Lord McCarthy and Lord Phillimore, have declared interests, I have appeared for applicants and respondent local authorities and statutory bodies before industrial tribunals and employment appeal tribunals. Wearing another hat as chairman of a radio broadcasting company, I have summarily dismissed executive directors and found myself defending those decisions as a witness in industrial tribunal proceedings.

When I see the word "streamline" in the explanatory memorandum to this Bill my suspicions are aroused. The danger that always attends the reform of forensic procedures is that it may be inspired by a desire to make things easier for the tribunal to get through its workload. That was put succinctly by the noble Lord, Lord Gladwin, who said that it might be designed to improve the throughput figures. He also welcomed the Bill on the basis that it would reduce his workload, so he looked at it from both points of view. Reform must always be approached from the point of view of the user of the system. As the noble Lord, Lord Wedderburn, rightly emphasised, in these types of proceedings the applicant is always in a weaker position.

The question to be addressed is whether the proposals make matters speedier and easier for the applicant to obtain justice. With that in mind, I consider that these proposals can be improved, as many noble Lords have said. The noble and learned Lord, Lord Archer, himself commented that he was not wedded to every jot and tittle. That conjured up a rather interesting picture of this Bill.

Clause 2 proposes to introduce amendments to permit regulations to be passed so that a tribunal can determine cases without a hearing, or a full hearing. The first example of that is that the tribunal can act without a hearing on written evidence alone where both parties have given their consent. As a practitioner, it is hard for me to envisage where such a procedure would be appropriate if there was any dispute either as to fact or to law, possibly with calculations of compensation.

But one wonders what else the noble and learned Lord, Lord Archer, has in mind in putting forward that example. Contrary to the view that he expressed, the Employment Lawyers Association is concerned that consent to such a procedure should be informed consent so that an applicant does not waive his right to a full public hearing without being fully aware of the consequences of so doing. I would argue that consent must be conditional on the party concerned obtaining independent legal advice. I do not understand why in new subsection (3A) in Section 7 of the Employment Tribunals Act there should be a provision that the consent, once given, could not at any subsequent stage be withdrawn and a full hearing sought. I can envisage circumstances which might well arise where consent to a decision without a hearing having been given at one stage, that consent should be withdrawn.

There is also a provision in new subsection (3B)(b)for no hearing where it appears that the applicant is not entitled to the relief that he is claiming. Whether or not the applicant is entitled to the relief that he is claiming may well be the subject of considerable argument in a complex case. It may be the very issue. It is not enough for the tribunal to decide that the applicant is not entitled to the relief that he is claiming. The noble and learned Lord should narrow that provision to the first part of the subsection as drafted, as indeed he indicated when he introduced this provision. The drafting may need to be looked at.

The third matter to which I would refer where there is no hearing is where a superior court has decided to the contrary. If the tribunal were to dismiss a case because there was a decision, for example, of the Employment Appeal Tribunal which seemed to be against the applicant, that would deny the new applicant the opportunity ever to challenge the decision of the superior court. Normally, the applicant would go through the first stage, accept that he was bound by the decision of the superior court, ask for findings of fact and then take the matter forward in an attempt to challenge the issue at the highest possible court. Summary dismissal of his claim without a hearing in which such factual findings are not made might well be a cause of injustice.

In Clause 5 there is a reference to the appointment of legal officers—mysterious figures, as the noble Lord, Lord Wedderburn, described them. They have powers under Clause 5 to carry out anything and everything that a chairman is allowed to do. That is where I suspect that the motivation is to relieve the pressure on the chairmen of industrial tribunals and to take things away from them rather than looking at it from the applicant's point of view. It introduces the concept of the interlocutory judge—the master or district judge, with whom we are so familiar in ordinary civil proceedings. Once we do that we necessarily have to introduce a body of rules and appeals. That involves delay and expense for the applicant and for the respondents—that delay was so rightly deplored by the noble Lord, Lord Gladwin. With my experience of civil proceedings, it would give rise to the possibility of tactics on one side or another; delays on one side or another; putting pressure upon applicants; and unless the provision is much more clearly explained I would oppose the concept of the legal officer.

The nature of the appointment does not suggest a level of remuneration which would attract the most experienced and mature judicial minds to that task. A better approach to the problem of dealing with such matters might be case management, as set out in the Woolf Report—case management controlled by the chairman of the industrial tribunal. That is what he is paid for. The Government should not try to save money by not appointing enough industrial tribunal chairmen or by the appointment of a much more lowly "mysterious" judicial figure.

