Employment Relations Bill

HL Deb 07 June 1999 vol 601 cc1144-218

3.8 p.m.

Lord Simon of Highbury

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Simon of Highbury.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 agreed to.

Schedule 1 [Collective bargaining: recognition]:

Lord McCarthy moved Amendment No. 1:

Page 17, line 26, after ("holidays;") insert ("and (b) any of the other matters mentioned in section 178(2), which the CAC specifies as within, or as relevant to, the method by which the parties are to conduct collective bargaining;")

The noble Lord said: The objective of the amendment is to widen the scope for recognition, particularly in terms of what the declarations of the CAC can contain. At present the Bill provides that a declaration of the CAC can cover pay. Would the Committee like me to wait?

Lord Clinton-Davis

Yes.

Baroness Farrington of Ribbleton

Noble Lords leaving the Chamber should do so without conversation in order that business may proceed.

Lord McCarthy

The object of the amendment is to widen the scope for recognition of declarations from the Central Arbitration Committee. As the Bill now stands, a declaration of the CAC in effect recommending recognition to a union can only cover three subjects—pay, hours and holidays; nothing more, nothing less.

The object of the amendment is to widen it so that the CAC is able at its discretion, not automatically and not in every case, to add to the subjects recognised, or take away, if it wishes, everything which is contained in the list of subjects in Section 178(2) of the consolidation Act of 1992; namely the definition of collective bargaining.

If that is collective bargaining and that is also very roughly the scope of a trade dispute, we are asking why all these subjects which can be negotiated voluntarily or which can form the basis of industrial action within the normal scope of what we regard as collective bargaining cannot be extended and included, at the discretion of the CAC, within the ambit of a CAC declaration. That is the object.

In Section 178(2) of the consolidation Act, "collective bargaining" is defined in such a way that it includes terms and conditions of employment, physical conditions, the engagement and dismissal of workers, the allocation of work, discipline, facilities for shop stewards or full-time officials, the machinery of negotiation and consultation. We are asking why, since that is all part of collective bargaining, it has been excluded from the ambit of the CAC when awarding a positive declaration in favour of collective bargaining.

One can put forward a range of arguments in favour of this proposition. The first thing that one might do is to go back to previous legislation of this kind. When the Conservative government in 1971 introduced the Industrial Relations Act, the body charged with the duty of making recommendations could include all these matters. Alternatively, if we look, for example, at the 1975 Employment Protection Act, when ACAS had the job, it could include all these kinds of subject. It was not necessary for it to do it every time and it did not do it every time. It chose the subjects which it thought were relevant to the workers concerned in the bargaining unit concerned and said "You will recognise all these subjects on this occasion".

Indeed, when this Bill was debated in the other place, these matters were included. This definition of Section 178(2) of the Consolidation Act 1992 was, in effect, the area and ambit of the discretionary work of the CAC. It was not until an amendment was moved in the Commons by the Government that this restrictive definition involving pay, hours and holidays was introduced. Even this Government and previous governments that have been involved in this kind of activity have seen the point of trying to make the widest possible discretion available to an organisation like the CAC.

Another argument might be that to give discretion of this kind very considerably helps the CAC in deciding what it can do for the union concerned. Sometimes the union has advanced a potential bargaining unit in respect of which it is not appropriate for the union to be recognised for the purposes of pay. This is because pay may be determined on a plant basis, a company basis or a national basis, and what the union is asking for is recognition for pay purposes within a particular group of workers. Similarly, with hours and holidays the employer may be able to go along to the CAC and say "We cannot be forced to recognise a union for these purposes with this small bargaining unit. It is not appropriate for pay, hours and holidays to be collectively bargained for at this level". However, it might be appropriate for engagement and dismissal to be negotiated at this level and it might be appropriate for grievance procedures and discipline to be recognised at this level. Therefore, I would argue that to introduce a firm, precise, limited link of this kind will make it much more difficult for a union to gain recognition.

Indeed, one of the questions that I would like to ask the Minister, because it is not clear from the face of the Bill, is whether it is seriously intended that if you gain recognition from the CAC you are entitled to negotiate all aspects of pay, even those which the employer can legitimately argue are not settled at this level. Surely not, and surely not all aspects of working hours. These are three rather odd subjects to be inserted in this restrictive way. They have never been inserted previously; they have not been inserted in parallel jurisdictions. What we are saying is that it would be much better if the Government were prepared to take a much more flexible approach in order to help the CAC. I ask them to accept the amendment.

Finally, I would also like to ask precisely where this limited list of subjects comes from. I have been told that it was in the election literature. It is true that it was in the election literature, but that is not necessarily a justification. It was not in the election manifesto. It was in the pre-election literature. It has never really been defended and it has never really been explained. Therefore, if the Government decide that they cannot accept our amendment for the first time this afternoon, perhaps they will explain to us why they have what appears on the face of the Bill. I beg to move.

3.15 p.m.

Lord McIntosh of Haringey

My noble friend ended his remarks by asking where the phrase "pay, hours and holidays" came from. He went back in time a little, prior to the election. However, I should remind him that the Fairness at Work White Paper said (in Annex 1, paragraph (viii) on page 42) that collective bargaining would, cover pay, hours and holidays as a minimum". That is exactly what the Bill does. When my noble friend describes this as restrictive, I believe he underestimates the opportunities which exist for other matters to be covered in collective bargaining as a result of agreement between employers and employees.

My noble friend also made a point relating to the CAC declaration. He said that he wants Amendment No. 1 to reflect the emphasis which he places on the CAC declaration. Our point is that once recognition has been gained, either through a CAC declaration or because the employer has agreed to a statutory request, the employer and the union or unions try to reach agreement on how to give effect to recognition. In other words, they try to reach a procedure agreement which covers the scope of their bargaining, as well as how they will conduct it. If they agree between themselves, they are free to choose whatever subject matter they like. It is not at all restrictive. That is the effect of paragraph 2(7) of the schedule.

However, if in the last resort the CAC has to impose a bargaining procedure under paragraph 2(7) of Schedule 1 because the employer and the union are unable to agree how they will bargain, that procedure will, by virtue of paragraph 2(6), apply only to pay, hours and holidays. The imposition of the procedure will also trigger the requirement to consult on training under Clause 5, to which we will come later in the Bill.

The logic of this structure is that it is preferable for both sides to reach a voluntary agreement. Such an agreement can cover matters such as facilities for union officials, disciplinary procedures, steps to avoid industrial action and other detailed arrangements which are in the interests of unions and employers. My noble friend quoted the previous government's legislation and used the phrase "could include". That is exactly what can happen in the terms of Schedule 1. Once the statutory procedure has been imposed—the Government will be disappointed if that is not a rare occurrence—the parties can by consent vary it. Therefore, they have every opportunity and incentive to reach an agreement which suits them better than the rigid, fall-back model. If were to go back to the full wording of the paragraph in the Consolidation Act referred to in Amendment No. 1, we would have a rigid, fully detailed fall-back rather than the limited fall-back which we have here.

These amendments are intended to give the CAC discretion to include in an imposed bargaining procedure any matters which it thought appropriate. I have been talking, as did my noble friend, about Amendment No. 1. I think that Amendment No. 72 is intended to achieve much the same in respect of voluntary recognition. However, as I think noble Lords who took part in the Second Reading debate will know, the Government intend to table significant amendments to Part II which will not be compatible with Amendment No. 72.

I think it is apparent from the way I have described the structure of this aspect of the schedule that the Government cannot agree to these amendments: first, because we believe that the imposed procedure should be a simple, basic formula, a bare minimum which most employers and unions will find inadequate and which they will replace with something more suited to their wishes and circumstances; and, secondly, because it would be wrong to give the CAC such a wide-ranging discretion with no indication as to how it is to be used. I was a little surprised to hear my noble friend say that this would help the CAC. I think that it would be contrary to the kind of brief that we have been seeking to give the CAC. We have tried throughout the schedule to give the CAC clear guidance, even on such difficult issues as determining the appropriate bargaining unit, so that it does not find itself having to make up policy as ACAS did in the 1970s. That led to endless judicial review, something we have sought to avoid by including in the schedule clear criteria for decisions even at the expense of the schedule being incredibly long and complicated.

With the Government's proposed structure, employers and unions know exactly what the alternative is to a negotiated agreement on the scope of collective bargaining. But if the amendments were accepted, that would not be the case. It could undermine the incentive to reach an agreement if, for example, a union thought it might be able to persuade the CAC to include additional matters in the imposed procedure. That would not be a good idea. I hope the Committee will agree that we are seeking to do everything we can to encourage negotiated agreements.

I turn to Amendment No. 73 in the same group. As I said on Amendment No. 72. the Government will be bringing forward substantial amendments to Part II of Schedule 1, as Michael Wills said during Committee in another place. We intend to narrow the scope of Part II by excluding entirely voluntary recognition reached before the entry into force of the Bill or without a formal request, citing the schedule, from the union to the employer. So Part II will apply only to what might be called "semi voluntary" recognition, where the union has made a formal request and, if necessary, the CAC has determined the appropriate bargaining unit, but the employer has agreed to recognise the union without a ballot and without a CAC declaration of recognition. So Part II will be concerned with what happens if the parties are unable to reach agreement on a method for collective bargaining.

Lord Wedderburn of Charlton

I am grateful to my noble friend for giving way. What he has just said is of great importance to those of us who have put down amendments to Part II or have points of argument or presentation which rest on matters in Part II. What my noble friend said gives us a certain clue. But it is difficult for those of us who thought that Part II was about voluntary agreements if they turn into something rather more compulsory. Before this afternoon goes very much further, will my noble friend be prepared to make further points so as to allow us not to move amendments which have become irrelevant in view of the alteration of Part II of the schedule?

Lord McIntosh of Haringey

I understand the difficulty in which I have placed my noble friend and indeed all of my noble friends. I have been saying something which has not yet been set out precisely in the form of amendments. I have used the phrase "semi voluntary recognition" and I have undermined, if one likes, a substantial element of Part II, which I know is a matter of concern to my noble friend. The answer is, yes, I shall try. When we come to the first amendments which affect Part II, I shall try to say something a little more general about the way in which we see Part II, although it will not be very much more than I have been able to say on the amendments before us.

Lord McCarthy

Will the noble Lord be moving his new amendments during the Committee stage of our proceedings, in which case they will be manuscript amendments?

Lord McIntosh of Haringey

No, I shall not be moving them. They will have to come forward before the Report stage. We are still working on the detail of some of the amendments. As I think is apparent to anyone who is not as expert as my noble friends are in these matters, this is an incredibly complicated issue. The relationship between statutory recognition and voluntary agreements is, although of great importance in employment relations, very difficult to put into legislation. I am glad to see that my noble friend Lord Wedderburn is nodding in agreement.

Lord McCarthy

I am sorry to intervene again but the position is not clear to me. The noble Lord suggests that we should spend some of our time this afternoon passing Part II when we know it will not survive. It is a Part II that is nothing like the Part II that will come before us when we reach Report. That is a very strange procedure.

Lord McIntosh of Haringey

I shall try to make it possible for us to spend as little time as possible on Part II by being as explicit as I can about the objective of our amendments to Part II. What I cannot do is put the amendments down—and certainly not in manuscript form this afternoon. I do not think that the Committee would appreciate that.

Perhaps I may return to Amendment No. 73. The Government believe that in this case the law should be exactly the same as where the parties are unable to agree a method following a declaration of recognition; that is, the CAC should impose a legally binding agreement which the parties may then vary or replace, if they wish, by written agreement between them. The amendment would introduce a difference between the procedures in Part I and Part II. In Part II the scope of the legally binding method would be pay, hours and holidays only if the parties had not agreed on some other scope. I have to say that I think it unlikely that the parties will agree on the scope of bargaining but not on the other mechanics. It seems to me that it is more likely to be the other way round. But leaving that aside, the amendment appears to misunderstand the logic of the imposed method.

We said in the White Paper that recognition would at a minimum cover pay, hours and holidays. If the parties are unable to agree the scope and mechanics of bargaining, then the CAC will impose a method which will cover pay, hours and holidays. If that scope does not suit the parties—for example, if they have agreed some different scope—then they can immediately, if they wish, vary the imposed method provided that they agree the changes and make them in writing. So the Bill as drafted allows the parties to achieve the same effect as this amendment, though of course by a different route. On that basis, I hope that my noble friend will feel able to withdraw the amendment.

Lord Campbell of Alloway

Leaving aside for a moment the valid points made on Part II by the noble Lord, Lord Wedderburn—I gather that we shall come to that at a later stage—I wish to associate myself with the reasoning of the noble Lord, Lord McIntosh. Since I first arrived in the House I seem to have spent the whole of my time on trade union affairs and I have read the Second Reading report of the debate, although I was not present for it. In those days recognition was a distant prospect, and it has now come to life in a reasoned form, providing a fair balance between the employer and the employed.

I cannot see why the amendment is necessary in order to induce a better atmosphere for industrial relations. I listened with respect to the argument of the noble Lord, but he did not point to any specific way in which the industrial climate would be improved. For that reason, and for the reason given by the noble Lord, Lord McIntosh, I support the Government's rejection of the amendment.

3.30 p.m.

Lord Monkswell

I did not speak in support of my noble friend's amendment when he moved it, partly because I thought he moved it very eloquently but also because I was interested to hear the Government's response. Having listened carefully to their arguments, however, I think that the objective of good industrial relations will not be achieved by the present wording of the Bill but by the amendment.

If an employer is innately antagonistic to trade unions and trade union activity, probably because he has little experience of the way trade unions work, he will use all the mechanisms available to ensure that there is minimal involvement with trade unions and that any involvement is as fragmented as possible, thereby seeking to gain an apparent advantage over the trade unions.

The Bill states that the employer will be able to engage in three different mechanisms: the statutory recognition contained in Part I of Schedule 1, the training requirements of Clause 5 and the implementation of health and safety at work regulations. If the employer is minded, he can operate on a divide and rule basis, with three separate structures within the company negotiating those three different elements. The difficulty is that while everybody may think it is sensible to have one negotiating structure, through the trade unions, to deal with all aspects of relationships at work, the company will have an incentive not to come to agreement with the unions and to resist at every stage because it knows that the fall-back position is minimal.

I implore the Government to think carefully about the practical implications for commercial undertakings.

Baroness O'Cathain

The noble Lord, Lord Monkswell, has described industrial relations that pertained 25 years ago. People collaborate these days and there are no battlefields in organisations. The amendment will not improve industrial relations. I agree with the noble Lord, Lord McIntosh, and my noble friend that Clause 7 gives flexibility in regard to collective bargaining. Each company will want to negotiate with the unions in different areas. There should be an adult, co-operative relationship, rather than a confrontational relationship. I hope that the Government will persist in rejecting the amendment.

Lord McIntosh of Haringey

The noble Lord, Lord Monkswell, appears to think that the Bill contradicts the Fairness at Work White Paper which was generally well received both by the CBI and the TUC. I have already quoted page 42 of that paper. The purpose of a statutory minimum for collective bargaining is to encourage negotiation and agreement and to discourage the statutory procedures as far as possible. The statutory procedures are in place, and any employer who denies recognition to his employees on the basis that my noble friend seems to think survives in this legislation will be very unpleasantly surprised because there are 40 pages in Schedule 1 which are designed to ensure that that does not happen. However, that does not remove our determination that as far as possible there will be agreement and that that agreement will be a common agreement on what should constitute collective bargaining.

Lord McCarthy

I would be most willing to withdraw the amendment if I could secure the Minister's agreement to what I think he said and what I think Hansard will say he said: that in Fairness at Work pay, hours and holidays are a minimum. In the Bill they are stated to be a maximum.

Would the Government support an amendment on Report which proposed that the CAC would be free to add additional subjects if it so desired to the minimum, as spelt out in Fairness at Work?

Lord McIntosh of Haringey

I cannot allow that to pass. I said that they are minimum, and by agreement between employers and employees all the other subjects that may form part of collective bargaining may be added. We would not agree that the CAC should add others, because it is those concerned in the individual workplace who should be responsible for determining the scope of collective bargaining.

Lord McCarthy

It is a maximum so far as the CAC is concerned, which is what the Bill is concerned with, is it not?

Lord McIntosh of Haringey

That is not the CAC's function; it is there to institute procedures where it is not possible to achieve agreement in any other way. It is not the job of the CAC to determine the negotiating structure within any individual workplace.

Baroness Miller of Hendon

We firmly believe that when bargaining is imposed on parties, as distinct from what they mutually agree, it must be minimal. I agree with the noble Lord, Lord McIntosh.

Lord McCarthy

The CAC is the only body that has authority to institute negotiation. When there is no agreement, it is a maximum. The point I am making is that this is a change of policy. What is stated in the Bill is not what was contained in Fairness at Work, where it was stated to be a minimum, and if it had been, it would not have been necessary for Mr. Willis in Committee and the other place to move the amendment which would change it from a minimum to a maximum. It would be much more plausible and sensible if the Bill were an expression of Fairness at Work.

The spread of voluntary recognition cannot be promoted—I do not believe that that is what the Opposition want—by limiting the scope of statutory recognition. Because of the way in which the scope has been limited, with a concentration on wages, hours and holidays, it will often not be plausible, reasonable or sensible for the CAC to recommend any recognition at all.

Also, in Amendment No. 2 the Government propose a choice. I call it a pontoon game. The choice in future will be that if you receive a small amount of recognition outside the three statutory subjects, you will have to take a chance. You will have to "tick or twist", because you cannot go before the CAC and keep what you have. You will have to give it up and hope that you will get more. That kind of chopping and changing on the subject matter of recognition is not conducive to extending the scope of recognition.