I come to Clause 7. The concept of an arbitration scheme is, on the face of it, attractive, but we do not know what is in the mind of the noble and learned Lord in putting that forward. The arbitrator is a decision maker, acting, as the noble Lord, Lord Wedderburn, pointed out, within a framework of legality. He has to apply the law as he understands it. He has to act within the legal procedures. His decision is subject to judicial review.

If competing cases are to be presented for a decision by a decision maker, it is far better that it be done in public; that there be orderly presentation of well prepared cases, conducted by qualified and experienced advocates, whether they be lawyers or experienced trade union officials. It should be done professionally. A row behind closed doors is not an effective substitute for a public hearing. As the noble Lord, Lord McCarthy, pointed out, secrecy is usually in the interest of the employer, who may well be happy to have the proceedings behind closed doors.

Of course the negotiated settlement of an unfair dismissal case under the auspices of ACAS and with the assistance of a skilled conciliation officer is an entirely different matter. There is existing legislation to make provision for just that. It is helpful for parties to come together with a skilled conciliator, and for them to have face-to-face discussions. That is different from going to an arbitrator who is being called upon to make a decision that is binding upon the parties.

I should like to be assured that the motivation behind the whole proposal for arbitration is not just to reduce the workload of the industrial tribunal or to avoid the appointment of additional tribunal members. It would be undesirable were an applicant to be persuaded to take his case into a private room, with an arbitrator appointed for the day, merely on the promise that his case would be heard more cheaply and more quickly. Justice: the arrival at a fair and correct decision in the particular case is much more important than speed and low cost. One of the most difficult positions for a legal practitioner to be in is to have a client who feels that the judge has interrupted him, has cut him short, that his evidence has been rushed, that his submissions have not been heard, and he has lost without having had his full and fair day in court. Speed and low cost are not necessarily the concomitants of justice.

The proposal in Clause 8 is to extend arbitration proceedings beyond unfair dismissal cases. Many noble Lords have expressed the TUC's view that it would be undesirable for such arbitration to take place in sex, race and disability discrimination cases because they raise complex questions of law. If there is to be arbitration along the lines in the Bill, I take issue with the TUC which has suggested that the use of lawyers in arbitration proceedings should be discouraged as far as possible. Some noble Lords have echoed those sentiments today.

It is fashionable to denigrate lawyers and their fees. Unlike the noble Lord, Lord Wedderburn, I do not speak carefully on this issue. Lawyers are not part of the entertainment industry. Their words float away in the air. They do not leave behind them any great artistic legacy, any body of literature, or any monument or building. Sometimes I wish that I had built the bridge on the M.6 along which I shall pass tonight as I drive to Scotland. If its design were the sole achievement of my life, I would be a happy man. Lawyers leave little behind. However, there is no comparable body of equal expertise and integrity charged with the responsibility of assisting people in trouble and of asserting their rights. If lawyers are no more than mechanics who keep the wheels of the various court and tribunal procedures turning, their skills have a vital effect on people's lives.

I was gratified to hear the noble Lord, Lord McCarthy, refer to the great advances—surprising as they appear to be to him—that lawyers have made in the employment field. For that reason, I entirely oppose the proposals set out in Clause 9 which would entitle anyone, qualified or not, who could acquire an insurance policy to set himself up as an independent adviser for the purpose of advising on compromise agreements. Considerable disquiet is already felt in the legal profession about the burgeoning ambulance chasing of so-called loss adjusters who advertise their services to injured persons to pursue and negotiate the settlement of their personal injury claims with insurance companies. In my view, these proposals would create a similar class of people who, since their whole raison d'être would be to broker deals between applicants and respondents, would undoubtedly lack the independence of solicitors or counsel, whose practices do not depend upon a narrow area of work.

Your Lordships should not be moved by stories of fat cat lawyers—a phrase regrettably used by the noble and learned Lord the Lord Chancellor—into creating a sub-profession of alley cats; people who do not have the necessary qualifications to give proper advice. If any amendments are to be made to this provision, the advisers who give advice to applicants should be specified either as lawyers or recognised trade union or professional representatives.

My noble friend Lord Lester of Herne Hill wrote to the noble and learned Lord, Lord Archer, spelling out two particular problems which he believes should be addressed. The noble Baroness, Lady Turner of Camden, has already underlined the point that the present procedures for dealing with equal pay claims for different work of equal value are tortuous and unworkable. I know that the noble Lord, Lord Lester, has practical experience of such problems and I have no doubt that he will take the opportunity to bring forward suitable amendments, provided that they are within the Long Title of the Bill.