Lord McIntosh of Haringey

I really cannot accept that. My noble friend suggests that there has been some change between the White Paper and this Bill. He suggests that we are now imposing a maximum rather than a minimum, and that the difference is in the role of the CAC. That is not the case. Paragraph 4.18 on page 25 of the White Paper states that the CAC will decide. Regarding, the procedure to be followed for negotiations between an employer and a trade union", it goes on immediately to state, Recognition will cover pay, hours and holidays". There is no change between the Bill and the White Paper.

Lord McCarthy

In that case I cannot understand why the government representative in Committee in another place thought it necessary to move the amendment that he did. He changed the face of the Bill, giving as his reason that the Bill as drafted did not represent present government policy.

The Government have carefully, intelligently and shrewdly sought to fashion a very different system of recognition to the system we had in the previous period. I am not attempting to bring back that system, merely the small parts of it that worked. The noble Lord knows as well as I do that there are many reasons why the previous statutory recognition procedure did not work. It was mainly because access could not be obtained; it could be decided to whom the procedure applied. Employers had ways of prevaricating. But it was never because the CAC had discretion in deciding the subject matter of recognition. Nevertheless, at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 2:

Page 17, line 29, at end insert— ("(8) The meaning of collective bargaining given by section 178(1) shall not apply (9) Sub-paragraphs (6) to (8) do not apply in construing paragraph 30.")

The noble Lord said: I shall speak also to Amendments Nos. 60 and 61. We have already discussed the issue of pay, hours and holidays. Clearly, we have not achieved consensus. We shall have to attempt to do so. There are two related changes to the Government's position which need to be made to Part I of the schedule. The first is to ensure the "collective bargaining" covers only pay, hours and holidays rather than the whole range of subjects in Section 178 of the consolidation Act. That was the issue debated in relation to Amendment No. 1. That is the definition proposed in Fairness at Work, and it is already part of the Bill. It is also necessary to disapply expressly the definition in the 1992 Act. That is the purpose of the new paragraph (8) which Amendment No. 2 would insert in paragraph 2.

The reason for imposing a collective bargaining method over a restricted range of subjects is to give the union and employer incentives to negotiate as to what other matters should be bargained about. That is why it is not a maximum. Pay, hours and holidays are intended to be a fair minimum set of subjects for collective bargaining which the employer and the union will often wish to extend.

The second change concerns existing recognition agreements. The Government's policy is that existing bargaining arrangements should not be disrupted by the procedures in this schedule and that the existence of any bargaining arrangements should rule out an application for recognition under Part I. Paragraph 30 gives effect to that.

However, not all collective bargaining deals with pay, hours and holidays. For example, as I said earlier, I ran a company which recognised an independent union for the purpose of representing workers in disciplinary claims and the like. It was also extremely helpful in the advice that it gave to the company on, for example, forming or improving a pension fund. We wish to ensure that no existing bargaining arrangements as defined by the 1992 consolidation Act are disrupted. The new paragraph (9), which Amendment No. 2 would insert in paragraph 2, ensures the definition of collective bargaining for the purposes of paragraph 30.

Amendment No. 2 therefore applies the appropriate definitions of collective bargaining to the schedule. Amendments Nos. 60 and 61 make changes to paragraph 30 to ensure that an existing collective agreement will not be disrupted by an application for recognition under Part I. Amendment No. 60 ensures that a collective agreement by which two or more unions are jointly recognised cannot be superseded by recognition under Part I. It also makes clear that paragraph 30 extends to collective agreements within the meaning of Section 178(1) of the Act. Amendment No. 61 ensures that a collective agreement which has ceased following a change in the bargaining unit under Part III does not bar any future applications for recognition in the new unit. Both these changes are relatively minor and do not affect the policy underlying paragraph 30. I beg to move.

3.45 p.m.

Lord McCarthy

These amendments are amazing. This provision was not mentioned in any manifesto. What we are being told is that if a union has a recognition agreement but it does not cover the three subjects of statutory recognition, if a move is made to obtain statutory recognition, to quote Amendment No. 61: An agreement for or declaration of recognition which is the subject of a declaration under paragraph 64(3) must for the purposes of sub-paragraph (1) be treated as ceasing to have any effect on the making of the declaration under paragraph 64(3)". In other words, the union has to choose. Is it to go forward and hope that it obtains recognition on pay, conditions and hours, and give up what it already has in the hope of obtaining something else? Or is the employer going to say, "If you are going for recognition in the big league of pay and hours and matters of that kind, I will offer you agreements handling, but of course you cannot have both"? This is a very strange and queer amendment. If the Bill's main objective was to discourage recognition, I could understand this provision. But in a Bill whose intention is to encourage recognition I do not understand why we are playing pontoon.

Lord McIntosh of Haringey

I am sorry to have to disagree again with my noble friend—I do not like the position in which I find myself—but he misunderstands Amendments Nos. 60 and 61. Paragraph 30 is concerned with specific cases which must be dealt with separately under Schedule 1. Amendment No. 60 is concerned with the collective agreement by which two or more unions are jointly recognised. Amendment No. 61 ensures that a collective agreement that has ceased following a change in the bargaining unit does not bar any future applications for recognition. These provisions simply complete the policy that is already in the Bill in these two specific cases: more than one union, and an agreement ceases as a change in the bargaining unit. It does not cause any agreement to cease. It simply recognises the different circumstances that already occur in the Bill, and in particular in paragraph 30.

Lord Campbell of Alloway

I support the amendment. I me rely seek to find out exactly what it does. Is it related to the reference in paragraph (7): If the parties at any time agree matters as the subject as the subject of collective bargaining"? Is the object to extend the definition of Section 178(2) to include such other matters as the parties may wish to agree?

Lord McIntosh of Haringey

If the noble Lord will look at paragraph (6) the definition there says that, References to collective bargaining are to negotiations relating to pay, hours and holidays". Paragraph (7) states, If the parties … agree matters as the subject of collective bargaining, references to collective bargaining are to negotiations relating to the agreed matters". The new paragraph (8) says, The meaning of collective bargaining"— that is the broader agreement— in Section 178(1) shall not apply". That is because we have already covered the minimum and all the optional extras, if I may put it that way.

Baroness Miller of Hendon

I did not rise to my feet before the noble Lord, Lord Wedderburn, replied because we had no exception to anything which the noble Lord, Lord McIntosh, had said on the matter. It is an extraordinarily long list of amendments. I shall only rise to my feet when I have something to say other than at this stage to say that since my noble friend asked for clarification, I ask the noble Lord, Lord Wedderburn, to clarify what he meant by "them"? I presume he meant Members of the Committee opposite. The noble Lord does not have to comment; I merely wanted to say that.

Lord Wedderburn of Charlton

I have not spoken yet.

Baroness Miller of Hendon

I beg the noble Lord's pardon. I meant the noble Lord, Lord McCarthy.

On Question, amendment agreed to.

Lord Wedderburn of Charlton moved Amendment No. 3:

Page 17, line 29, at end insert— ("(8) References to a breach of anything made legally binding on a party by any provision of this Part refer to liability for breach of contract (with such limitations as to remedies as are set out) and no other breach of duty or liability is thereby created, Whether in the law of tort or otherwise.")

The noble Lord said: In moving this amendment I shall speak also to Amendment No. 58. As in the case of a number of amendments in the name of myself, my noble friend Lady Turner and the noble Lord, Lord McCarthy—just to make clear who is who—this is an amendment which some have described as "legalistic". Of course it is legalistic in the sense that we are making law. It is a legal point. in substance. It is very much along the lines of what I take to be the Government's policy in introducing a schedule in this Bill making recognition of collective bargaining in certain circumstances obligatory. That is why I understood that the only remedy offered to one of the bargaining partners for a breach of a legally binding contract, method or agreement—all three are in the schedule—is a very limited one based on the old equitable remedy of specific performance. There must be more to be said about the schedule on that matter since plainly the courts will look for guidance to the legislature on how that old remedy is to be used for new circumstances. That must come later.

Amendments Nos. 3 and 58 will need extension if they are taken on board by the Government since at the moment they apply only to Part I of the schedule. It is easier to do it this way. Both amendments suggest that further limitations on litigation may be needed in the light of judicial developments, of rather uncertain ambit, in the civil law generally and in particular as regards the law of tort. As the Bill stands those developments have possible ramifications as regards recognition and collective bargaining where the CAC specifies that that should occur.

There are moments in the gradual development of labour law at court level which must be looked at carefully in new legislation. A classic moment of this kind occurred when Sir Charles Dilke, on 3rd August 1906, saw that the trade disputes Bill of that year did not cover the liability which had come about in the courts for inducing a breach of employment contracts after the case of Lumley v. Gye of 1853. He persuaded the House to adopt it. He did not need to make a formal speech. As Lord Robert Cecil said, he was much too old a parliamentary hand to do that. Dilke pretty well persuaded the House, except for the last-ditchers like Lord Robert Cecil, to adopt a measure of protection in trade disputes without which the entire structure would have fallen like a pack of cards.

This is a similar situation although, unhappily, it lacks Sir Charles Dilke to deal with it. The uncertain extensions in the liability in tort began in the 1960s when a breach of contract came to be regarded as an unlawful means or an unlawful act. Therefore, if one breaks a contract with X knowing that damage is going to occur to Y. that may be actionable by Y. That is a very important proposition because the schedule of the Bill says that only one of the two bargaining partners can bring the action for specific performance of the agreement put in place by the CAC. If that were not so and a third party could sue, what would be the point of limiting the remedy for the first two parties?

I should substantiate the point. Gradually the view that a breach of contract, inducing it or using a breach of contract of any kind in order to establish liability to a third party—or even one of the two parties if it is induced by someone else—is now pretty clear. There are doubts about its precise formulation. I have to establish, so that the record is clear, that that point is established with a review of the authorities by Lord Justice Stuart-Smith and Dame Elizabeth Butler-Sloss in Associated British Ports v. The Transport and General Workers Union in 1989. In that case Lord Justice Butler-Sloss said that the case of Torquay Hotel Co. Ltd. v. Cousins, 1969, established that a breach of contract which had effectively no remedies left after the operation of a force majeure clause, even though the other party could not sue for damages, had no injunction or similar remedy, was a breach of contract and therefore unlawful. As Lord Denning said on a number of occasions, to make use of it was to use an unlawful means.

I shall cite what Lord Justice Stuart-Smith said in what is sometimes called the "Dock Strike" case, which was Associated British Ports v. The Transport and General Workers Union. He said that in Torquay Hotel Co. Ltd. v. Cousins the remedy was not available in damages since force majeure was pleaded, but the existence of a breach of contract which might be repudiated was recognised.

I detect already a note in the debate that "This will not happen often" or "This is not what it is about". The legal provision is nearly always about the pathological situation and not about the common and normal situation. If one employer and one trade union gains recognition through the CAC one wants to know what happens if the employer or the union actually breaks the CAC-imposed agreement. We know that between the two parties that is a remedy of specific performance, although there may be difficulty in carrying it out. The third party may say, "When you took action in breach of the agreement you knew that it would damage me". For instance, a subsidiary of the employer would always be a standing object for such status. Perhaps an associated body of either party says, "You knew that damage would flow from a possible breach and therefore we can sue you. What is more, we can sue you not merely for specific performance"—that would be absurd; there would be no specific performance rights here because it would be a third party—"but for damages, an injunction and any other remedy that our lawyers can think of on the day".

Unless a barrier to the range of legal remedies in Schedule 1 is put in place there is a risk of many situations arising in which there is quite unnecessary litigation. At any rate, if there is to be litigation we should know what we are doing. I suggest that in principle a limit should be placed on legal action of this kind. Where the parties can sue each other for whatever is a limited liability or right third parties should not be allowed to extend legal proceedings on a different base of the law of tort just because a breach of contract is regarded as unlawful in the law generally.

I put the point in a final and rather important way. In the course of the Bill we are learning to live with principles that are the opposite of those which have applied since 1969, or possibly before that in the literature. For a very long time the presumption has been that collective agreements are not legally binding at the collective level, to say nothing about their incorporation into individual employment contracts, because that is the way that they are made legally enforceable in Britain. But at the collective level for many decades they have not been regarded as legally enforceable agreements. That presumption is abandoned in the schedule. (I thought that the noble Baroness, Lady Miller of Hendon, wanted to interject. I am glad to see that she shakes her head vigorously.)

The presumption laid down in Ford Motor Company v. AUEW in 1969 that collective agreements are not enforceable between the parties is to be set aside in the relatively limited but nevertheless real territory of Schedule 1. If we change the basic legal rule we have an obligation to see how far we are going and to say, "Not that far because it will do great damage to the social fabric of collective bargaining between employers and trade unions".

If we do not impose a limitation it will be on our heads and not the responsibility of the courts, whom I have been known to criticise, because the fact that the principle goes beyond the normal rules of the law of tort will be there for all to see. It will be our fault if we do not stop at this point and say that we do not want a lot of litigation, especially by third parties, because it will ruin the entire scheme and that we may as well scrap Schedule I and go back to collective bargaining that is nothing more than voluntary and includes all the legal obligations that we can think of. I beg to move.

4 p.m.

Lord McIntosh of Haringey

I am sure that my noble friend and I are in agreement about the importance of ensuring that any procedure which is enforced in the way set out in the schedule should be as rare as possible. I am also sure that my noble friend and I are at one in wishing to ensure that any proposed enforcement procedure in this Bill should not be broadened by the courts in a way that is not intended. I hope I am right in my understanding that that is what lies behind my noble friend's amendment.

My noble friend raises historical parallels which I am certainly not qualified to match or cap. He does himself an injustice if he thinks that he is not the Sir Charles Dilke of the end of the 20th century. I believe that over many years he has enjoyed a reputation for finding defects in trade union and employment relations legislation and ensuring that, given the political will, they are put right. But I hope to persuade him in the first instance that he is right to say that the occasions on which these issues will arise will be relatively limited.

I accept that in the past the courts have been ingenious in finding new obstacles to trade union activity, but we do not believe that the Bill creates other potential liabilities, for example breach of a statutory duty. We believe it is completely clear that the imposed method for collective bargaining under paragraph 27—which is when the CAC comes in—is legally binding only between the parties. Indeed, sub-paragraph (4) makes clear that, Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties'. Sub-paragraph (6) provides that, Specific performance shall he the only remedy available". We have constructed this carefully to exclude any breach of statutory duty, for example.

Perhaps I may take the opportunity to clear up any misunderstanding about what the imposed method in paragraph 27 will involve. The model method which the Government intend to provide under paragraph 127 of the schedule will be purely procedural. It will specify the matters for collective bargaining, namely pay, hours and holidays, and when talks are to lake place, who is to attend and what further steps are 'to be taken in the event of a failure to agree. In other words, it will be a typical basic procedure agreement. It will not require the parties to agree; it will not require arbitration if talks fail; it will not impose additional legal constraints on industrial action. That is an important point which my noble friend should consider when he suggests that there will be an extension into the courts.

The parties can, if they agree, vary the method imposed on them by the CAC to do all these things and snore, if they wish, but the method will not impose them. We hope and believe that the method will be invoked only rarely. I know that my noble friend anticipated that; indeed, he said so. We believe that almost all employers and unions will prefer to reach a negotiated agreement on a bargaining procedure which offers far more flexibility.

My noble friend believes that the exception will arise where there is a pathological condition, as he put it. I am not sure whether he was referring to a pathological disagreement involving both employer and union or a pathological condition in one party alone. But we believe that the restrictions set out in paragraph 27 mean that the kind of extension that he anticipates and fears is unlikely to take place.

The legal advice that I have received is that these amendments are unnecessary. However, I recognise his expertise in this area. I assure him that the Government will study very carefully what he has said today and reflect further on whether a provision on these lines is desirable. We shall be very happy to talk to him about it between now and Report stage. On that basis, I hope that he will feel able to withdraw the amendment.

Lord Wedderburn of Charlton

I am grateful for such a positive response from my noble friend. The test is not whether it will happen only once. If one had a Bill which said that X's head would be chopped off it would be highly objectionable, and it would happen only once. That is what one means by going a step further into social affairs. Pathological social events are those where some part of the system has gone wrong. I accept that this type of case will occur mainly or only where part of the system of collective bargaining, CAC and all the rest in Schedule 1 goes wrong but people's reactions cannot be limited to that. The case of Rookes v. Barnard in 1964 that I cited sent the trade union movement, rightly, into a great flurry of objection to the direction of the law of tort. I tried to make it clear that I appreciated why the Government have done that.

A contract, agreement or method between the two parties—the employer and the union, to make it clear—is of course a legally binding contract or legally enforceable agreement with a limited remedy. All that is absolutely clear. I have been known to write criticisms of cases. One gets to know cases better when one criticises them. One of the Government's troubles is that they do not like any arguments other than those they have seen, then altered.

A contract made through the CAC procedure is binding between A and B and enforceable only by a specific performance. There are problems about that specific performance remedy. Also, there are many cases involving a contract even of that kind—Torquay Hotel Co. Ltd. v. Cousins was one of them—where the limitation of remedies did not prevent the court saying, "You've broken your contract, which induced further damage to a third party". Of course there must be some degree of knowledge or deliberateness, which is the phrase wisely used elsewhere in the Bill. That does not mean that a case will never arise.

As the Government are reconsidering many important parts of the Bill, I ask them urgently to look a t that type of case again. If my noble friend wants me to submit a further reading list, I will do so—although I have tried to avoid that response. Even the three cases that I cited are enough to show that a third party in some cases could get to court under the schedule. Then he would not be limited by the limitation of remedy.

The fact that such a case might happen rarely is neither here nor there. My noble friend cannot predict the response of the trade union movement, CBI, TUC or anyone else to one dreadful decision because they believe that cannot happen. I do not believe that any of the parties that went before the Government with their arguments thought that such a remedy could occur. If the Government want a Schedule 1 that works, I ask them to accept an amendment of this kind. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

Baroness Miller of Hendon moved Amendment No. 4:

Page 17, line 39, leave out ("21") and insert ("50")

The noble Baroness said: I would like to speak also to Amendments Nos. 5, 6, 74 to 75A, 163, 165A and 169A. The amendments relate to the number of employees who may form the quorum to initiate the procedures for union recognition under paragraph 6(1)(a) and (b). I have said that I shall be as brief as possible because of the number of amendments. I do not wish to sound churlish towards Ministers and their officials who were so helpful to me before this stage in faxing other amendments and so on. The truth is that the Bill has grown enormously since we set the time, so although I made up my mind to be as brief as possible I have rather more to say on this particular amendment which is of great importance to small and even medium-size businesses.

Amendments Nos. 4 and 5 increase the number employed from 21 in the Bill to 50. The original number seems to have been plucked from the air. There used to be a sign on London Transport double-decker buses, "Small dogs may be carried upstairs at the conductor's discretion". I remember the debate about how small was a small dog.

When the Bill was debated in Committee in another place, it was suggested that the number of employees be increased to 50 and that the Secretary of State should have the power to reduce the number to 21 in light of circumstances and on the advice of the CAC—whereas the Secretary of State was proposing to reverse that process by starting at 21 and increasing the number to 50 in light of circumstances. Paragraph 6(6)(b) gives that power of variation. At least we have taken one small step in the right direction. By having that paragraph, the Government have acknowledged that 21 may be too stringent. I go further. I believe that that number could seriously damage small businesses. By the time the Secretary of State is persuaded of the existence of a problem and gets around to resolving it, it could be too late.

For the purposes of this Bill the Government have arbitrarily picked on 21, but in the case of the liability to pay interest under the Late Payment of Commercial Debts (Interest) Act 1998, the number chosen to define a small firm was 50 or fewer. Consistency in legislation would be an advantage. My honourable friend the Member for Daventry told the Committee in another place that the basic test for a small firm in the US was 50 employees or fewer.

That brings me to the second reason for saying that the figure of 21 is unacceptably and unreasonably low. Let us assume that the firm has a bare minimum of 34 employees. The employer must recognise the union if a mere nine employees—40 per cent of the workforce—requires it and the majority vote in support. In other words, if only three bother to vote, it would take just two votes to approve. Even 11 out of 21, although a majority, could be disruptive in a small business where everyone knows everyone else.

If 50 employees were the qualifying number to start the process, 20 employees would have to approve—which would be much more reasonable. It is no use saying that the other employees should have voted. Apathy towards union affairs is one of the factors that unions, in their heyday, relied on to rule an indifferent majority. The fact that an employee does not vote is not an indication that he is in favour any more than against. It simply means that he did not vote. It is not too difficult in a small firm with just 21 employees for union-minded activists to secure a derisory nine votes, especially when personal relationships can be a means of asserting influence. I would not say pressure, although that could be a factor.

In Committee in the other place, the Minister said: The Government recognise that small firms may be different in that they are often managed on a personal basis and collective bargaining may be inappropriate".

That returns me to the question of how small is a small firm. I believe that the answer is 50 employees and hope that the Government will consider accepting that figure.

Amendment No. 6 excludes from the definition of workers those who are directors, the company secretary or any other persons regarded as officers of the company. Common sense suggests that a director could in no way be regarded as a worker for the purposes of the Bill and thus contribute to the quorum when deciding whether a claim for union recognition could be launched. However, I have no doubt that some ambitious trade union organiser would try to establish that directors are to be included in the total number of workers. More relevant than that hypothetical suggestion is the Government's own attitude to the definition and status of directors.

When your Lordships debated the National Minimum Wage Act 1998, I sought to exclude directors on the ground that many directors of small family businesses would choose for whatever reason to pay themselves no wages, especially when the business was experiencing cash flow problems. The Government adamantly refuse that exemption on the ground that they would accept no deviation from the national minimum wage.

Again, on grounds of consistency, clearly the Government are going to hold that directors are workers for the purposes of this Bill and their mere existence may very well trigger the recognition process. Once again, I believe that the Government overlook the special needs of small businesses, those which will almost certainly be most hardest hit by the operation of the Bill.

There are tens of thousands of small family businesses with just two husbands and wives as the directors and perhaps a bookkeeper acting as company secretary. Therefore, they already have five people out of the 21. Of course, they could vote in the ballot and possibly ensure its being lost, but I am certain that the union organisers would say it was unfair that the directors should have a vote in the circumstances. I do not believe that the Government can have it both ways. Either the directors should be excluded or they should have a vote in the ballot. It is our preference, in the interests of commonsense, that directors, using the ordinary everyday meaning of the word, should not count as part of the workforce.

The amendment also excludes some shareholders because in the context of small family businesses, members of the family may have shares and work in the business, possibly just part-time when extra help is needed. Under paragraph 6 of Schedule 1, part-time employees are counted. I have excluded workers who also hold shares in their employing company which are quoted on a recognised stock exchange. Clearly, it would be unfair to an employee that he should suffer a loss of his franchise simply because he has enough faith and interest in his employers to buy shares or to acquire them as part of an incentive scheme.

However, I recognise that a Government who have an inherent distrust of employers, even those who operate share incentive schemes sanctioned by the Inland Revenue, may suspect that some Machiavellian employers may hand out shares to a few employees in order to reduce the number of qualifying employees. If the Government would accept the principle of excluding persons who are not really employees within the ordinary understanding of the word, I am sure that with a little more specific drafting we may be able to reach an accommodation over this aspect without causing any kind of loophole.

Finally, I have proposed to exclude members of a partnership who as individuals would obviously be working in the business. When we debated the national minimum wage, I postulated the hypothetical large firm of solicitors with, say, 74 partners who the Government insisted were just one legal entity. I am sure that the noble Lord, Lord Clinton-Davis, will remember that discussion. If then they were regarded as workers, the starting line would be crossed before one counted the first typist or the first tea lady. Of course, it would be harder to get the 40 per cent, or a majority of it, but in order to avoid future litigation and in the interests of clarity I feel that it is better to exclude them in clear terms.

This group of amendments is intended simply to provide a fair balance of rights and responsibilities such as was claimed by the Secretary of State during Second Reading in the other place to be the objective of this Bill. That being so, I very much hope that the Minister will feel able to accept them.

Lord Taylor of Warwick

I support the noble Baroness, Lady Miller, especially in relation to Amendments Nos. 4 and 5. It was Groucho Marx who complained, I worked my way up from nothing to a state of extreme poverty". This aspect of the Bill in its present form could cause many small business owners to echo those words. The heart of the problem is that under the terms of the Bill the definition of a small business is one with 20 employees or fewer. That automatically puts a firm with just 21 workers in the same league as a giant corporation with huge resources. It is like the young chap who called himself a plant manager when in reality all he was required to do all day was water them.

The Confederation of British Industry, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors have all asked the Government to raise the threshold. They suggest that an exemption for small companies with fewer than 50 employees is more realistic. It is a great concern that the Bill uses the arbitrary number of 20 workers, ignoring all the advice and submissions from those expert organisations.

The figure 20 has no real significance. My first fee as a lawyer many years ago was a four-figure sum. That sounds impressive until I tell your Lordships that it was £12.95. I should like to know what impact analysis the Department of Trade and Industry or any other government department have carried out. What will be the percentage cost increase of compliance for firms employing 20 people? If that research has not been done, why not?

It would not be unusual for a firm with fewer than 50 workers to have just one personnel manager and one accounts manager, or even just a bookkeeper. A letter from a firm's trade union requesting collective bargaining at a time when some key people are away, on sick leave or on holiday could make it difficult for the employer to respond within the statutory timetable. One could argue that a union is likely to take advantage of such an employer, but the very existence of such provisions makes smaller firms more vulnerable.

The future of small companies is vital to our economy and I do not believe that anyone here would disagree with that. They are the majority of businesses in this country, contributing 40 per cent of turnover and employing 50 per cent of the private sector workforce. Since this Government came into power in May 1997, they have imposed 2,400 new regulations. The Institute of Chartered Accountants estimates that the extra cost of these regulations for small businesses is £5,000 a year. As a vice-president of a small business bureau, I know that many small firms have struggled to survive this onslaught. Now, just as they see a light at the end of the tunnel, it is the light of an oncoming train called the Employment Relations Bill.

Lord Davies of Coity

I am wondering whether the point of the legislation is being missed by the spokespeople on the Benches opposite. It is about fairness at work. It is about ensuring that workers in this country are treated fairly by their employers and by this society. It is a bit rich for Members on the Benches opposite to describe fairness when for more than a decade, beginning in the 1980s, they introduced anti-trade union legislation which damaged the interests of workers who were represented by trade unions and workers who were not. By that I refer to the emasculation and eventual abolishment of the wages councils which were intended to produce minimum standards for working people in this country.

I notice that the noble Lord, Lord Tebbit, is smiling. I recall that a couple of weeks ago he described the extent to which he consulted before he introduced his legislation. I was at the sharp end of his legislation and I do not recall him once taking on board any representations made by trade unions on behalf of their members and workers generally.

The noble Baroness, Lady Miller, says that in America the figure is 50 workers. If the industrial environment, the structure, determines that 50 is the appropriate figure, that is fine, but we are saying that this Government have consulted widely with representatives of employers and trade unions. To a large extent, they have forced representatives of the CBI and the TUC to come together to try to thrash out as many points as possible so that legislation could be made easier and fairer for those people.

Where that was not possible the Government had to take a decision. However, they did so based on the evidence before them and on the structure of industry in this country. As the legislation is about fairness at work, perhaps I may remind the Committee that every worker is entitled to that fairness. We have mentioned the figures of 50 and 21. The noble Baroness, Lady Miller, said that the Government picked the number 21 out of the air. I suggest that perhaps she picked the number 50 out of the air as an alternative. Perhaps there is evidence from America which does not apply here.

4.30 p.m.

Baroness Miller of Hendon

The figure of 50 that I picked out was the amount used in the late payments Bill. That was the number used to define a small business. The American experience was another matter.

Lord Davies of Coity

I take that point. However, an enormous number of people in this country, working throughout industry, will be denied the opportunity to have a trade union to represent their interests in terms of collective bargaining and representation if this amendment is agreed to. We understand that industry is changing and larger companies are employing fewer people and small firms are enlarging to more than 50 workers. I believe that the Government have got this right and I hope that the amendment will be withdrawn.

Lord Cavendish of Furness

Perhaps I may declare an interest, as I did on Second Reading. Rather than going through the lengthy description of the interest that I declared then, suffice it to say that I employ some 300 people and this Bill would impact on my affairs and those of my workforce.

I rise to speak in support of my noble friend's amendment. There has been talk of consultation and partnership in relation to this Bill. I believe that consultation was dealt with, although there still remains the question of who is to be consulted and who will listen to the consultation.

On partnership, again and again on Second Reading the question was raised as to whether partnership favoured the employer at all. In the reply there was no mention of it, and I can find nothing whatever to support the suggestion that partnership favours employers.

The debate on "smallness" is important. There is a level at which it is acknowledged, almost universally, that trade union activity is not appropriate. I believe that "smallness" relates to functions rather than to the numbers on the payroll. The number of people on a payroll can be misleading in a huge number of ways. My slate quarry operation opened an office in London—a huge investment with high risk—involving three people. It was crucial to the business's success that that little unit functioned properly, and it was completely discrete from the workforce in Cumbria.

All businesses have a minimum number of functions for which management is always looking for cover, just as Ministers look for cover when one of their number falls ill and someone else has to do their business. I would have thought that the question of functions would show a typical profile which would include an accounts department, a marketing department, a sales force, a human resources department, a production department which, in turn, can be sub-divided into several utterly different activities, packaging, transport, and so on. A minimum number of functions would perhaps be six to 10, so to say that you are talking about 20 people would be wrong as you may be talking about cover for only one person in a very small business.

I believe that a business with 50 employees is still a small business. I would not go to the barricades over it, but I suggest that this is a genuine attempt to achieve a sensible number. I suggest that we are looking more towards the number of 50 than towards the number of 21, for the reasons that I have outlined.

Lord Gladwin of Clee

When speaking to sub-paragraph (a) of Amendment No. 6 the noble Baroness referred to officers of a company, directors, company secretary and other officers of a limited company, but she made no reference to managers. I know a lot of managers and there are many in my trade union who would resent the fact that they are not described as workers. I find that curious. Officers of a limited company are identified, but managers are not.

In sub-paragraph (c) the noble Baroness talked about a partnership and described the kind of partnership that she had in mind. Should I assume that she would exclude companies like the John Lewis Partnership?

Baroness Miller of Hendon

I did not mention managers. In relation to small businesses, in many respects the husbands and wives who run the businesses are the managers of such businesses. We are not talking about large businesses. However, so far as managers are concerned—

Lord Gladwin of Clee

There must be managers if there are 50 employees.

Baroness Miller of Hendon

Amendment No. 6 refers to excluding such people from the number of 21 employees and not 50. That was the point that I was making. If the Government do not feel it is possible to alter the number from 21 to 50—although I hope they will be able to—at the very least I included in the same grouping an amendment which recognises that if you include all the other people in the figure of 21 you are in trouble. The reason that I did not add managers was for the reason that I gave in the first instance, not because of an implied insult to managers, but if I excluded managers as well there would be only one person left in the business.

Lord Brookman

I too want to declare an interest. I currently sit on the General Council of the TUC. Alongside me is a past General Secretary of the TUC and other colleagues around me have also sat on the General Council of the TUC. The majority of people with whom I come into contact in my area of work would wish to see all workers, irrespective of a figure of 21 or 50, with the right to be represented by a trade union at their place of work. Why? The reason is that, in my opinion, in the world of work there are bad employers.

I recall my second-oldest daughter, home from university—she is a married woman in her late 30s now and she is doing quite well—working part-time in the holidays in a small factory. There were probably about 20, 30 or 40 young ladies working there making sandwiches which were on sale up and down the high street in various parts of the area where I live. I cannot recall precisely—I would not want to be sued—but I believe that my daughter received 75 pence per hour while the owner had a white Rolls-Royce outside the front door. I think that is grossly unfair and I am sure that noble Lords opposite would agree.

On representation at work, I realise that some noble Lords on the Benches opposite are inclined to have no views about trade unions, trade unionists, national leaders of trade unions or the General Council of the TUC. If they could do away with them, neuter them or abandon them, they would do so. We have survived 18 years. I understand the shaking of heads in relation to looking at the past. I am one who wishes to look to the future. I would like those on the Benches opposite also to look to the future. This legislation is about the future and fairness at work in the future. We would hope that all workers have the right to have trade union representation at work. We are satisfied that the Government are doing their best to get harmony in the workplace. Therefore, I hope, along with my colleagues on this side of the Committee, that the figure of 50 is withdrawn.

Lord Tebbit

I am tempted to my feet partly by the remarks of the noble Lord, Lord Davies of Coity. For a while he dwelt upon my reluctance, when I was Secretary of State, to engage in consultations about my legislation. He has a short memory. He should remember that the trade unions mandated themselves not to discuss with me anything about my proposed legislation. I was cast into what they believed was some form of outer darkness and they would not speak to me. I believe that I enjoyed quite a nice illuminated life at that time.

However, if I may tell a secret or two, my life was illuminated from time to time by the fact that the noble Lord, Lord Murray, would come in to see me through the underground car park and the back lift. I always found those meetings agreeable, even when we could not find agreement. I often profited from the wise words of the noble Lord, Lord Murray, though I do not know whether he ever profited from anything I said in return. That was the situation at that time. I was willing to consult; but it takes two.

I support these amendments. I have in mind an engineering company with which my family sometimes deals. The proprietor and chief executive of that small company, which would be caught by the Bill, spends days at a time out on the road without even returning to his office. It is a company in which nobody works harder than the proprietor. Often, for days, his only contact with the office is by telephone. Where does that fit in with these provisions?

There is some idea, particularly among those who have been so grand in life as to have served on the General Council of the TUC, that all companies, even those with only 21 employees, have a personnel manager, perhaps a personnel department and a multiplicity of people backing up on each function. It is not like that. If one is faced with a difficult trade union, a difficult regional officer or shop steward, life can be made almost impossible under the provisions of this Bill. One is always going back to deal with the many trade union matters that can be generated rather than looking after the customers and running the business.

I thought we had got away from that. and that most people were glad to get away from it. In fact, there are some former businessmen on the Government Front Bench who were glad to get away from the days of the 1970s. This is a small step back in that direction. Of course it will not unduly worry the vast multinationals. In general they can cope with these things—they have years of experience of them. In any case, most of my legislation will be left intact. We are not going back to the bad old days where the print unions ensured that no women, blacks or Asians were employed at the print shops at The Times and other newspapers in Fleet Street; my legislation stopped that. As I understand it, it is not the intention of the Government to undermine that.

So the big boys will not be particularly worried. But this Bill will hit the small companies—those we hope will not stay small but will grow. It will be a disincentive to them to grow. Also, as I read it—I hope I will be corrected if I am wrong—it will be a disincentive to employ part-time workers. After all, if we employ part-time workers, we employ twice as many people, so we bring ourselves into the ambit of the Bill with even a dozen employees, not even 21. There will be a clear incentive on managers and proprietors of such small companies to get rid of part-time employees and replace them with full-timers, thus reducing the head count. I am not sure that that is altogether a good thing. Many part-time workers are part time only because they have other responsibilities; most notably single parents who still have custody of children. Part-time working is one way in which they can get back into the labour market. It would be a tragedy to discriminate against the likelihood of their achieving a job by the introduction of this sort of legislation.

I do not understand why the Government are so attached to the figure of 21. It is an extraordinarily low number. A few years ago we normally defined small businesses as those employing fewer than 100 people. Now we are setting down this sort of definition. Small businesses cannot cope with the possibility of difficult trade union activists mucking the business about, possibly in order to pursue an agenda which is nothing to do with the company in question but concerns a company down the road. For that reason, if my noble friend decides to press these matters to a vote either at this stage or on Report, unless I have heard some powerful arguments to the contrary from Ministers. I shall support her.