Secondly, the noble Lord, Lord Lester, has pointed to the clogging up of lists by the applications in which the same point of principle arises. It may be that many of the 88,000 rising to 109,000 cases are caused by a system which demands that individuals file individual applications in particular, for example, in sex discrimination in pay cases. It ought to be possible to bring representative proceedings or the equivalent of class actions. Where, for example, there has been a ruling in the European Court on a material issue, a representative action would assist in clarifying its effect on UK law. This is an ideal opportunity to make a necessary procedural reform which ought greatly to relieve the pressure on the tribunals by reducing the mirror, repetitive cases into one representative case.

I know that the noble and learned Lord, Lord Archer, will take on board the comments that I have made. We on these Benches will endeavour to work with him on the practicality of my suggestions and we will endeavour to co-operate to the best of our ability to ensure that the Bill reaches the statute book.

12.44 p.m.

Lord Burnham

My Lords, although the right reverend Prelate the Bishop of Liverpool is no longer in his place, on behalf of these Benches I wish to second the good wishes expressed by the noble and learned Lord, Lord Archer of Sandwell. I do so with great pleasure.

I, too, congratulate the noble and learned Lord, Lord Archer, on bringing the Bill forward. We welcome it with more than the cautious welcome it has received from certain other noble Lords. The Bill would have made my life a good deal easier in the years when much of my time was spent in industrial relations, a great deal of it sitting and waiting around in bleak rooms at ACAS, even if not normally for unfair dismissal cases.

I am sorry that much of today's debate has been spent most professionally by noble Lords experienced in the trades union movement. I should have liked to have heard Members of my own Benches—perhaps it is my fault that they are not here—expressing their views from their experience in management. Furthermore, I should have liked to have heard the noble Lord, Lord Marsh, who was in the Chamber at the beginning of the debate, speaking from his great experience of the Newspaper Publishers Association.

The noble and learned Lord, Lord Archer, can regard himself as the godfather of the Bill. It has a distinguished parentage and its gestation period comfortably exceeds that of an elephant. The Green Paper which was its progenitor was published in 1994 and in November 1995 my right honourable friend the then President of the Board of the Trade announced the Conservative Government's intention to implement the proposals. The draft Bill was published a year ago last week. It seems to have undergone a few changes during that two-and-a-half years and I have no doubt that we shall look for some refinement before it leaves this House with our blessing.

There is undoubtedly a need for it or for something similar. It cannot be right that with between 20,000 to 25,000 cases a year going to arbitration, 50 per cent. took more than 26 weeks to be heard, even though that figure has been reduced. I say to the noble Lord, Lord Thomas of Gresford, that justice and speed are not incompatible. The noble Lord, Lord McCarthy, spoke of a possible inducement for employees. Undoubtedly, speed is such an inducement. An employee who has been dismissed needs to obtain new employment fast and will find it difficult to do so with the problems of his previous employment and the end thereof hanging over him. The issue of re-engagement or reinstatement, whatever one calls it, must remain in the Bill, but none of us has any doubt that it is not a practical solution in other than a small proportion of cases.

The enactment of the Bill must lead to shorter waiting times. Those who are responsible for the Bill are to be congratulated on that. I hope that tribunals will be tough in setting realistic deadlines. I suspect that there is never a real delay in getting to ACAS and if the case can be settled there, there is less cause for complaint. It is the log jam of cases waiting for the arbitration that causes the delay.

A change that has come about since the days of the White Paper—a change which I believe is to be regretted—is the dropping of the proposal that employees shall be barred from tribunals unless they can show that they have already tried to settle their dispute with their employers. Such a clause would have prevented too precipitate a charge in the arbitration maelstrom and reduced the necessary consideration of many hopeless cases.

When the Green Paper was published, the local government management board expressed concern that the changes which allowed the chairman of the tribunal to sit alone in the majority of cases would undermine the belief that tribunals were impartial and effective. Almost all noble Lords who have spoken have touched on that point.