Lord Murray of Epping Forest

I wonder whether the noble Lord, Lord Tebbit, recalls the old, unhappy. far-off days and battles of long ago. Truth to tell, there was only one real disagreement between the noble Lord and myself in those days. I was anxious to extend to every individual employee the inestimable value of having standing behind him an organisation, a group of people, who would protect him if he was intimidated, treated wrongly or exploited by any employer, no matter who that employer was. The noble Lord's purpose was to restrict, limit, inhibit and make it as difficult as possible for that individual to join a trade union. Trade unions are about individuals.

I am astonished that we should argue about the number 21. As has been said already, that number is far too high. We are talking about a Charlie Jones and a Mavis Thompson. The right of an individual to seek protection is paramount in our society and I wish to ensure that that is achieved. If the figure of 50 had been on the face of the Bill, we would have heard the same arguments, the same passion and the same demands from the Benches opposite to extend it to 75 or 100 for exactly the same reasons as have been adduced. If I was able to introduce an amendment to reduce the number from 21, I would be tempted to do so. I am happy to accept a compromise. It is a good compromise and I go along with 21 for the present time.

4.45 p.m.

Lord Geddes

It is with apologies that I intervene in the proceedings of your Lordships' Committee as I was not able to take part in the Second Reading debate. I shall be extremely brief. It may help the Committee, and indeed the Government, to take cognisance—I say this with some trepidation with my noble friend Lord Tebbit sitting beside me—of the EU definition relative to the number of employees. It supports my noble friend Lady Miller. A "large" firm is defined as an organisation employing 250 plus; a "medium" firm is 50 to 249; "small" is 10 to 49. It is interesting to see how the figure 21 comes into the middle of this. There is a fourth definition of "micro", which is nought to nine.

I am fully aware that British legislation is being proposed but, as my noble friend Lord Tebbit reminds us again and again, to some extent British legislation is also subject to European legislation. I hope that the Government have not got it wrong with the figure of 21 when the Commission defines a "small" business as up to 49 employees and a "medium" business as 50 plus.

Lord Brookman

Surely the noble Baroness is not too interested in knowing what is going on within the European Union. After all, the other side is always wishing to pull out of the European Union.

Baroness Miller of Hendon

The noble Lord, Lord Brookman, has never heard me say that I wish to pull out of the European Union. His comments do not add anything to our discussion.

Baroness Turner of Camden

Do Members on the other side of the Chamber appreciate that when we talk about trade union membership, it is something entirely voluntary? People voluntarily decide to join a union and once they are in a union, they simply want to ensure that they receive their legitimate rights. Quite frankly, the noble Lord, Lord Taylor, made the case for us to some extent when he said that 50 per cent of the private sector workforce was involved. If that is the case, we are really talking about a very large number of employees. If we do not have legislation of the kind proposed by the Government, those employees will not have the rights which really ought to be theirs.

Lord Monkswell

The noble Lord, Lord Tebbit, seemed to think that trade unions were a hindrance to economic activity in industry. He mentioned the fact that small firms may not have a personnel manager, a training manager or indeed a health and safety officer. However, perhaps I may suggest that the expertise which exists within the trade union movement could be an asset to small businesses in terms of providing the sort of advice and information on such matters as health and safety at work and training with which a small company may find it rather difficult to cope. Surely that should be seen as an asset.

When my noble friend the Minister responds, I am sure he will argue that the amendment should not be accepted. However, paragraph 6(6)(b) suggests that the number of workers specified may be varied and that, different provision may be made for different circumstances". Can my noble friend say whether that provision has been included in the Bill so as to enable the figure of 21 to be moved downwards as employers and workers experience the benefit of trade union recognition?

Lord Clinton-Davis

During the course of my noble friends' remarks, I noticed that the noble Lord, Lord Tebbit, assented to a proposition being imputed to him; namely, that he did regard trade unions as a form of encumbrance and as being hostile to the interests of the economy. I draw that to the attention of my noble friends because I believe that it illustrates the noble Lord's attitude towards trade unions and that it ought to be on the record. Of course, a nod of one's head does not indicate that at all. It is precisely because the noble Lord adopted this attitude of hostility that much of it was reciprocated during the period in which he held office. However, we have, happily, moved on from that unhappy experience.

The Bill is designed to create a different attitude in industry—one which the noble Lord finds disagreeable but one which I believe most people would regard as being very desirable. I hope that the noble Lord might, in his more elderly wisdom, come round to a rather different conclusion from that which he entertained during his period of office.

Lord Tebbit

The noble Lord has forgotten that in my younger days I was a trade union leader; indeed, not an altogether terribly pliant one. I was forced into that position by a very bad employer called "a nationalised industry." When you are dealing with a management which is perpetually mucked around by Ministers and is unable to manage, people are forced into that sort of position. I understand that full well. Of course, with no shareholders to fire the management which was wrecking the business, we experienced very great difficulties in getting anywhere in our negotiations.

If unions have anything to offer—and the noble Lord, Lord Monkswell says that they have—I am sure that employers would be very happy to accept it. I can imagine a number of the operators of our ports would he most anxious to accept advice from the dockworkers' union on how to run our ports. It was constantly doing so over a very long period of time during which all the jobs vanished to Rotterdam and such places. However, where there is such advice, I am sure that it will come forward.

It seems to me that the noble Lord, Lord Murray, has forgotten the basic intent of the Bill. It is not about giving people the right to belong to a trade union because everyone has that right; it is about intervening in the negotiations between a trade union and an employer and insisting that an agreement is reached that the union will be recognised as the negotiating body. In other words, it is arbitrarily taking the view that the trade union should be the negotiating body.

Lord Davies of Coity

The one point that the noble Lord has failed to express is the fact that a trade union does not operate in isolation from its members' wishes. When it makes representations to an employer seeking recognition, it does so on behalf of those workers who are employed by that employer and have joined the union. It is not an arbitrary situation and it is not a third party situation; indeed, it will be done directly on behalf of the workers employed by that employer.

Lord Tebbit

I fully understand that. However, the noble Lord does not seem to understand that there is another party involved; namely, the owners, the proprietors, of the business. They have created a business which enables them to offer employment to their workers. Do they not also have rights? Do they not have the right to run their business in a reasonable way within the limits which the law imposes?

Lord Davies of Coity

I understand that perfectly well. However, the two sides of industry are trying to come together in the most harmonious way possible to ensure fairness for the employees and prosperity for the employer. That, in turn, will run through to the employees. It is a case of working together. But when you see an employee faced with his employer, it is rather like a David and Goliath situation. Only collectively is any influence brought to bear on an employer, who is the stronger of the two parties.

Lord Tebbit

I must say that the prospect of a firm employing 21 men or women faced with the Transport and General Workers' Union could indeed be seen as a David and Goliath situation. Unfortunately, I think the noble Lord has got the roles reversed. He talks about harmony. My goodness me, does not every married couple want to live in harmony? However, they do not want: the mother-in-law constantly coming in and telling them how to do it. That is what this Bill is. It could be retitled the Mother-in-Law Bill, or perhaps I should say the Father-in-Law Bill, so that I do not fall victim and transgress in some way as regards anti-discriminatory laws.

Noble Lords opposite simply do not agree that an employer has the right to say, "No thank you. I would rather deal with my own employees directly and I would like to deal with them as individuals." That applies particularly in a small firm comprising 21 people. That is a better way to manage a company. After all, there is a choice for the employees. It is often possible to find another job in a larger, unionised company. Happily, on the whole, these days we have relatively low levels of unemployment in this country. It is not as though we were living in Euroland, in Germany, in Spain or in one of those countries where they have all these sorts of laws but also have extraordinarily high levels of unemployment. It is more as though we were living in America in some ways where, in a deregulated economy, jobs are created without—I should point out to the noble Lord, Lord Monkswell—too much assistance from the trade union movement.

Lord McIntosh of Haringey

Perhaps I may start by acknowledging the passion with which noble Lords opposite addressed the issues raised by these amendments. Although the argument became rather expanded, the noble Baroness, Lady Miller, has a genuine passion for the interests of small businesses which she has expressed throughout her time in politics. I respect her for that. However, two further aspects have become apparent. First, there is the passion which a number of noble Lords opposite have against trade unions wherever they may appear, whether that be in small or large firms. It is when the noble Lord, Lord Tebbit, characterises the interventions of trade unions as being those of difficult trade union activists that we come out into the open.

The second matter that has become apparent is the passion with which we in the Labour Party address the issue of individual rights and collective rights at work. As has always been acknowledged, there is no dispute about the right of any individual to be a member of a union and to benefit from the services and facilities which a union may provide. However, alongside that—although this should not be confused with it—is the right to make one's membership of a union effective through collective bargaining. The noble Lord, Lord Tebbit, manages to turn the story of David and Goliath on its head. The issue here is a profound political and economic one. It would do no justice to anyone in this Chamber if I did not acknowledge that from the beginning. I acknowledge the sincerity with which noble Lords opposite address this issue but we profoundly disagree as regards the purpose of this Bill.

The principle behind statutory trade union recognition is the protection of vulnerable members of society. Everyone may agree that that is a worthy aim. However, it must be understood that in applying this principle we have sought to use common sense, excluding firms where collective bargaining may not be appropriate. We have done our best not to impose unnecessary costs on employers. However, the fundamental principle of protecting the vulnerable means that we cannot ignore workers in smaller companies.

Much has been made of different cut-off points for smaller and larger firms. I refer to the different cut-off points used in Europe and the different cut-off points used for different purposes. I remember the Boswell report on small businesses that was issued many years ago. I remember that that report proposed a cut-off point of 200 employees because that was thought to be a sensible way of dealing with those who did not comprise the large organisations on which macro-economic policy had been based for many years. That was a breakthrough because for the first time the interests of smaller businesses were recognised. That was a valuable step. But surely the cut-off point for one purpose is not necessarily the cut-off point for another. Health and safety measures have to be in place in workplaces of all sizes. One cannot say that someone who works in a firm that comprises only three people cannot be protected from burning to death through not having appropriate health and safety measures in place. In other respects a cut-off point of 50, 100 or 200 employees may be quite appropriate. With regard to the cut-off point of 21, we do not suggest that it is perfect or that it is in any way a magical figure. It has been selected after much consultation because we recognise that employees of small firms are often dealt with on a personal basis and collective bargaining is not likely to be appropriate for them.

Let it not be thought that that means that those firms with 21 or more employees will be forced into collective bargaining. That, of course, is not the case, as my noble friend Lady Turner made clear. If there is to be collective bargaining, it has to be agreed by a majority of those voting and by 40 per cent of those eligible to vote. If that is not the case, I am sure that an employer who has a larger number of employees and good relationships with his workforce will ensure that there is no vote for compulsory collective bargaining. In that situation, voluntary agreements are much more likely which will suit that workplace. Some of those will concern basic pay, holidays and hours and others will concern other issues. The whole point of this Bill is that those measures can concern the subjects that employers and employees believe constitute the proper basis for collective bargaining.

I return to the arguments of the noble Baroness, Lady Miller, which I think we have lost sight of. We do not believe that collective bargaining will impose significant costs on small firms. I am sorry to repeat this but I speak from personal experience. I am convinced that the collective bargaining that I achieved by recognising a union in a company with 30 to 35 employees was beneficial to management. Against the cost of collective bargaining should be offset the costs of setting pay by any other method. Sometimes it is more efficient to bargain collectively. It is also likely that respecting workers' wishes for union representation will improve morale and hence productivity. A number of my noble friends have made that point effectively.

The figure of 20 or 21 is of course a pragmatic judgment. However, I say to the noble Baroness, Lady Miller, that it is not true—as she said—that we acknowledge that it may be too stringent. We acknowledge that it may have to vary in either direction. It could be too stringent or not stringent enough. We have provided a possibility for variation in the Bill. The Secretary of State may initiate a process whereby the cut-off point changes. Our subsequent amendments in the group commencing with Amendment No. 7 extend that provision to ensure that the possibility of variation applies throughout the Bill. We believe that this is the right figure and we believe that the amendments that I have discussed should be rejected.

I now turn to Amendment No. 6 and its associated amendments which seek to exclude from the definition of "worker" three categories of person: officers of a limited company; shareholders in unquoted private companies; and members of a partnership. The amendment is unnecessary. Officers of a company are not normally workers, nor are they shareholders. The only way in which a person who is an officer or a shareholder can be a worker is by entering separately into a contract of employment that makes him or her into a worker. I am sure that the noble Baroness is not arguing that those who have contracts of employment should be excluded from the head count implied in the cut-off point of 21. Shareholders and officers who do not have a contract of employment are not workers and do not count towards the figure of 21.

Lord Tebbit

I am grateful to the Minister for giving way. He made it plain that those who have contracts of employment are included in this figure. What about those who have contracts for employment? I am sure there are other noble Lords in this Chamber who have contracts for employment as opposed to contracts of employment; that is, they are essentially self-employed persons contracting to do a particular job for a company.

Lord McIntosh of Haringey

They do not have a contract of employment and they do not count, just as Ministers who are office holders do not count. They are not employees for this purpose. The third category the noble Baroness mentioned were members of a partnership. Members of a partnership are working for themselves and are not workers in the sense used in Schedule 1, which is the definition in Section 296 of the Trade Union and Labour Relations (Consolidation) Act 1992. I hope I have persuaded the noble Baroness that these amendments are not necessary. Also they are undesirable because they could exclude genuine workers who hold shares in their company from counting towards the 21 workers limit.

One of my noble friends mentioned the John Lewis Partnership. I am not sure whether that would qualify—I rather think it would not—because I believe it is a title rather than a legal status. Nevertheless it would clearly be quite wrong for people to be excluded from the right to argue for collective bargaining simply because they were also part of an employee share ownership scheme. I hope that the noble Baroness will not pursue Amendments Nos. 6 and 75A. Having considered the intensely political issues involved in the cut-off point, I hope that the Committee will agree that the Government have consulted widely and have taken into account the nature of the burdens on small businesses; that there are opportunities for small businesses in partnership at work; and that the Government's solution is preferable to the one proposed by the noble Baroness.

Baroness Miller of Hendon

The Minister will not be at all surprised that I am extraordinarily disappointed that he did not accept my Amendments Nos. 4 and 5. I am grateful to all noble Lords who have spoken in support, particularly to my noble friend Lord Tebbit, who spoke from great experience, and to my noble friend Lord Geddes, who made the point that in European legislation a small business is defined in a certain way; that is, anything up to 49 people. I was surprised by some of the interventions from noble Lords opposite. No one has commented on the numbers I have mentioned. We are talking about a partnership, about fairness at work. My noble friend Lord Tebbit spoke about fairness to the employer. I was making the point that, all of a sudden, compulsory collective bargaining could be imposed with very few people deciding that it was necessary.

As to the last three parts of Amendment No. 6, I shall read very carefully what the Minister said. I do not consider them unnecessary; had I thought that I would not have mentioned them. In my view they are very necessary and I shall read the clauses carefully.

I intend to beg leave to withdraw Amendment No. 4, but noble Lords opposite should not take that to mean that I am content. This is a very bad day for small business. The Minister says that the Government consulted widely but numerous business organisations are not at all content with 21 plus. The IoD, the EES and various other organisations felt, on consultation, that it would make it very difficult for employers with small businesses. I shall consult with my colleagues as to what is to happen at the next stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 5 and 6 not moved.]

Lord McIntosh of Haringey moved Amendment No. 7:

Page 18, line 22, at end insert ("and (b) may include supplementary, incidental, saving or transitional provisions.")

The noble Lord said: In moving Amendment No. 7 I shall speak also to Amendments Nos. 76 and 170. I referred to the amendment when I denied that the Government acknowledge that the 21 cut-off point is too stringent. The Bill already provides that the Secretary of State may, by means of a statutory instrument made under paragraph 6(6), alter the 21 workers cut-off. He has no equivalent power to seek to amend paragraphs 40 and 75, where it also appears. It is obviously desirable to alter the figure in all three places, if it is to change at all. Amendments Nos. 76 and 170 respectively would give the Secretary of State the power to alter the 21 workers figure in each paragraph and resolve this anomaly.

If the 21 workers limit should need to change, the Government wish to ensure an orderly transition from one limit to another. Therefore we are also putting forward Amendment No. 7 which gives the Secretary of State power to make transitional arrangements in regulations which alter the 21 workers limit. These are modest but necessary changes.

Amendments Nos. 76A and 170A standing in the name of the noble Baroness, Lady Miller, assume that there will never be a time when the Government believe that the limit needs to be reduced. I do not have that kind of power of foresight. I can envisage a government—certainly not this Government—raising the limit to 200 workers and a. subsequent government wishing to reduce it to 100, 50 or perhaps even 21 workers. The amendments would prevent that. They would always ratchet up the limit. I repeat, the Government have no intention of increasing or reducing the 21 workers limit. However, we believe that the Government should have the power to alter the limit in either direction in whatever way necessary. I commend Amendments Nos. 7, 76 and 170 to the Committee. I beg to move.

Baroness Miller of Hendon

My Lords, I shall speak to my Amendments Nos. 76A and 170A, both of which are in identical terms. I am sorry if I misunderstood paragraph 6(6)(b). I was gratified to think that the Government would extend the number rather than reduce it; I did not realise at that stage that the Government intended the power to move it either way.

My two amendments seek to vary government Amendments Nos. 76 and 170. The government amendments seek to give the Secretary of State power to vary the number of workers employed by a firm required to trigger the representation figure from the low number of 21 specified in the Bill, which we have just discussed at length in the previous amendment. As the Committee is aware, we regard the figure of 21 as unduly low. We do not object to the Secretary of State having power to amend it by, in effect, ministerial decree. However, we object to the possibility that the figure could be reduced even further. The Secretary of State may say that no such possibility has entered his mind. After what the Minister has recently told us, I suspect he may not say that. My proposal would remove any possible ambiguity. It allows the Secretary of State to move the figure upwards—but only upwards—when, as we suspect he will, he discovers that the figure of 21 is far too low.