The noble Baroness, Lady Turner, who is no longer in her place, made some very good points about the support which the "sidesman" would give to a chairman. But I do not believe that there is any justification for the argument that a chairman sitting alone would undermine the belief that the tribunals were impartial and effective. I do not believe that I am being too cynical in saying that that change to one man sitting alone—and I talk about men in the sense of members of the human race—will serve only to save time. In my experience, the two lay members—one an employer's nominee and one a trade union nominee—tend to cancel each other out and in any event, the settlement reached is based largely on the opinion of the professional chairman. There must be concern if the chairman is relatively inexperienced, but that would not seem to be a serious danger.

Some thought should be given to the question of whether widening the qualifications necessary for a chairman is contradictory to the requirement that he carry insurance. Somebody who is not a professional would find it difficult to obtain the necessary insurance. But I do not believe that would be a problem, although that matter must be considered in Committee.

The change to allow ACAS to prepare a scheme for arbitration in unfair dismissal cases is particularly to be applauded. In industrial disputes, my experience is that the ACAS conciliation officer seems generally to act in the capacity of a eunuch: he can offer professional advice but is unable to get the job done himself. Under the Bill he will be able either to recommend a settlement which the parties may accept without going to arbitration or failing that, will prepare and polish the case which is to be presented to the arbitrator.

It is foolish to think that cases which either employees or managements bring to the tribunal are put together with the same care and professionalism as speeches in your Lordships' House. Whether the case is to be presented in writing (and adjudicated upon), as it will now be able to be, or be taken to a tribunal by the appellant in person, the work of the ACAS conciliator must greatly shorten the time it all takes. Having prepared a scheme under Clause 7, it should be possible for ACAS to proceed smoothly. At a later stage it will be possible for the scheme to be extended to other classes of disputes. That would be extremely helpful for the process of industrial negotiations, even though the noble and learned Lord, Lord Archer, questioned that. But it would seem to be a satisfactory fallback.

Clause 13 is particularly welcome. This will penalise either party for not taking advantage of the internal or external procedures open to it. By failing to use any procedure set up for appeals against dismissal, an employee's compensatory award may be reduced; and if the employer prevents in any way the proper use of such procedure, the payment may be increased. The Bill contains a worrying amount of common sense.

I should like to comment on Clause 1 in that context whereby the name is changed from industrial tribunals to employment tribunals. It is ironic that that comes at a time when the charge of the Bill moves from the Department for Education and Employment to the Department of Trade and Industry. However, I accept that.

I note that when the Green Paper was published in 1994, there was a suggestion in the Guardian that employees and unions might be disadvantaged by the Bill (which was then unpublished). In a letter to the paper, Mr. John Monks, the General Secretary of the TUC, expressed himself content and was in particular unworried about the lack of a right of appeal from the judgment of a tribunal. He is probably correct in this because as he says that even if there is no right of appeal, either party could seek judicial review if it was felt the arbitrator had taken a decision which was legally wrong.

I am interested that Mr. Monks at that time confirmed that it is rare in unfair dismissal cases for new precedents to be set. As he says, the vast majority of claims are uncomplicated and routine. Arbitrators have heard it all before. I am sure all those who have been involved would accept that. So much is this so that it might in the future be possible to settle all claims by computer! However, I hope not.

I have expressed some form of a eulogy for the Bill which, as I say, we very much welcome. There are changes which are desirable and which will be discussed in Committee. One point that I should like to raise, which has not been raised by other noble Lords although the noble Lord, Lord Gladwin, took the matter from another angle—that is, using the procedure for small firms with a very small number of employees. Many firms have fewer than 10 employees, and many companies with employment problems are newly set up and, at the time of conflict, still relatively disorganised. It may well not be appropriate for those companies to enter the full panoply of the provisions of the Bill. Although I consider this to be an excellent procedure, I question whether it is appropriate for all organisations or whether there should be an easier, very simple procedure for small companies. In almost every case, they should be able to find a method of settling the dispute by a simple heart-to-heart with an adviser who is sympathetic to both parties.

I therefore ask the Minister to look at the Bill to see whether in Committee there is any way of making the procedure even simpler for the simple employer and the simple, if aggrieved, employee. We shall do the same. Employees in such businesses are unlikely to have the protection offered by the trade unions where larger numbers are employed and such employers may well not have a trade organisation at their back. It is still necessary for justice to be done and to be seen to be done but in these cases it is as important that the procedure should be simple and easy.

That seems to be the only major problem, but is an important one and should be addressed if the Bill is to achieve its aim of quick, easy and universal justice. Having said that, I would give it the full blessing from these Benches and wish it well on its way.

12.48 p.m.

Lord Haskel

My Lords, first I congratulate my noble and learned friend Lord Archer of Sandwell on bringing forward this Bill. It relates to a subject in which he has considerable expertise and knowledge, as he has demonstrated to us by his remarks this morning. Other noble Lords have spoken and they too have given us the benefit of their experience and knowledge. I thank those noble Lords who had the courtesy of informing me of their concerns beforehand. In particular, I should like to thank the noble Lord, Lord Burnham, for his welcome for the Bill.

The previous government started work on the Bill, as we have been told. It was the subject of two consultation procedures and, as my noble and learned friend Lord Archer told us, it has received support from a wide variety of sources, including employers organisations and the trade unions. We welcome this and look forward to further examples of social partners working together with government and producing practical and workable solutions.

We support the Bill. The Government welcome the initiative of my noble and learned friend in bringing the Bill forward. I am grateful for the opportunity to outline our reaction to the Bill, to welcome the changes made to it since it was published last year, and to say how the measures contained in it are to be taken forward. I shall try to answer some of the questions put to the Government. I know that my noble and learned friend will respond to the points made to him. However, as regards those points which fall in between, I am sure that we will deal with them by letter.

This is a Bill about the resolution of disputes and it aims to improve relations in the workplace. Where there are disputes, it is in the interests of all concerned that they should be resolved speedily. I should tell the noble Lord, Lord Thomas, that justice delayed is justice denied. The Bill will achieve the speed-up of justice in a number of ways. It will streamline certain tribunal procedures; for example, by allowing chairmen to determine certain issues without the need for a full hearing. It will also promote alternative forms of dispute resolution, such as arbitration, and encourage the use of internal appeals procedures.

Some noble Lords expressed concern about the effect of those changes on the users—that is, on the employees in particular. The changes will bring benefits to those who find themselves in the unfortunate position of being involved in a dispute: this will benefit both employers, especially small firms, and employees alike—the users of the system.

Central to dispute resolution is the role of ACAS. I should like to pay tribute to ACAS and the work that it carries out both in collective disputes and the less high profile, but equally important, role of attempting to settle individual employment rights disputes through conciliation. ACAS has an admirable track record in the area. Indeed, for employers and employees alike, the intervention of ACAS is often a welcome means of trying to resolve their differences. My noble and learned friend's Bill will give ACAS new responsibilities in this regard, both in terms of providing an arbitration scheme for unfair dismissal disputes and extending the conciliation officer's duties to include redundancy payments cases; for example, where employers have not paid their former employees what they are statutorily entitled to receive.

Certainly the proposal that ACAS should provide an arbitration scheme is a new development in the area of dispute resolution. Yet this will be another positive step towards helping people solve their disputes. The Bill does not contain the detail of the scheme. Instead, it outlines the general framework under which the scheme will operate. This will allow ACAS the flexibility to design a scheme which will be voluntary, informal, non-legalistic, private and binding on the parties. We look forward to receiving ACAS's proposals in due course.

My noble friends Lady Turner and Lord Wedderburn expressed concern on the matter; indeed, the noble Lord, Lord Phillimore, made some suggestions about the ACAS scheme. I am sure that those points will be taken on board. It occurred to me during today's debate that it might be helpful if the Government were to ask ACAS whether it could produce a memorandum illustrating what such a scheme might look like. I believe that that might help noble Lords in Committee.

Other noble Lords have asked who the arbitrators will be. ACAS will appoint arbitrators to the scheme, but they will not be ACAS employees or officers. The noble Lord, Lord Thomas, and other speakers wanted the results of the arbitration to be public because such decisions may have an important effect on the rights of employees. I would say that arbitration is probably not suitable for such important cases. Those cases will go to industrial tribunals which are held in public and, therefore, the public will be aware of tribunal decisions.

The ACAS scheme will cover unfair dismissal disputes. My noble and learned friend has already pointed out that the Bill contains a power for the Secretary of State to enable ACAS to prepare arbitration schemes in other jurisdictions. Noble Lords expressed concern about that provision. I should like to assure the House that the Government have no plans at present for additional schemes to be introduced.

The introduction of an arbitration scheme for unfair dismissal disputes is, as I have said, a new development. We have an open mind about it. If it is successful, that will be because parties involved in disputes have found it to be a useful means of resolving their disputes. If it is successful, we may take views as to whether arbitration might be a suitable method of resolving disputes in other areas.