He may also argue that the amending order will contain a provision requiring the approval of both Houses and that our fears are unfounded. That may be so, but it is no reason why the Bill should not specify the exact limits of the basis of the order. The power should be to amend the number only in an upward direction.

Lord McIntosh of Haringey

I have already responded to the points made by the noble Baroness. It would have been polite for me to have listened to her first. I do not think she expects me to change my mind. I commend Amendment No. 7.

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 8:

Page 18, line 28, at end insert ("; and (d) identifies any specific issues on which the union or unions are currently seeking recognition, or will seek recognition in the future, or both.")

The noble Baroness said: The amendment proposes a very simple and totally undemanding obligation on a union seeking to represent workers in a particular firm. All it has to do is to state in its request for recognition whether there are any specific current issues or ones it foresees in the future about which it would wish to represent its members. It may well be that there are no such specific issues and that all the union wants to do, in general terms, is to represent employees concerning matters such as pay and working conditions. In that case, in its request for recognition the union will state: Apart from pay and conditions in general, there are no specific issues on which we currently wish to represent our members or which, at this time we anticipate will arise".

However, let us suppose that the union believes there are issues of redundancy, expansion, shifting work from one place to another, multi-tasking or any other of the numerous problems that arise in industrial relations. Is there any reason why the union should not state in advance of its recognition what it has got on its mind? Forewarning the employer does not enable the employer to veto the request, nor does it give an employer any tactical advantage. Indeed, by laying its cards on the table, the union could make the resolution of a specific issue much less confrontational.

I do not wish to make heavy weather of the amendment. Equally, the Government should have no difficulty in accepting it. I beg to move.

Lord McCarthy

The answer to the question of why we do not need the amendment—which would not do any harm—is that it would not do any good. One of the points I tried to make earlier was that in the way this Bill is constituted one gets only one answer: whether one twists or busts, one either gets recognition, or wages, or house, or holidays, or one does not get recognition at all. Indeed, subsequently it would be the case that one would have to give up the recognition one has in order to get some more. What is the point of disclosing all the other things that a union wants? The employer almost certainly knows that and he will not give anything. It is because he will not give anything that he finds himself in front of the CAC.

Lord McIntosh of Haringey

The amendment was moved very attractively and modestly by the noble Baroness because, as my noble friend Lord McCarthy recognises, it is a very modest amendment. It refers to "any specific issues" and the noble Baroness made it clear that if there were no specific issues there would be nothing for the union to reveal. I acknowledge that it is not unreasonable for an employer to want to know in advance what recognition is being sought. Any employer who has a good relationship with his workforce is likely to have that knowledge anyway.

It is certainly true that both the union and the employer will have matters upon which they may or may not wish to bargain. In other words, if the amendment is to be put forward, it should be put forward for both sides. Both will probably feel more strongly about some matters than others. A union might feel relaxed about not bargaining for facilities for union officials but regard matters of discipline as vital. An employer might be happy to bargain on the level of pay but not on the firm's pay structure. There needs to be negotiation about what collective bargaining should cover if there is to be a voluntary agreement, which, I repeat ad nauseam, is the purpose of this legislation.

The amendment would damage the negotiation by requiring a union, and only a union, to put its cards on the table. In particular, a requirement to state matters upon which the union will seek recognition is likely to result in unions listing all the matters they can think of in order to keep their options open. I believe that that would be counter-productive and certainly would not advance the negotiations.

I am therefore of the view that, however modest the amendment may be, it would be unhelpful. I am sure that there is no particular virtue in having the requirement on the face of the Bill. The Secretary of State already has a power under paragraph 8 to specify the form of requests by statutory instrument, and that could, if necessary, duplicate the effect of this amendment. I hope the noble Baroness will not press it.

Baroness Miller of Hendon

I am, of course, once again disappointed that my very modest amendment, which, as the Minister said, might very well do some good—and certainly I do not believe it would do any harm—is not to be accepted. I believe that there is an area in which it would do some good; namely, where a union is seeking compulsory recognition and an employer is not too happy about it but understands what it is that the union is seeking. It removes all the fears that he might have.

I notice that the noble Lord the Minister said that it might be a better amendment if it cut both ways. Perhaps I might suggest that since the Government are bringing up so many other matters in the next stage, they should have another look at this proposal and come back with something that we might find acceptable. It would be very nice indeed if, somewhere along the line, something that is proposed from this side of the House was accepted, rather than hearing the word "no" in answer to absolutely everything, as was the case with the National Minimum Wage Bill. The one success that I had, which would have helped the Government enormously, was overturned in the other place. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 9:

Page 18, line 40, leave out ("in the second period")

The noble Lord said: My Lords, in rising to move Amendment No. 9, I wish to speak also to Amendments 10, 13 to 15, 17, 21, 23, 41, 47, 49, 50, 56, 69, 71, 80, 84, 88, 106, 109, 112, 121, 156, 167, 173, 178, 183, 188, 189, 192, 193, 201 to 204, 210, 212, 215, 218 and 219.

This group of amendments is intended to clarify the time periods for the procedures in Schedule 1. We are making three types of change: consolidating negotiation periods; a consistent use of working days for all time periods; ensuring that time periods begin the day after an application is received, or whatever triggers the start of a period.

Amendments Nos. 9, 10, 14 and 15 together act to consolidate the two negotiation periods in paragraphs 10 and 11. The employer will still have the first period of 10 working days in which to respond to a request for recognition. However, if he or she agrees to negotiate, instead of there being a second period of 20 working days for negotiation there will be an additional 20 working days. In other words, there will be 20 working days plus whatever is left of the first period. That could be as long as six weeks. Of course, the parties may agree to extend the period. We are therefore making sure that there is plenty of scope for negotiation and voluntary agreement.

Amendments Nos. 188, 189 and 193 make an equivalent change to the negotiation periods in the derecognition procedure.

The second change that we are proposing is the use of working days throughout the schedule. At present, we use working days for shorter periods and normal days for longer periods, working days being Monday to Friday. It has been represented to us by the Industrial Society that a mixture of terms is confusing. We have therefore introduced amendments to replace 28 clays with 20 working days, and so on. We have not otherwise changed the length of any of the periods.

The rest of the amendments are equally technical. They are intended to ensure that time periods begin the day after an application is received or that another event triggers the start of the period. This will ensure that there will be a full 10, 20 or however many working days in which to respond to the event. For example, it ensures that an employer has 10 full working days in which to respond to a union's proposal to involve ACAS under paragraph 82(3).

I commend these amendments, which make modest but worthwhile improvements to the schedule. I beg to move.

Lord Monson

I wonder whether the noble Lord, Lord McIntosh, can explain an apparent anomaly in the definition of "working day", which is referred to in Amendments 13, 23, 47, and 49, and no doubt elsewhere in this very long grouping and, of course, throughout the Bill as at present drafted.

The definition of "working day" for the purposes of Schedule 1 is to be found in paragraph 129 of that schedule on page 57. It says: For the purposes of this Schedule in its application to a part of Great Britain a working day is a day other than … a Saturday or a Sunday". However, elsewhere in the Bill, Clause 13(5) states: For the purposes of section 10(5)(h) in its application to a part of the United Kingdom a working day is a day other than … a Saturday or a Sunday". Clause 37 of the Bill states: This Act shall not extend to Northern Ireland". The United Kingdom, of course, refers to the United Kingdom of Great Britain and Northern Ireland. I suspect that this may be a drafting error and that in Clause 13 the reference ought to be to "Great Britain" rather than "the United Kingdom". Perhaps the noble Lord the Minister might like to confirm that, or otherwise.

Lord McIntosh of Haringey

The noble Lord, Lord Monson, has certainly caught me on the hop. I had seen the definition in paragraph 129 of Schedule 1 but I had not observed the definition in Clause 13(5). If may, I will write to the noble Lord, place a copy of the letter in Library and copy it to the noble Lords who have taken part in this debate.

Lord Wedderburn of Charlton

When my noble friend replies by letter, a copy of which I hope he will place in the Library, he will no doubt notice that in Clause 13(5) the definition is for a particular purpose; that is, the purposes of Section 10(5)(b). When he considers the matter, he may wish to take the view that there is a different definition for this clause than perhaps for some others.

Lord McIntosh of Haringey

I would like to think that my noble friend had got me out of a difficulty; I do not think he has. Clause 10(5)(b) refers to alternative times for disciplinary and grievance periods. I do not believe that helps the Northern Ireland issue.

Lord Tebbit

I wonder whether the noble Lord, Lord McIntosh, could say whether he feels that this is quite right as it is drafted. Does this work in the case of small companies which still engage in what used to be a very widespread practice, in the style of wakes weeks, of closing down a company for a period of perhaps a week or a fortnight—for five or 10 working days when everybody goes on holiday? The managers or owners of a company may be away on holiday and perhaps not readily in touch during a period which has been triggered by some event under these provisions.

5.30 p.m.

Lord McIntosh of Haringey

There are two answers to that. First, the Bill says that the triggering event when a period is being defined after which an employer has to do something is the date when the employer receives the notice. Therefore, if the employer has been away on holiday and does not receive the notice until he comes back, the qualifying period is the period after the day on which he comes back. That point was made by the noble Lord, Lord Taylor of Warwick, and is dealt with in the Bill. On the issue of wakes weeks, where that happens—it is increasingly unusual these days—it is always possible by agreement for a period to be extended to take account of that.

Lord Tebbit

I am grateful to the noble Lord. I have not found how the term "employer" is defined. If a proprietor, who is colloquially what we would call the employer and who runs the whole business, goes away and the company secretary receives the notice, does that trigger the start? That is not a problem in large companies but in companies of the size dealt with by the Bill there could be a real problem.

Lord McIntosh of Haringey

The definition in the schedule of an employer is somewhat circular. It states: References to the employer are to the employer of the workers constituting the bargaining unit concerned". That does not quite answer the noble Lord's question. But I think that the answer to his question is that the employer is the person with whom the worker has a contract of employment. That will be defined by the company as being the person who signs that contract of employment on behalf of the company.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 10:

Page 18, line 43, leave out ("in") and insert ("before the end of")

On Question, amendment agreed to.

Baroness Seccombe moved Amendment No. 11:

Page 18. line 47, leave out ("10") and insert ("20")

The noble Baroness said: In moving this amendment, I wish to speak also to Amendments Nos. 16, 191 and 194. They are all identical amendments and extend the time for the machinery for union recognition to operate under paragraph 9 and, as regards the employer and the union, if the derecognition machinery is to be invoked under paragraphs 80(6) and 82(3). The extension that I propose is a moderate one—from 10 working days to 20 working days. By no stretch of the imagination can this be regarded as giving either side the opportunity to play for time. On the one hand, the party invoking the machinery, either by seeking union recognition or derecognition, will have had all the time it needs before launching its request carefully to consider its position and all its implications and to prepare its case, while the other side will have to start from scratch and may need time to take expert advice or to consult with the workers. Two working weeks, because that is all we are talking about, is too short, while extending it to four working weeks will harm no one. These cases will not be ones of immediate urgency. There will be no burning fire to put out.

I have noticed that among the vast swathe of amendments to Schedule 1 which the Government are introducing at this late stage after all the hours the Bill spent in Committee in the other place they are proposing to alter the number of days for what is described as the second period of the same machinery and the negotiating period and the time for a ballot from 28 days to 20 working days. These very sensible amendments to exclude weekends and holiday periods now provide for 20 working days for the operation of the particular machinery involved in those clauses. There is absolutely no reason why, in the interests of consistency, the periods covered by these four amendments should not be identical. I trust that the Government will accept them. I beg to move.

Lord McIntosh of Haringey

These are indeed modest amendments and I understand the basis on which the noble Baroness has moved them. I wish to speak, first, to Amendments Nos. 11 and 191 and then to Amendments Nos. 160 and 194; Amendments Nos. 191 and 194 being the time periods for derecognition. The aim of all four amendments is to ensure that there is enough time for negotiation. That is a laudable aim. But there is no point in prolonging negotiations if the parties have nothing to say to each other. At all stages of the process the parties may agree to extend the period of negotiation. If agreement cannot be reached, or if one party refuses to negotiate, then a requirement for additional time just drags out the process. That is what would result from the amendments.

Amendments Nos. 11 and 191 seek to amend the schedule where the parties agree. The amendments would extend the employer's initial response period from 10 working days to 20. That would add up to two weeks to the recognition process, which in the worse case could run to 18 weeks from the initial request to the holding of the ballot. That would lengthen the application process without materially improving it. If the employer is willing to negotiate, there are an additional four weeks for negotiations and the employer and the union can agree to extend this period still further. If the employer will not negotiate, there is little point in delaying the application.

When the topic was discussed in Committee in the other place much was made of the potential problem for the small business where the employer was on holiday. I think that I answered that point in what I said to the noble Lord, Lord Tebbit. The 10 working day period starts the day after the request was received by the employer and in all cases the employer will have two full weeks to decide whether or not to negotiate. I cannot see any benefit to industrial relations in extending the first period for negotiation to 20 working days.

Amendments Nos. 16 and 194 apply where the negotiations fail. The amendments would, in effect, require a union to accept an employer's request to involve ACAS at any time during the negotiations about recognition under paragraph 11. There are four weeks—20 working days—for these negotiations, or possibly a little longer because of the amendments which have just been agreed to. During the first two weeks of this period, if the employer proposes the use of ACAS in conducting negotiations, and if the union refuses or ignores the request, the union may not apply to the CAC for a determination of the appropriate bargaining unit or whether the union should be recognised. The amendments would extend the period in which the employer could, in effect, require the union to accept the services of ACAS from two weeks to four weeks, the same length as the negotiation period. There is no point in involving ACAS if it does not have any time in which to work. Of course it is possible that the union and employer will agree to extend negotiations; but then they can also agree to involve ACAS. We are discussing the question of whether it is reasonable to require one party to accept the use of ACAS.

There is also no point in allowing one party to make a request for the use of ACAS a week before the end of negotiations since the other party has 10 working days in which to accede to the request. So, for example, a union could wait for a week, until the negotiating period was over, accept the employer's proposal that ACAS be involved, and then refuse to extend the period for negotiation. The actual involvement of ACAS would be nil. So I do not think the amendments would have any effect in practice.

The amendments, however well meaning, imply that it would be unreasonable for a union or employer to reject a proposal for the use of ACAS which was made on the last day of negotiations. I do not think that that is unreasonable. What would be unreasonable is to require the union or employer to accept the proposal, which is what the amendments—I do not think wittingly—would do.

Baroness Seccombe

I thank the noble Lord for that detailed answer. We see a difference between the second stage and the 20 working days. We shall study the noble Lord's answer and consult with colleagues. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 12:

Page 18. line 48, at end insert ("for recognition")

The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 33. 46, 48, 64, 184, 185, 187, 190, 211, 213, 214, 216, 217 and 220.

The amendments are miscellaneous drafting improvements. They have the effect of removing superfluous words, adding clarity, correcting cross-references et cetera.

Amendments Nos. 12, 48 and 220 are clarifications, which have no effect on the function of the schedule. Amendment No. 33 brings the wording of paragraph 21(3) into line with paragraph 90(5)(b), the equivalent provision dealing with derecognition ballots. Amendments Nos. 46, 187, 190, 211 and 214 remove superfluous words. Amendment No. 64 inserts a missed cross-reference, and Amendment No. 184 corrects an erroneous cross-reference.

Amendments Nos. 185 and 213 correct a logical omission, and require requests for derecognition to be received in order to be valid, as in paragraph 4.

Finally, Amendments Nos. 216 and 217 ensure that the definition of "bargaining unit" in Part VI is consistent with that in the rest of the Bill: a group or groups of workers.

I commend the amendments to the Committee. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 13 to 15:

Page 19, line 2, leave out ("28") and insert ("20 working") Page 19, line 21, leave out ("in") and insert ("before the end of") Page 19, line 30, leave out ("in") and insert ("before the end of")

On Question, amendments agreed to.

[Amendment No. 16 not moved.]

Lord McIntosh of Haringey moved Amendment No. 17:

Page 20, line 14, after ("day") insert ("after that on which")

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 18:

Page 20, line 40, after ("is") insert ("made in accordance with paragraph 10 or 11 and")

The noble Lord said: In moving the amendment., I speak also to Amendments Nos. 19, 20, 24, 59, 62, 63, 65 to 68, 70, 79, 85, 175 to 177, 195 to 200.

These purely technical amendments clarify the procedure for the scrutiny of applications by the CAC. They ensure that applications to the CAC must be made in accordance with the relevant parts of the schedule.

Amendments Nos. 18, 19 and 20 deal with applications for recognition, which are required to pass the preliminary tests in paragraphs 28 to 36 inclusive. They require the application to be in accordance with paragraph 10 or 11. Paragraph 10 relates to when the employer rejects the request and paragraph 11 relates to when negotiations fail. In other words, the CAC must be sure that the negotiation process in those paragraphs has been followed. Amendments Nos. 198, 199 and 200 do the equivalent for the derecognition procedure. Amendments Nos. 59, 63, 65 to 68 and 70 make it clear that the preliminary tests apply to an application to the CAC under paragraph 10 or 11 and not, for example, the union's application under paragraph 3.

Amendment No. 62 corrects an oversight: it deals with the case where two or more unions are jointly recognised. The present draft deals only with a single union.

Amendment No. 79 is a clarification of paragraphs 41(2) and 41(3), and Amendment No. 85 corrects a "typo". Amendments Nos. 175, 176, 196 and 197 all remove superfluous uses of "to the CAC".