My noble friends Lord Gladwin and Lady Turner expressed their concern about extending the area of arbitration. I should point out to them that, if we are to contemplate arbitration being available for other jurisdictions, we would ensure that the relevant representative organisations, such as employers and trade unions, were consulted. And, where appropriate—for example, if it were contemplated that arbitration might be suitable for disputes involving discrimination—we would consult the EOC, CRE and other bodies. My noble and learned friend has also signalled that he wishes to make an amendment to ensure that any orders made by the Secretary of State to approve new jurisdictions will be subject to the affirmative procedure. I can confirm that the Government will support such an amendment. I hope that that will reassure those noble Lords who were worried about that aspect of the matter.

The ACAS scheme will, of course, be an alternative to an industrial tribunal hearing, but it is not a replacement for the tribunals. The Government are fully committed to the important role that the industrial tribunals play in the industrial relations field. I should like to put on record our high regard for the work of such tribunals and, in particular, for the lay members, who often hold down full-time jobs. Indeed, the tribunals benefit from their experience.

There are proposals in this Bill to extend the circumstances in which a chairman will sit alone without lay members on certain technical cases. My noble friends Lord Gladwin and Lord Wedderburn and the noble Lord, Lord Phillimore, were worried about chairmen sitting alone. I should stress that this is not a step towards doing away with lay members altogether. The Government are committed to the use of lay members. Their practical experience of relations in the workplace is very valuable in the majority of tribunal cases. The proposals in the Bill will extend "sit alone" for full hearings to a number of more straightforward technical types of case in which the input of lay members may be less valuable. Other hearings will continue to be conducted by a three-person tribunal. Even in the sit-alone cases, the chairman will have the discretion to call for a tribunal of three if that is believed to be desirable.

The administrative support to the tribunals is provided by civil servants. They created a next steps agency—the Employment Tribunals Service—in April 1997. Despite substantial increases in their caseload, the tribunals have made substantial improvements in recent years in efficiency. My noble and learned friend Lord Archer gave us the figures and outlined the size of the problem regarding the caseload in the pipeline. Despite improvements in efficiency, there is always further room for improvement. To achieve that, my noble and learned friend's Bill aims to give the tribunals additional tools to streamline procedures which should be welcome to both employer and employee alike. No one wants to waste time unnecessarily at an industrial tribunal hearing if it can be avoided. The Bill will ensure that proceeding are dispatched efficiently and effectively in accordance with the interests of justice.

Some noble Lords were concerned about the internal procedures. The Bill will give the tribunal the discretion to consider all of the circumstances of a case and in particular the likelihood of success of an appeal. This will allow tribunals to take account of procedures which were forced upon employees and which were not even-handed. The tribunal will also take account, as it is required to do by the 1992 Act, of the ACAS code of practice. The code states that it is good practice to give details of disciplinary action in writing and at the same time the employee should be told of any right of appeal, how to make it and to whom.

My noble friend Lord McCarthy was concerned about dismissal procedures agreements. Clause 12 is about dismissal procedures agreements. It seems to me that it does exactly what the noble Lord is asking for. It makes the legislation more flexible. This Bill was prepared by the previous government and we are happy to support it. However, the previous government appeared to want to remove rights from employees in small firms. The noble Lord, Lord Burnham, raised that point. In our business manifesto Equipping Britain for the Future we stated that small firms were the bedrock of a successful enterprise economy and that we would give small firms the backing they deserve. We also stated that we believe in fairness at work. This Bill deals with both those aspects.

Lord Burnham

My Lords, I thank the noble Lord for giving way. I was in no way suggesting that small firms should not be subject to the same considerations. I refer to their ability to handle this procedure. If there were a simpler method, that would be more satisfactory.

Lord Haskel

My Lords, I am sure that the noble Lord's remarks will be taken into account by ACAS when preparing its scheme for arbitration and simple procedure. Fundamentally this Bill does not affect the rights of employees but it tries to improve the system for resolving disputes at work. We stand for trust, partnership and co-operation and not confrontation. My noble friend Lady Turner was concerned about flexibility and effects on family life. We believe in real flexibility in the workplace and in trying to make it easier to resolve disputes, not make it easier to sack people. This Bill makes a positive contribution to the resolution of disputes. I hope that it will gain the support that it deserves from your Lordships' House.

1.12 p.m.

Lord Archer of Sandwell

My Lords, it is customary at this stage in a debate to thank all noble Lords who have participated. That I do with complete sincerity. I am most grateful for the suggestions which have been made and for the general and generous support which the Bill has received. I am particularly reassured by the support it has received from the Front Benches on the part of the three noble Lords who have spoken from that position.

As my noble friend Lord Wedderburn said, I never claimed that the Bill is perfect. That is an easy renunciation on my part because I do not claim credit for drafting it. I therefore escape any of the blame which may arise.

I commend the Bill for the reasons which some of your Lordships have given. I refer in particular to the backlog spoken of by my noble friend Lord Wedderburn, who said that it arose largely from the proliferation of new rights which had been given for all the right reasons. One of the spin-offs, necessarily, is a burden on tribunals and, consequently, a backlog. My noble friend Lady Turner spoke of a period of destabilised employment giving rise to more claims. However, my noble friend Lord Gladwin emphasised that the purpose of the Bill is to get rid of the backlog, which must be in the interests of all who use industrial tribunals.

I have been warned of the wrath to come in Committee. I suspect that it will be wrath of a fairly gentle nature. I do not think that it helps if I try to anticipate all our Committee debates. I was asked about the arbitration proposals. My noble friend Lord McCarthy asked why there should be arbitration at all. That point was echoed by the noble Lord, Lord Thomas. Is it not better to do the whole thing in public? Surely, wherever possible, our system of justice should hold its proceedings in public so we can all see what is happening and we have a system of precedents which we can consult. Normally I would agree with that. But, as my noble friend Lord Haskel said, it is not proposed that industrial tribunals should be abolished and replaced totally by arbitration. That will be one other option in what the parties consider to be appropriate cases. The noble Lord, Lord Thomas, said that what was being suggested was intended only to divert cases from industrial tribunals. That is exactly the case. Why that should be regarded as a condemnation of the proposal escapes me for the moment. No doubt in our subsequent debates the argument will be developed.

It may be possible to frame arbitration in such a way that one eliminates those issues which—because we have printed forms—necessarily confront industrial tribunals. That may save a lot of time. I agree with the noble Lord, Lord Burnham, that speed in itself is not a disadvantage; it is a positive advantage for the parties. When one is asked—it was a question put by my noble friend Lord McCarthy—what is the inducement for employees to adopt this procedure, the obvious answer is speed.

The noble Lord, Lord Thomas, surprised me as he almost suggested that speed was to be deplored and that leisurely proceedings should be embraced for their own sake. He drew a picture of leisurely cross-examination at great length by fat cat lawyers or whoever, as though this was—

Lord Thomas of Gresford

My Lords, I never believe in lengthy cross-examination. I do not even believe in fat cat lawyers, if it comes to that. I do not think that the noble and learned Lord quite understood what I was trying to say. I am not suggesting that the proceedings should not be as speedy as possible, but that there should be full consideration. I am concerned that too much haste means that a person feels he does not have his day in court.

Lord Archer of Sandwell

My Lords, I say at once that I would never dream of suggesting that the noble Lord practises unduly lengthy cross-examination. I know from his reputation that that would be totally false. However, I gained the impression at one stage that he rather thought that leisurely proceedings were to be embraced for their own sake. Of course proceedings should take the time which is required for justice. However, if that can be done by arbitration in a suitable case I should have thought that might commend itself to employees.

Lord McCarthy

My Lords, I never said that there should not be arbitration, and I never said that there should not be speed. What I am trying to get the noble and learned Lord to say—and what I have tried to get the Government to say, without success—is whether some additional incentives will be included to improve arbitration so that we obtain more than speed; we obtain justice.

Lord Archer of Sandwell

My Lords my noble friend has anticipated what would have been my next sentence. I was going to pick up the point which he made; namely, the more incentives we can include, the better. I wholly support that idea. If the noble Lord has any proposals to make, as far as I am concerned at least, there will be an open ear. I gather that there will also be an open ear on the part of my noble friend Lord Haskel.

My noble friend Lord McCarthy then asked the converse question: what happens if people are pressured to adopt arbitration? That is a question which can be asked in relation to almost any option which one gives. What happens if undue pressure is put upon people to take one course rather than another? I am not sure that one can ever say that any course is pressure proof. However, if we can think of ways of resisting pressure that can lead only to improvements in the Bill.

I was asked by my noble friend Lord Wedderburn about a situation where there are divergent interpretations by arbitrators on the one hand and by tribunals on the other. As he said, part of the safeguard will be judicial review. I wholly accept that that is not a total safeguard. I am not sure what legislative provisions will avert that. However, as my noble friend said, it may be that all of us during our idle hours in the summer can reflect on the matter from time to time and return in the autumn with some ideas.