Amendment No. 177 is to ensure consistency with the parallel provision in paragraph 14(5). Amendment No. 195 provides that a failure to respond to a proposal of ACAS arbitration within 10 working days has the same effect as a refusal. This is to ensure consistency with paragraph 11(5).

All of the amendments make modest and, I hope, unobjectionable improvements to the schedule. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendments Nos. 19 and 20:

Page 20, line 43, at end insert ("made in accordance with paragraph 10 or 11 or is not") Page 21, line 1, after second ("is") insert ("made in accordance with paragraph 10 or 11 and is")

On Question, amendments agreed to.

Lord McIntosh of Haringey moved Amendment No. 21:

Page 21, line 6, after ("day") insert ("after that on which")

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 22:

Page 21, line 9, at end insert—

("Withdrawal of application

14A.—(1) If an application under paragraph 10 or 11 is accepted by the CAC, the union (or unions) may not withdraw the application—

1. (a) after the CAC issues a declaration under paragraph 19(2), or
2. (b) after the union (or the last of the unions) receives notice under paragraph 19(3) or 20(2).

(2) If an application is withdrawn by the union (or unions)—

1. (a) the CAC must give notice of the withdrawal to the employer, and
2. (b) no further steps are to be taken under this Part of this Schedule.")

The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 27, 29, 30, 31, 32, 37, 38, 42, 158, 207 and 208.

A major principle underlying the recognition procedures is the desirability of voluntary agreements. An implication of this principle is that it should usually be possible to withdraw an application to the CAC without being forced to go through the entire procedure. I am reminded of what is happening at the borders of Kosovo and Macedonia at the moment.

There are other circumstances in which it should be possible to withdraw an application. For instance, if the CAC determines an appropriate bargaining unit which is different from the union's proposed bargaining unit, the union may wish to withdraw its application, build up support in the appropriate bargaining unit and then reapply. The Government believe this should be allowed for by the schedule.

At present the schedule is unclear as to whether an application to the CAC may be withdrawn, and what the consequences of that withdrawal would be. This is a particular problem for Part I of the schedule, since the recognition procedure is complicated by the need to identify a bargaining unit.

The amendments are intended to clarify the situation. They allow applications for recognition to be withdrawn at any time up until a ballot is arranged by the CAC. Amendment No. 22 does so by stating that they cannot be withdrawn later.

Once the ballot process begins, the union is committed to seeing it to a conclusion. This will deter speculative applications, and by requiring the ballot to be held will produce a definite result for or against recognition. Whoever wins the ballot will be able to say to the other party, "You lost fair and square, now let's move on". In other words, it will encourage a definite result.

Withdrawal of an application will not be free of consequences. There will be no penalty for withdrawing an application before it is accepted. Once the CAC accepts an application, however, there will be a three-year bar on applications by the union for recognition in the same bargaining unit, or in a similar unit. Paragraph 34 already has this effect. So a union will be able to withdraw, but it will not be able to come back for three years. Withdrawal may still save time, face and money.

These are helpful amendments which clarify the procedure for withdrawal of applications for recognition. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 23:

Page 21, line 15, leave out ("28") and insert ("20 working")

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 24:

Page 21. line 16, leave out ("accepts the application for decision,") and insert ("gives notice of acceptance of the application,")

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 25:

Page 21, line 30. leave out ("compatible with") and insert ("supportive of")

The noble Baroness said: This very short amendment would require the CAC to ensure that when it decides what is an appropriate bargaining unit within a business, that unit should be supportive of effective management and not merely compatible with it.

This is not merely a matter of semantics. The Oxford English Dictionary defines compatible as meaning able to co-exist or being well suited. A secondary meaning is closer to what we are looking for because merely being able to co-exist with effective management, as the paragraph at present provides, is not enough. Earlier this afternoon I complained about some of the remarks from the Opposition Benches, not from the Front Bench, I hasten to say, that took us back to trade union relations a while ago. Noble Lords might think that my next line does the same. Co-existence, as noble Lords will recall, was the minimum objective of the West in regard to communism during the Cold War. Peaceful co-existence was the next objective.

As an example, a particular bargaining unit, for example an outlying factory, may be compatible with effective management because it is geographically separate and distinct from the rest of the enterprise, while still not being supportive of it because it could end up with different conditions being applied to identical but geographically different units in a business when the circumstances did not warrant it.

The many definitions in the dictionary of the word "support" include these: to carry all or part of the weight of, to give strength to, or to encourage; to back up, to maintain, to keep from falling or to keep from sinking. We fully support the concept that in defining an appropriate bargaining unit the CAC must, in the slightly altered words of the paragraph, take into account whether the unit will carry part of the weight of effective management, give strength or encouragement to effective management, hack up effective management, or keep effective management from falling or sinking.

I emphasise that we do not wish to diminish the concept of the provision. We want to see it properly defined because the phrase "effective management" is not dealing with a tangible, measurable thing that is capable of objective judgment. It is only a word, but an important one. We hope that the Government will accept it as the constructive amendment that we most certainly intend that it should be. I beg to move.

Lord McIntosh of Haringey

I am sure that the amendment is intended to be constructive. It is a subtle little amendment, and I quite like it for that. But I am afraid that the noble Baroness destroyed her argument in her quotations from the dictionary. She said that the first definition of "compatible with" was "co-existence" but the second was "consistency", which is what she wants to achieve. If the definition is already there in the dictionary, surely "compatible with", meaning "consistent", is the right term to use.

Of course we want the choice of bargaining unit to support effective management. The CAC's general duty already requires it to encourage and promote effective practices and arrangements in the workplace. However, the problem with the amendment is that the duty that it would impose is more subjective than merely to ensure compatibility with, and therefore consistency with, effective management. It could make the CAC's decision more liable to challenge in the courts; and in extreme cases it might bring the CAC and the employer into conflict because they disagreed about what was supportive and what was not supportive of effective management. The amendment would make the CAC's decisions more liable to challenge, and hence risk disrupting the effective function of the CAC. I am sorry; I cannot support the amendment.

Lord McCarthy

That is right. The point about the words on the face of the Bill is that they are negative. The words used are "compatible with"—in other words, "not incompatible".

The critical thing that management wants is that the CAC does not recommend a bargaining unit which cuts across the relative autonomy of different units inside an organisation. It wants the CAC to respect the organisational structure that management has introduced into the firm. Any sensible arbitration committee of this kind would do that. It is a negative thing. It does not want people to mess up existing arrangements and put in a collective bargaining unit which cuts across different groups of workers whose wages, terms and conditions are largely autonomously determined. That is a negative thing.

If the words "supportive of effective management" are used, what does that mean? It could mean anything. If one took the kind of attitude taken by the noble Lord, Lord Tebbit, who is not in his place, one would say that in any organisation a form of recognition would not be supportive of effective management and there would be an attempt to find one that would be the least effective from the workers' point of view.

What workers want is that the bargaining unit should fit the solidarity or sense of common interest of a particular work group or series of work groups. It is the job of the CAC to try to find a middle ground between those two viewpoints. In so far as we are expressing what needs to be done from the management point of view, "compatible" is much easier to apply than "supportive".

Baroness Miller of Hendon

Obviously I shall withdraw this subtle little amendment, as it was described by the Minister. This is a case of déjà vu. It reminds me of the time when I, from this side of the Chamber, debated the national minimum wage with the noble Lord, Lord Clinton-Davis. My amendments were described as "charming", "modest and "beautiful". All kinds of lovely words were used, making me feel very warm. Nevertheless, the Government refused everything. We have heard a different adjective applied to my amendment today. I beg leave to withdraw it, given the very charming way in which the Minister replied.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 26:

Page 21. line 41, at end insert ("(4A) The CAC must give notice of its decision to the parties.")

The noble Lord said: With this amendment, I shall also speak to Amendments Nos. 105, 107, 108, 110, 111, 113 to 117, 119, 162, 164 to 166, 168, 169, 171, 172, 174 and 179 to 182.

These amendments are concerned with the giving of notice. They are intended to ensure that notice of applications and decisions is given at appropriate times to keep the CAC, employers and unions informed of progress. They also deal with a problem with the existing text concerning the CAC's rejection of invalid applications.

Amendment No. 26 requires the CAC to give the parties notice of the appropriate bargaining unit if it has to decide one under paragraph 16. The current text of the Bill omits any requirement to do so and the union will need notice of the appropriate bargaining unit to have the option of withdrawing its application because the unit has changed.

Amendments Nos. 105 and 107 deal with a problem that arises if an employer makes an invalid notification under paragraph 55, which is concerned with a situation where an employer believes that the unit has ceased to exist. If the union does not question the validity of a notification, it is not clear how the CAC should act. These amendments require the notice to be copied to the CAC and for the CAC to decide whether it is valid.

Amendments Nos. 108, 110, 111, 113 to 117 and 119 are consequential.

The other amendments, Amendments Nos. 162, 164 to 169, 171, 172, 174 and 179 to 182, concern a situation where an employer applies for derecognition on grounds of having fewer than 21 workers. The amendments specify that the 13 weeks during which the employer had fewer than 21 workers must be immediately prior to the application under paragraph 75, but allows five working days for the application to be made—which sounds realistic. Amendment No. 171 deals with the same problem of an invalid notice that arose in connection with paragraph 55. These are technical amendments which improve the flow and function of the schedule. I commend them to the Committee. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 27:

Page 21, leave out lines 42 to 44

The noble Lord said: This amendment was spoken to with Amendment No. 22. I beg to move.

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 28:

Page 22. line 10. at end insert (". and (c) the qualifying members for the purposes of this sub-paragraph are fully paid up and their membership has not ceased or been suspended owing to resignation, disqualification or the non-payment of dues or internal union disciplinary procedures.")

The noble Baroness said: Paragraph 17 of the schedule deals with the definition of an appropriate bargaining unit by the CAC. The CAC is required in paragraph 17(2)(a) to decide whether, members of the union (or unions) constitute at least 10 per cent of the workers constituting the bargaining unit".

I cast absolutely no aspersions on the integrity of any union or union officials who may be called upon to prepare a case for recognition, an essential constituent of which is the number of its members working in a particular place. However, any of us who have had anything to do with the compilation of lists of persons qualified for something or other know how frequently unqualified people are included. When I was chairman of my local family health service authority I was absolutely amazed to discover that there were numbers of "ghosts" appearing on GPs' lists of patients: patients who had moved or died without the doctor even being aware of it.

Every public company has a list of shareholders whom it can no longer trace for one reason or another. Most, if not all, unions will have a rule suspending a member from membership privileges for non-payment of dues or for other reasons listed in the amendment; or its membership list may not be fully up to date. As regards the latter problem, the union ought to bring the lists up to date if it is to count heads. Ten per cent is not a very high number of members needed to qualify. It cannot be right that, say, in a unit with 100 workers the union only has to produce a list of just 10 persons whom it says are members to meet the first condition, and it then transpires that one of those persons is disqualified from participation under the union's own rules.

If it is the union itself that makes the rules about qualifications, this amendment is not anti-union. It is not about vote-rigging or the stuffing of ballot boxes. I have no doubt at all that the unions will act with propriety and will ensure that their officials and shop stewards also act with propriety. But the purpose of the amendment is to ensure that other workers and their employers can be sure that what is done is done properly—in other words, that the procedures are, in a phrase that is becoming extremely fashionable in "politics speak", "transparent". I beg to move.

Baroness Turner of Camden

I hope that the government spokesperson will not feel disposed to accept this amendment. I feel that, in framing it, the noble Baroness probably did not understand exactly how unions operate. The proposed sub-paragraph refers to "fully paid up" members. Unions do not normally exclude people until they are, say, three months in arrears. We have the term "in compliance" with the rules which may mean that people do not have to be fully paid up members. If they are three months in arrears, they are still members. Therefore, the wording of the amendment is not acceptable. Moreover, the text of the Bill itself refers to members; in other words, people have to be members and fully compliant with their union in order to be regarded as members. This amendment is not acceptable from the standpoint of its wording or the Bill itself.

6 p.m.

Lord Cavendish of Furness

I support my noble friend's amendment. It is a minimum requirement. Even if the wording is slightly wrong, I hope that the Minister will listen to the arguments and perhaps produce an alternative. I echo my noble friend. I do not believe that there is anything to suggest that there is an assumption of corruption or wrongdoing here. In framing legislation it is a very good idea to prevent for all time the possibility of future corruption, which protects all parties in this case and society in general.

Lord Meston

I agree with the noble Baroness, Lady Turner, about the unnecessary reference to being fully paid up. I agree that a member who has ceased to be a member is therefore not a member. That would be sufficiently clear on the face of the Bill. What needs to be covered is the possible problem of suspended membership although I suggest that the words, owing to resignation, disqualification or the non-payment of dues or internal union disciplinary procedures are otiose and unhelpful. They might cause confusion.

When the noble Baroness, Lady Miller, moved her amendment I could not help but think that I would not want to be the patient of any doctor who did not know when his patient had died.

Lord McIntosh of Haringey

I hope I can assure the noble Lord, Lord Cavendish of Furness, that I always listen to the arguments. Whether I understand them is quite another matter. I am sorry that we are unable to agree to this amendment. We understand the concern that union membership should not be exaggerated or inflated, but I do not believe that the amendment achieves the effect that is wanted. The amendment asks, "When is a trade union member not a trade union member?" That is not a trick question, nor is it a difficult one. If union membership has lapsed, then according to the rules of the union that person is no longer a union member. That is true whether it is because of resignation, disqualification or the non-payment of dues. In any of those circumstances a person does not count as a union member for the purposes of the schedule.

The relationship between a member and his union is a contractual matter between the worker and the union. A union member has the right to end his or her membership on giving reasonable notice and complying with any reasonable conditions. Of course, a worker has the right to join or not to join a union. Therefore, it is not appropriate to specify that union members must be fully paid up. There are Benches of union leaders behind me. I confess that I have been known to become more than a year in arrears with my union dues. It was then discovered that I could be persuaded to pay my union dues in advance, which is what I do now. Sometimes I avoid the rises which occur in union dues from time to time. In practice the important point is that the 10 per cent membership is only the first hurdle. Any union which can muster only 10 per cent membership by counting members not in good standing is most unlikely to pass the test of having majority support. Any evidence that the union had distorted its membership would count against it in the majority support test. I do not believe that the amendment would screen out any more applications than paragraph 17 does at the moment. I hope that the noble Baroness will not press the amendment.

Lord Cavendish of Furness

The noble Lord dealt adequately with the two circumstances of resignation and disqualification, but he was silent about suspension. Perhaps the noble Lord can deal with that.

Lord McIntosh of Haringey

It depends on the union's rules. If a union says that a suspended member is a member of a union, that would count towards the provisions of the schedule. What it means is that a member would be suspended from membership and is therefore not a member of a union.

Baroness Miller of Hendon

I take no offence at the noble Baroness, Lady Turner, suggesting that I am not so qualified in knowing all the membership rules of trade unions. She is right. I have never been a member of a union. When I ran my own business I did not have a union shop. I am well aware that noble Lords opposite have enormous experience of all union matters. I make that absolutely clear. That may be why the wording of my amendment is not as it should be.

However, I believe the point I was trying to make is important. The noble Baroness, Lady Turner, said that it was usual to have in the rules that a member of a trade union could be up to three months in arrears with dues and still be a member. When we talk about recognition for the purposes of collective bargaining for small businesses where there are perhaps between 23 and 25 people working in the business and only 10 per cent have to be in a trade union to trigger the whole mechanism, then whether part of that small number of members is in arrears or not could be quite important. At this stage I shall seek to withdraw the amendment and take advice on how to reword it and make it more acceptable.

As regards the comments of the noble Lord, Lord Meston, I shall most certainly tell him outside the Chamber exactly the difference between a ghost patient and a real patient and how a doctor would deal with the case.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendments Nos. 29 to 32:

Page 22, line 33, after ("must") insert ("give notice to the parties that it intends to") Page 23, line 9, after ("must") insert ("give notice to the parties that it intends to") Page 23, line 11, at end insert— ("20A.—(1) This paragraph applies if the CAC gives notice under paragraph 19(3) or 20(2). (2) Within the notification period—

1. (a) the union (or unions), or
2. (b) the union (or unions) and the employer.

may notify the CAC that the party making the notification does not (or the parties making the notification do not) want the CAC to arrange for the holding of the ballot. (3) If the CAC is so notified—

1. (a) it must not arrange for the holding of the ballot,
2. (b) it must inform the parties that it will not arrange for the holding of the ballot, and why, and
3. (c) no further steps are to be taken under this Part of this Schedule.

(4) If the CAC is not so notified it must arrange for the holding of the ballot. (5) The notification period is the period of 10 working days starting—

1. (a) for the purposes of sub-paragraph (2)(a), with the day on which the union (or last of the unions) receives the CAC's notice under paragraph 19(3) or 20(2), or
2. (b) for the purposes of sub-paragraph (2)(b), with that day or (if later) the day on which the employer receives the CAC's notice under paragraph 19(3) or 20(2).")

Page 23, line 12, leave out ("19 or 20") and insert ("20A")

The noble Lord said: These amendments were spoken to with Amendment No. 22. I beg to move.

On Question, amendments agreed to.

Lord McIntosh of Haringey moved Amendment No. 33:

Page 23, line 19, leave out from ("may") to end of line 20 and insert ("decide")

The noble Lord said: This amendment was spoken to with Amendment No. 12. I beg to move.

On Question, amendment agreed to.

Lord McCarthy moved Amendment No. 34:

Page 23, line 21, leave out from beginning to ("In") in line 25 and insert— ("(4) The ballot may be conducted—

1. (a) at a workplace or workplaces decided by the CAC, or
2. (b) by post, or
3. (c) by the employment of proxies, or
4. (d) by a mixture of the methods set out in (a), (b) and (c),

depending on the CAC's preference, having regard to the need to encourage a high turnout of employees in the ballot. (5) In addition to the need to encourage a high turnout,")

The noble Lord said: The object of this amendment is to maximise the turnout in recognition ballots. The assumption is that all sides of the House would want to see ballots which result in recognition or non-recognition having the highest possible turnout. At the moment the Bill does not support that contention. Page 23, line 21, states that, The ballot must be conducted—

1. (a) at a workplace or workplaces decided by the CAC, or
2. (b) by post,

depending on the CAC's preference".

The Bill continues: In deciding how the ballot is to be conducted the CAC must take into account— (a) the likelihood of the ballot being affected by unfairness or malpractice if it were conducted at a workplace or workplaces".

So malpractice and unfairness are identified with the workplace. The other provisions are, "(b) costs and practicality; (c) such other matters as the CAC considers appropriate".

We say that that is old hat. It goes back to the days of shop floor meetings where people raised their hands before they went on strike and things of that nature. We now need a system in which the CAC can combine any method it feels appropriate, the objective of which is to maximise turnout. Our amendment states that, The ballot may be conducted—

1. "(a) at a workplace or workplaces …
2. "(b) by post, or
3. (c) by the employment of proxies, or
4. (d) by a mixture of the methods set out in (a) (b) and (c)".

We are leaving it all to the CAC to find the best possible mix of methods in order to maximise the turnout. We say that it is, depending on the CAC's preference, having regard to the need to encourage a high turnout of employees in the ballot".

I take it that there is no dissent about the contention that one wants to maximise the turnout in a ballot of this kind. We have the 40 per cent. test. It is not just the majority of the members of the bargaining unit who are members of the union, which is one way of achieving the objective, or that the majority of the bargaining unit vote for collective bargaining. We also need a 40 per cent. test of people in the bargaining unit who have to vote in favour of recognition.

It seems to me, and I believe to trade unions, that the 40 per cent turnout rule is a reasonable condition if everything is done to make participation possible. The problem is that we have carried over the fear of the workplace ballot from the days of the mass meeting. I am quite sure that the noble Lord, Lord Tebbit (who unfortunately is not in his place), still lives in that period, and loves it, but these are not the days of Red Robbo and strikes. We are talking about a secret ballot with conditions conducted by the CAC, not the union. The Government have provided a lot of protection and regulation to govern the conduct of that ballot.

One looks at improper interference in the conduct of recognition ballots. If one looks at the considerable volume of research and investigation carried out by ACAS last time legislation of this kind was considered one finds that improper interference is not the monopoly of unions. Improper interference by employers was reported in many ACAS reports. One of the major problems was that they had no real sanction or power to resist improper interference. We believe that in this case the Government have placed a number of protections on the face of the Bill.

We are talking here about a recognition ballot that is conducted by an independent organisation, the CAC. Surely, the object of the exercise must be to encourage participation so that there is the maximum number of workers involved in deciding whether they want recognition and a minority does not decide the matter one way or the other. That is the reason for the 40 per cent rule. For that reason one of the major objectives of the CAC and the Government, to maximise participation, should be on the face of the Bill.

I understand that the amendment is grouped with other government amendments, in particular Amendments Nos. 35, 36, 205 and 206. It may be that my noble friend Lord McIntosh will say that in combining these amendments I am given most of what I want. That is not so. My noble friend says that there will be a combination of methods and not just one rather than another, so we are not in a situation in which it is necessary in all cases for the CAC to decide whether it should be a postal or workplace ballot, which is a pointless decision. Nevertheless the factors that he wants to take into account are location—for example, whether the ballot takes place on board ship or the parties want it to be a multi-dimensional election. The amendment assumes that the norm is a choice between a workplace ballot and a postal ballot, and it is only if there is no real reason why there should not be a more effective result using a workplace ballot that one decides on a postal ballot. There is no commitment in the Government's amendment to maximising participation. There is no suggestion by the Government that in general as opposed to exceptional circumstances there should be a multiplicity of methods. Therefore, I ask the Committee to accept the amendment. I beg to move.

6.15 p.m.

The Deputy Chairman of Committees (Lord Brougham and Vaux)

I should advise the Committee that if this amendment is agreed to I cannot call Amendment No. 35.

Lord Clinton-Davis

I hope that my noble friend will accept the amendment. It is extremely important to ensure that there is as large a turnout at the workplace as is practicably possible. These are extremely important issues. I found my noble friend's remarks in moving the amendment extremely persuasive. The Government would be wise to accept the need to be rather more specific than their amendments. The amendments represent important and complementary provisions as far as concerns the Bill. Because of their importance there should be no room for ambiguity. I hope that my noble friend will view this amendment with approbation. Subject to anything that he may say, it seems to me that there is nothing in the amendment that is in any sense incompatible with what the Bill seeks to achieve. I hope that my noble friend will accept the amendment.

Baroness Miller of Hendon

I very much hope that the noble Lord the Minister will not accept the amendment moved by the noble Lord, Lord McCarthy. We believe that the amendment is thoroughly objectionable; it would allow ballots to be conducted by post and proxy voting. The noble Lord has tabled an amendment which would allow ballots to be conducted by post. We have no objection to that whatever. It is a very good thing to enable as many trade union members as possible to respond, and we have no objection to that. Our objection is to the provisions of sub-paragraph (4)(c). To hand over a proxy vote to a union activist is hardly an indication of a commitment. I believe that it also lends itself to direct moral pressure, if not personal intimidation.

Without wanting to open up old wounds, the history of unions pressurising workers at factory gate mass meetings is hardly reassuring as to how campaigns to secure proxy votes would he conducted. It is absolutely not necessary. If postal votes are permitted, as is allowed for in the amendment tabled by the Minister, there is no problem. People who cannot attend can vote by post, but proxy voting is another matter and we very much object to it.

Lord McIntosh of Haringey

My noble friend Lord McCarthy always seeks to anticipate my response to his amendments. He suggests that I shall try to persuade him that the Government have given him most of what he wants. My speaking note says that I can meet him half-way. I intended to say that I could meet him one-third of the way, so we are not really within striking distance.

There are essentially three elements to the amendment: the employment of proxies; the possibility of a mixture of voting methods; and the encouragement of a high turnout. I begin with the last element. I believe that we have done everything we can to encourage a high turnout. We require a substantial positive vote in favour of recognition. That means that those who seek recognition know that they must get at least 40 per cent of those eligible to vote to back recognition. As to those who oppose recognition, it is very risky to rely on abstention, for if the supporters of recognition reach the 40 per cent threshold only a majority of votes against recognition can prevent it. Therefore, both sides have the strongest interest in encouraging members to vote. The Government believe that this is the right way to do it. We want these decisions to have clear democratic legitimacy.

The amendment would make it the task of the CAC to encourage a high turnout. I suggest to the Committee that in this matter the CAC must be strictly neutral. If some people do not care either way about the decision and therefore do not choose to vote, that is their prerogative. It is for the supporters and opponents of recognition to try to persuade them to vote, not the CAC. The amendment would place the CAC in the invidious position of having to balance the need to encourage a high turnout against other factors, such as the risk of unfairness or malpractice.

The amendment appears to require the CAC to give higher priority to encouraging a high turnout than to avoiding unfairness or malpractice. Therefore the Government have encouraged voting by means of the structure of the Bill. That is a better way than placing the duty on the CAC as this amendment seeks to do.

As to the mixture of voting methods, there is a measure of agreement between us. We recognise that there may be circumstances where a mixture of workplace and postal voting may be appropriate. I do not go back, as the noble Baroness, Lady Miller, seeks to do, to the days of mass meetings and "I'm alright Jack" with Peter Sellers as the sinister union activist:. I had not heard the word "activist" for years until this afternoon's debate.

The best example of where workplace and postal voting together may be appropriate could be an oil rig where one crew is on duty and the other is ashore on leave. It would be sensible to ballot the on-board crew at their workplace—probably the only way one could do so. The crew on shore would have to be balloted by post. We had a representation from a union representing seafarers on precisely that point. Amendments Nos. 35, 36, 20:5 and 206 are proposed to deal with it.

My noble friend's third point is the employment of proxies. The noble Baroness, Lady Miller, attached highly emotive language to that aspect, but the Government are less sympathetic to proxies. We do not wish to complicate the procedure unduly. For any individual, a recognition ballot will be a rare event—unlike company general meetings, to several of which even a modest shareholder is likely to be invited each year. People who are off sick or on leave can mostly be accommodated by postal voting. We do not believe that proxy voting involving an essentially personal decision on a single issue is right—but not for the noble Baroness's reasons.

Lord Clinton-Davis

If that were to be coupled with a provision that there had to be in support of any proxy voting evidence provided that it was not possible to vote any other way, does my noble friend think that that would, in principle, be a way through this particular problem?

Lord McIntosh of Haringey

That is a hypothetical question. We have the possibility of workplace and postal ballots. I would need a lot of convincing that proxies add anything to those alternatives. As we have always provided for them to be permissible separately and we are now proposing that they be allowed together, we cover the waterfront. If my noble friend seeks to persuade me and produces an example, I would be glad to listen—as always.

One third of the way is all that I can say in respect of Amendments Nos. 35, 36, 205 and 206. The present situation is that the CAC has two choices, each with its own advantages and disadvantages—a workplace ballot and a postal ballot. The amendments would add a combined workplace and postal ballot where neither a workplace nor a postal ballot alone would represent a fair test of support.

I acknowledge that my noble friend Lord Clinton-Davis is saying that it tends to be better to err on the side of providing more options than fewer in statutes. It is likely that most situations would be best suited to a simple postal or workplace ballot but it would be foolish to deprive the CAC of the power to choose a combination of the two if that were more appropriate. There may be particular situations where a combined ballot is appropriate. I gave the examples of a merchant ship or oil rig. We want the CAC to have discretion to conduct a mixed workplace and postal ballot if only because, for particularly good reasons, it believes that to be appropriate. The key tests of appropriateness are the views of the employer and unions, location of the workers, and the nature of their employment.

Amendments Nos. 35 and 36 would allow such mixed ballots for recognition, and Amendments Nos. 205 and 206 relate to derecognition ballots. We set a requirement that 40 per cent of workers must vote in favour of recognition for an application to succeed. It is only fair that we allow the CAC to run ballots that do not artificially restrict the ability of workers to vote.

Baroness Miller of Hendon

The Minister referred to my use of the phrase, "trade union activist". I am not surprised that he has not heard that phrase for a long time. I claim that is because of the trade union legislation that we brought in. It is because we are concerned not to go back to those days that we have tabled amendments to the Bill.

Lord McCarthy

The noble Baroness says that the object of the Conservative administration over 17 years was to destroy trade union activists. That seems to be what she was saying.

Baroness Miller of Hendon

I did not actually say that. I said that the Minister had not heard that phrase because of the trade union legislation that we brought in. I hasten to add that the new Labour Government, it seems, have no intention of overturning much of the legislation they fought tooth and nail when in opposition but are happy with now. I could not resist saying that, in view of the Minister's remark.

Lord McIntosh of Haringey

Of course the noble Baroness could not resist saying that. Activism has its merits.

Lord Cavendish of Furness

We have heard much today about old days gone. The idea from the noble Lord, Lord McCarthy, that there is no such thing as activism or mass meetings at the workplace is absurd. I do not know where academics or Ministers go these days but evidently not to the north of England. Furthermore, I think that that is extremely healthy. I was pleased, by and large, by what the Minister said about the amendment. There is a great deal in the management of business and in the creation of wealth that involves a rather robust expression of feeling on the shop floor. I welcome that.

Lord McCarthy

Perhaps it is the acoustics in this Chamber, but I was trying to say that it was the noble Lord, Lord Tebbit, who was in the back of beyond in talking about activists. Never mind. Whether that is accidental or intentional, let me return to my amendment.

I did not expect the noble Baroness to be in favour of proxy voting. It is of course all right for companies. One can buy and sell Marks and Spencer by proxy vote but not use that method to achieve union recognition. All right. We do not need to have proxies. I gave that as an example. I want maximum participation. My noble friend Lord McIntosh says that we cannot do that, as if the members of my party—

Lord McIntosh of Haringey

I said no such thing. I said that the Bill wants to maximise participation. We want a high turnout. All I said was that we do not think it is the CAC's job to maximise participation. The people taking part in the ballot should do that.

Lord McCarthy

It is all right for the leaders of our party to go around saying, "For God's sake vote in the European elections." That is considered perfectly fair and proper but is not thought to be a job for the CAC. Okay. I want a series of provisions that result in high participation. It is said that the Government do not want that on the face of the Bill. One does not need that on the face of the Bill.

I want a series of provisions that induce high participation, partly because of the 40 per cent turnout rule. That rule is reasonable if there are facilities for high participation. But where employers have a vested interest, as they do, in discouraging high participation, one must have something going the other way. The easiest way for an employer to ensure that a 40 per cent turnout is not achieved is to make it difficult to vote.

Lord Brookman

Does the noble Lord agree that trade unions—and I represented a trade union—have a job to do as well? I am absolutely convinced that trade unions will do what is necessary and will work hard to achieve 40 per cent. We do not need that much help from legislation in that respect. We will do what is necessary and have substantial success.

Lord McCarthy

I sincerely hope that the noble Lord is right. Maybe I am living in the past in that respect. I remember what happened between 1974 and 1979. I remember all the obstructions that employers put in the way of high participation. I remember ACAS reports that spelt out the way that was done. As a result, quite rightly, this Bill has a number of protections for employees and trade unionists in the participation process. I am merely trying to say that there should be a mix of methods to induce high participation.

That brings me to the Government's amendment. The noble Lord. Lord McIntosh, said that he had met me one third of the way. Look at the words. Amendment No. 35 refers to, a combination of the methods". That is fine. But Amendment No. 36 states: The CAC may not decide that the ballot is to be conducted as mentioned in sub-paragraph (4)(c)"— the one I have just read— unless there are special factors making such a decision appropriate". So it is not going to be the norm. The useless, pointless choice between a workplace and postal ballot will still be the norm. The abnormal will be,

1. "(a) factors arising from the location of workers or the nature of their employment;
2. (b) factors put to the CAC by the employer or the union (or unions)".

The unions may put to the CAC the fact that they do not believe that they can achieve high participation unless they have a mix of methods. What would the Minister say to that?

6.30 p.m.

Lord Wedderburn of Charlton

A further question arises from the important remarks of my noble friend. Surely. the Government's Amendment No. 36 is somewhat odd and should be corrected as suggested by my noble friend. The factors which must be taken into account by the CAC exist in an inclusive fashion. They might refer to other factors. Many Members of the Committee have greater knowledge than I, but surely many trade unions tend to be individual in their structure, nature and culture. That is often why it is difficult to achieve a merger which would otherwise be sensible.

One does not want to encourage that as an obstacle. So would it not be sensible to stress that these factors, if they have to be mentioned, are only examples and that the CAC is free to take other factors into account?

Lord McIntosh of Haringey

The important point, in answer to both of my noble friends, is that it is greatly to the union's advantage to encourage a high turnout. It used to be thought that that was more readily achieved in workplace ballots. Many people opposed to trade unions used to oppose such ballots on the ground that they were more likely to be manipulated or even distorted. If the argument were only about high turnout, it could be said that there should be only workplace ballots.

However, the evidence is much more confused. There are examples of high turnouts in postal ballots; for instance, in a recent recognition postal ballot from ADT Security Systems the turnout was more than 70 per cent. It is true that nowadays, with more flexible working conditions and more people working away from a fixed location, a workplace ballot can be more difficult to organise than in a single-site factory. Therefore, unions, when making such decisions, must take into account many considerations peculiar to their situation. My noble friend Lord Wedderburn made exactly that point. However, what is consistent about them is that it is always in their interest to have a high turnout because of the turnout threshold we have included in the Bill.

Under those circumstances, all we are doing with Amendments Nos. 35 and 36 is to give the unions flexibility in order to help them achieve a higher turnout without risk of malpractice or distortion in the ballot. Our proposal is a worthwhile advantage. I cannot see what proxies add and I am not greatly tempted by the argument of my noble friend Lord McCarthy about shareholders.

Lord McCarthy

In the circumstances, we are happy to withdraw the amendment. It may be that we can get one-third of the way forward on Report. On that understanding, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendments Nos. 35 to 38:

Page 23, line 23, at end insert ("or (c) by a combination of the methods described in paragraphs (a) and (b),") Page 23, line 30, at end insert— ("(5A) The CAC may not decide that the ballot is to be conducted as mentioned in sub-paragraph (4)(c) unless there are special factors making such a decision appropriate; and special factors include—

1. (a) factors arising from the location of workers or the nature of their employment;
2. (b) factors put to the CAC by the employer or the union (or unions).")

Page 23, line 40, leave out ("has decided") and insert ("is required under paragraph 20A") Page 23, line 42, leave out ("of the decision") and insert ("that it is so required")

On Question, amendments agreed to.

Baroness Miller of Hendon moved Amendment No. 39:

Page 24, line 9, at end insert ("provided that, unless the employer otherwise agrees, such access shall only be required to be granted on each occasion outside the hours the employees are required to work and shall be restricted to such parts of the employer's premises as he may from time to time designate")

The noble Baroness said: In moving this amendment, I wish to speak to Amendment No. 209. I also have two amendments to Amendment No. 40, which is in this group. Perhaps I can be advised when I can speak to them.

Under paragraphs 21 and 29 of the schedule, an employer is obliged to provide access to the workers to, enable the union … to inform the workers of the object of the ballot and to seek their … opinions on the issues involved". The ballots referred to concern recognition in paragraph 21 and derecognition in paragraph 29. What I have described as an obligation is much more dramatically described in the introduction to each paragraph as a "duty." Well, it is only a word and in these days no one could object to being obliged or duty-bound to provide the facilities. On the contrary, we believe that it is far better to be on the employer's premises than at the factory gate, or even in the car park, where all kinds of unconnected and outside parties might want to join in.