My noble friend Lord McCarthy asked who the arbitrators would be. To a great extent, my noble friend Lord Haskel answered that question. The Bill does not prepare a scheme; the scheme will be prepared by ACAS. If ACAS can prepare a draft scheme and give us some ideas, incorporating those suggested by the noble Lord, Lord Phillimore, that might greatly aid our debates in the autumn.

My noble friend Lord Gladwin raised the question of the words "or otherwise re-employed" in Clause 7. He was kind enough to warn me that he might raise the matter. My noble friend is right. The reason for those words is that they offer arbitrators greater flexibility. It may very well be that one of the attractions of arbitration is its greater flexibility. However, I take my noble friend's point that we must be careful not to change the substantive law and the well understood remedies by what is a side-wind. Again, I should be happy to continue our discussions in the autumn.

The noble Lord, Lord Thomas, raised the matter of determinations without a full hearing. He rather gave the impression that there cannot be many occasions when that is appropriate. I am not sure. I believe that there are such occasions and that, if asked, any experienced chairman of tribunals would agree. The noble Lord then said that if people were to be asked to consent to that, they should have accessible legal advice. I gave my reasons for not wanting to write that provision into the Bill in my introduction. I can see how desirable it would be if there were some other way of ensuring that; I hope that we may find ways of encouraging people to take such advice.

The noble Lord also said that he was not very happy with the provision that, once the advice had been given, it was not possible to withdraw it. That has to do with administration. If someone, having given consent and the whole proceedings having then gone ahead on that basis, says, "I've had second thoughts about this; I'm going to change my mind. We shall have to go right back to the beginning and start again", it would impose intolerable burdens on the administration. Again, if there are ways of compromising on that point, perhaps we can do so.

The noble Lord, Lord Phillimore, was unhappy with compromise agreements, particularly because, as matters stand, if we are not to have qualified lawyers giving the advice, it could be someone without any qualifications at all. The safeguard against that is that one has to have indemnity cover. Obtaining such cover, as the noble Lord, Lord Burnham, said, is not an easy matter in any case. In fact, one of the problems is that it will be almost impossible for many perfectly well qualified people to obtain it. Most of us could give examples of the kind of people who might give very good and sensible advice and who are not lawyers. Whether we can list them in the Bill is a rather more difficult question. Again, it is a matter for discussion in the autumn, but I am not sure.

I turn to in-house procedures. My noble friends Lord Wedderburn, Lady Turner and Lord Gladwin were troubled that in-house procedures mean that the last word rests with the employers. I would point out, as did my noble friend Lord Haskel, that tribunals already take account of ACAS guidance which states that employees should be brought into the consultations. I know that my noble friend Lord Wedderburn has his reservations about that. The matter should be discussed further. I see the dangers. However, I hope that he will understand what are the reasons for encouraging people not to go to tribunals if the matter can be resolved more easily at an early stage.

My noble friend Lord Wedderburn and the noble Lord, Lord Phillimore, asked about legal officers. I anticipate that they will probably be people who are barristers and solicitors of a certain seniority. The noble Lord, Lord Thomas, is right. The concept is that of an interlocutory judge. Almost by definition, an interlocutory judge will not necessarily have the qualifications and training of a more senior judge. So it is in a sense a way of saving on the time of chairmen. I should not have thought that the proposal is any the worse for that; in fact, that is one of the purposes of the Bill. Again, we shall hear more in due course as to who they will be.

A number of proposals came within what I tried to formulate in my introduction as matters that might be better left to other legislation. My noble friends Lord Wedderburn and Lord Gladwin spoke about the need for an improvement in the substantive law in this area. They are pushing at an open door so far as I am concerned. I am not sure, however, that this is the Bill under which that can be achieved. My noble friend Lord Gladwin mentioned in particular the two-year rule, and I could not agree more.

The noble Lord, Lord Burnham, suggested some kind of exemption for small firms. He may be pushing at a rather more closed door in my case in that respect. But our debates may have to be in relation to other legislation.

The noble Lord, Lord Thomas, mentioned that the noble Lord, Lord Lester, was kind enough to write to me about the two proposals mentioned by the noble Lord. Both are matters in relation to which the Government are presently involved in working groups. It may be more sensible to wait to see what those groups produce. Again, it is a matter for discussion later.

I am very grateful for the general welcome given to the Bill. I look forward to our further debates with great interest, and not a little apprehension. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.