Since the obligations are to allow the union access to the workers, I have to assume that this means personally and not being supplied with a mailing list. Perhaps the Minister will clarify that. If the employer has a large staff, there may not be a canteen or hall, or other space, to accommodate them all at once. Will the Minister tell us what will happen then? Possibly the Government will need to introduce yet another amendment on Report.

Without detracting from the principle involved in this clause, and despite the fact that in both cases there is the restriction that the access has to be reasonable, I fear that some further clarification is needed in order to enable an employer to have some idea about the meaning of being reasonable. I have provided two restrictions, both of which the employer is at a liberty to waive. First, the employer can require the meeting to take place outside normal working hours. What must not happen is for the unions to be able to get the workers to down tools to go off to a meeting of indefinite length during working hours. Calling meetings at an inconvenient time is not unknown in the history of trade disputes and is a means of exerting pressure on an employer by having what can be described as "a mini strike" without going through the formalities of calling a real one.

My second point is that the employer shall designate the place of the meeting. The Bill requires the employer to be reasonable. But the employer may not want the meeting to take place outside the loading bay where goods are constantly coming or going. He may not want it in the car park under the full glare of TV news. He may not want it on the shop floor where it will disrupt the work of another shift. As I pointed out, the Bill quite properly requires the employer to act reasonably.

Despite the reference by the Secretary of State during the Second Reading debate in the other place to, measures for partnership based on rights matched by responsibilities".—[Official Report, Commons, 9/2/99; col. 130] as with other large tracts of this Bill there are no responsibilities imposed on the unions to match the duties. As I recently reminded the Committee, that word is imposed on the employers under this provision. These two identical amendments at least restore the balance in two minor ways without seriously inconveniencing the union, even if at all. I beg to move.

Lord McCarthy

I am a little confused. We had wanted our amendment to be introduced on its own, but it became amalgamated. It is too late in the day to complain about that—

The Deputy Chairman of Committees

If the noble Lord would like to deal first with Amendment No. 39 I shall call Amendment No. 40 separately.

Lord McCarthy

No, I can deal with this, but it will be confusing to start with. I hope that the Government will not accept Amendment No. 39. In cases of attempting to gain trade union recognition by using public bodies, it has always been accepted that the public body be present in the organisation and have powers to talk to the parties involved, and that any surveys, ballots and counting will be done in the firm's time. Otherwise, it would be monstrous to insist upon the 40 per cent rule. If you say that you want a bare majority, it may be possible to do that outside the firm, but people may say that you have only a minority of people, 15 per cent of the labour force, and by a bare majority they have voted in order to get recognition, and we would agree with that. Therefore, there should be a high level of participation. That is what I was trying to say in relation to the previous amendment. If you suddenly say that the access has to take place outside the hours that employees are required to work, and you institute the 40 per cent rule, that will put an enormous premium on the employer's side of the vote. That would do everything possible to make the vote a foregone conclusion. Of course we could not accept that. That is a nonsense.

Turning to my own amendment—Amendment No. 40—the object is to describe in more detail the ways in which the employer is expected to co-operate and the way in which that co-operation takes place. Paragraph 22(1) states: An employer who is informed by the CAC under paragraph 21(8) must comply with the following three duties". That is something new which we did not have in 1974, when we hoped for a great deal. Sub-paragraph (2) states: The first duty is to co-operate generally, in connection with the ballot, with the union (or unions) and the person appointed to conduct the ballot; and the second and third duties are not to prejudice the generality of this. Sub-paragraph (3) states: The second duty is to give to the union (or unions) such access to the workers constituting the bargaining unit as is reasonable to enable the union (or unions) to inform the workers of the object of the ballot and to seek their support and their opinions on the issues involved". All that must take place inside the firm, in the firm's time. The CAC has to be given the names of the representatives of the workers in the bargaining unit, and the CAC's job, via the ballot conductor, whoever he is, is to give out any information supplied by the union and to become a kind of union post office. No doubt there will be a code of practice which will spell out in more detail the significant role for the union.

This amendment seeks to put parts of that on the face of the Bill. The amendment suggests that information—the names of all employees in the union—should be given directly by the employer to the union, not via the CAC, within seven days. We do not see why the employer should not be under an obligation to give that to the union rather than making him go through the CAC.

Secondly, we believe that there should be on the face of the Bill, not just in the code of practice, something about the facilities that the union enjoys during the campaign. The term "campaign" has not been used anywhere in this legislation; it is not in Fairness at Work. It will be a campaign. It was a campaign last time. The union will be making its case for the most part to non-unionists. It will be saying to the majority of workers who are not trade unionists, "This is why we think you ought to vote for collective bargaining". That will almost certainly be on the voting paper. The employer will reply to that, saying, "Nonsense, trust me, I'm your good employer and we are going to have a wage increase next week so you do not want to vote for this".

There will be a campaign. Therefore, as all the controls in this situation are in the hands of the employer, the employer controls the organisation, the hierarchy, the supervision; and the employer can always put his arguments across, as he should. We are saying that something should be on the face of the Bill about the facilities that the unions have in these circumstances. We are putting in small, moderate matters such as details of the facilities, where to hold meetings and so on.

The justification is that we know that in the past the kind of employer who got into this situation—we are not talking about the great majority of employers—and found himself in front of ACAS or the CAC resisted union access, frustrated union access, prevaricated and sent incomplete returns over and over again, as reflected in the reports of the legislation. In addition to the extra safeguards that the Government have put in paragraph 23 of Part IV of the Bill, we want those two things on the face of the Bill.

6.45 p.m.

Lord Clinton-Davis

In conjunction with the considerations that we are now addressing, one has to read the provisions of paragraph 23, which my noble friend will acknowledge. I believe that my noble friend is seeking to avoid ambiguity and unnecessary recourse to the CAC. That is thoroughly desirable.

In relation to Amendment No. 39, that is possibly a matter, when looking at the provisions of paragraph 23, that can be obviated completely. The point made by my noble friend Lord McCarthy as to the provision of all employees constituting the bargaining unit is quite important in an election. It is something that is commonplace. I hope that my noble friend will not take exception to that.

Moreover, the details of facilities and the place or places of work also are significant in relation to the holding of meetings, which are, of course, an essential provision in relation to any electioneering. I hope that my noble friend will accept that that is complementary to the requirements that the Bill currently sets out.

Lord Wedderburn of Charlton

Before my noble friend replies, perhaps I can ask him to take the problem addressed by this amendment very seriously when we return to it on Report. Wherever in modern societies the law plays a part in pushing the employer a little further towards collective bargaining than he would go on his own a significant percentage of the employers involved tend to resist, at any rate if they have not had much experience of trade unions.

One can take examples from many systems in Europe or North America, but I mention one to illustrate what I mean. In the United States, where the obligation to enter into bargaining in good faith has been an obligation since 1935—I do not suggest that our Bill goes anywhere near bargaining in good faith—there have been phases of employer resistance, many of which have been very successful. However, the example from the United States shows how a high percentage of employers tend to move towards what is permitted by the law—they do not necessarily cross the border—and what the law suggests as a standard for their resistance.

In the United States, of course, matters take a particular colour from the constitution because the employer so often takes his stand on his constitutional right to free speech. Any resistance to what he is allowed to do in terms of communication to the workforce is often ruled out by limitations on free speech in constitutional law.

Will my noble friend consider the matter in that light: that is, when it is agreed that a high turn-out and a free vote—the CAC's preferred method—are important? It is also a question of some groups of employers, in the British circumstance, doing what they are not forbidden to do. Therefore, especially in this matter of facilities, my noble friend Lord McCarthy made a strong case which I hope the Minister will consider before we come to Report.

Lord Cavendish of Furness

Perhaps I may say a word in support of my noble friend's amendment. If I heard the noble Lord, Lord McCarthy, right this time, he helpfully blew out of the water the myth that the Bill is about partnership. He talked about the campaign in which there would be winners and losers; the tension and the reinforcement of the "them and us" culture.

He spoke also, as he has done often today, about the bad employers against whom employees need protection. On this side we acknowledge that there are such things as bad employers; it is idle to pretend otherwise. At Second Reading the noble Lord, Lord McIntosh, said that bad employers in this present climate would probably go out of business, but they also needed to be legislated out of business. There was therefore a belt and braces approach to this minority of bad employers. But we hear nothing about had trade unionists. In fairness, if one says it is idle to pretend that there is no such thing as a bad employer, it is idle also to pretend that there is no such thing as trouble-making trade unionists. I accept that they are in a minority. I accept that we want to put those practices behind us; but they still exist. At least people can walk away from a tyrannical, unpleasant employer; the tyrannical, unpleasant trade unionist can do a mass of damage to the economy at large beyond the single company.

I therefore echo my noble friend Lady Miller in asking where is the matching responsibility and where is the protection for small business?

Lord McIntosh of Haringey

Quite honestly, this is a beast of a subject. It is probably the most difficult thing to legislate for. No one can complain that in Schedule 1 we have not sought precision, even at the expense of being extremely long-winded. But on this occasion we chickened out. We chickened out in the White Paper. We said that we were, minded to ask ACAS to draw up a statutory code of practice to help employers and unions understand what reasonable access means in practice". In paragraph 22(8) of the schedule we provided for such a code. Indeed, we have gone even further. We realise that it is possible that ACAS may not be able to produce such a code and allowed for the possibility that it might have to be issued by the Secretary of State. There is therefore no precision in these matters; there is no one right answer and I approach these amendments in that spirit. Of course there are arguments on both sides. Of course employers want to ensure that their workers are not distracted from their work and trade unions have an equally proper concern to put their views to workers.

Let me turn to Amendments Nos. 39 and 209. The noble Baroness is concerned about unnecessary disruption of business by campaigners for recognition. The code of access is intended to prevent that. I hope that the noble Baroness will be reassured by what I tell her about it. I am afraid that Amendments Nos. 39 and 209 give an employer too much scope to act unreasonably. It may be entirely reasonable for an employer not to allow access during working hours, but breaks in the working day may be a good opportunity for unions to approach workers and I do not believe that this amendment allows that. Perhaps the noble Baroness could clarify that point.

Under this amendment it would be possible for a hostile employer to designate unsuitable or inconvenient areas for access to workers. It might not quite add up to "non co-operation" but it would certainly be obstructive and we do not want that to happen. These amendments therefore go too far in the direction of helping the employer and too far against the trade union.

I turn to Amendment No. 40. There are two aspects to that and they are both difficult. First, there is the question of providing the union with a list of the names of workers in the bargaining unit. I acknowledge that we said in the White Paper that the employer would be required to do that. However, we reflected on that point particularly in the light of Clause 4 and Schedule 3. Schedule 3 will remove any duty on unions to give employers a list of names of union members who are to be balloted about or be called upon to take industrial action. Schedule 3 responds to a reasonable wish on the part of some workers to keep their union membership secret from their employer.

We have come to the conclusion that in relation to recognition ballots, employees could have an equally valid wish not to be identified to the union or unions seeking recognition. However, the union has a perfectly legitimate right, indeed a duty, to communicate with those workers and we provided for that in paragraph 22(6). A union can send material to the works to be balloted via the body conducting the ballot. That ensures that the union can put its case while avoiding the disclosure of names and addresses to the union. Disclosure to the union could also be contrary to the right to privacy guaranteed by Article 8 of the European Convention on Human Rights. Therefore for that reason, which has not been raised in debate, the Government are unable to accept the first part of my noble friend's amendment.

The second part of the amendment also causes problems. We hope that any reasonable employer would do his best to enable a union seeking recognition to have access to workers on the premises. However, we have to accept that some premises are unsuitable for this purpose. We accept too that it could be unduly disruptive to allow a union to call a meeting of workers during working time—I am not talking about mass chapel meetings in printing works at nine o'clock at night. There are problems where the workforce is peripatetic or works largely from home. In the Commons we heard about the problem of employers with a religious objection to trade unions. There are so many difficult issues involved that we believe it would be unwise to place any absolute requirements on the face of the Bill. Instead we propose to deal with these matters in a statutory code which can give good guidance in a more flexible way on what is reasonable and good practice. I hope that the CBI, the TUC and others will be able to contribute to such a code.

The noble Baroness, Lady Miller, did not speak to her amendments to Amendment No. 40 so perhaps I shall leave my comments until she does. The Government's approach to this—it is a statutory code off the face of the Bill—is the only realistic way of dealing with these difficult problems and is certainly better than the restrictions on both sides proposed by the amendments in this group.

Baroness Miller of Hendon

I am not comforted by what the Minister said about Amendment No. 39. I am comforted by the fact that he acknowledges that this is an extremely difficult problem; that the Government were not able to define it either in the Bill or in the Notes to the Bill and that those asked to advise as yet have not been able to come up with an answer. I am not happy with the suggestion that I shall somehow be comforted when I see it in the code. As the Government have had great difficulty until now, I am sure that they will also have difficulty with the code.

A great deal of legislation is coming out in codes of practice or regulations. We do nor have the same opportunity to discuss those as we would do if the measure were before us now. It is not helpful—although as helpful as the Minister can make it—for those who are trying to argue a different case if the grounds for turning down our suggestions are that the Government do not have a better answer but will somehow provide a better answer in the code. We shall not have an opportunity of dealing with that in such detail. That is extremely unfortunate.

The Minister asked whether the provision would prohibit any meeting at any time during the course of the day. I am not sure that it would. The amendment says, provided that, unless the employer otherwise agrees, such access shall only be required to be granted on each occasion outside the hours the employees are required to work". There are many hours during the day when an employee is not required to work and I am sure that some accommodation could be found. However, in view of what the Minister said I shall take that amendment away and see whether we can come up with something that is slightly more acceptable. It would be nice at this stage, after this number of hours—of course there are bigger things to come later on—if we obtained some small sort of co-operation or co-existence.

When I started my remarks I stated that I was somewhat confused about the correct order of things and that I was not sure whether I should speak to Amendments Nos. 40A and 40B, which are amendments to Amendment No. 40, because the noble Lord had earlier dismissed my amendments before I had spoken to them. I have a feeling that that has happened again. I believe that the noble Lord has spoken to Amendment No. 40. I was going to say to the Minister that I do have some very brief notes with me as to why I do not accept Amendment No. 40 as drafted.

7 p.m.

Lord McCarthy

If the noble Baroness wants a small concession, I can see nothing wrong with Amendments Nos. 40A and 40B; indeed, I think that they would make our amendment even better. However, that is not much good because my noble friend the Minister will not accept it. Nevertheless, I am not against the suggestions of the noble Baroness.

Baroness Miller of Hendon

That is the exact point I was trying to make. The noble Lord, Lord McCarthy, says that the Minister will not accept his amendment. The Minister has already spoken to Amendment No. 40 and has said that he will not accept my amendments before I have actually explained their purpose. That brings us back to where we were before. The noble Lord the Deputy Chairman of Committees said that that would not happen. However, I have no objection to any of this. I am absolutely sure that it is all inadvertent. As the Minister is not going to accept any of the amendments, I shall not say all the clever things I have written down.

Lord McIntosh of Haringey

We have done pretty well. We have had an amendment moved; we have had another amendment spoken to on the same subject; and we have reached agreement on amendments to an amendment in the same group without drawing breath. I am afraid that the noble Baroness is right. I am not going to accept my noble friend's amendment, even with the sensible amendments she has proposed to it and which he has accepted.

Perhaps I might say a few words about the code of practice. Some people use the derogatory phrase about the Government "chickening out" of decisions, but there are other arguments for a code of practice rather than trying to put everything on the face of the Bill. The principle argument for such a code is that it is drawn up in detailed consultation with those who actually spend their lives doing this sort of thing. It will be drawn up in consultation with the CBI, the TUC, and other employer organisations, together with other organisations and individual unions which wish to become involved. If something goes wrong it can be changed, but that would not be the case with legislation on the face of the Bill.

Therefore, although I have acknowledged that I do not have a perfect answer to all of these questions—and there may not be one; indeed, I suspect that, as so often, it will be different in different work places—I think that the code of practice which we proposed in the White Paper and which we have confirmed in the Bill represents the right approach. I think it would be a mistake to accept any of these amendments because they would restrict the proposed code of practice.

Baroness Miller of Hendon

The Minister said that there would be wide consultation with the C BI and the TUC as regards the code. However, can he confirm that there will also be consultation with other organisations representing employers? I ask that question because the CBI has not always been in line with, for example, the IOD or the EIS board, the small business bureau or, indeed, other such organisations.

Lord McIntosh of Haringey

I thought that I had just confirmed that. It is certainly not our intention to restrict consultation in any way.

Baroness Miller of Hendon

In that case, I shall certainly withdraw Amendment No. 39, but I shall look at it with a view to rewording it and perhaps adding one more amendment to the list of 100, or so, amendments which have been tabled by the Government. Indeed, more are due to come. I do not know the exact number but it is certainly way over a hundred. As the Minister has already indicated that Part II of Schedule 1 will be much changed on Report, I do not believe that one or two harmless, moderate little amendments that I may wish to bring forward could cause any problems for the Government.

Lord McCarthy

Before the noble Baroness withdraws her amendment, I should say that what the noble Lord said is quite true. There is much to be said in favour of a code of practice. However, the case against it is that it is not legally enforceable.

Lord McIntosh of Haringey

In the White Paper and in the Bill we have talked about a statutory code of practice.

Lord McCarthy

But it is not legal.

Baroness Miller of Hendon

I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 40 not moved.]

[Amendments Nos. 40A and 40B, as amendments to Amendment No. 40, not moved.]

Lord McIntosh of Haringey moved Amendments Nos. 41 and 42:

Page 24, line 12, at end insert ("after that on which") Page 24, line 50, leave out ("19 or 20") and insert ("20A")

On Question, amendments agreed to.

Baroness Miller of Hendon moved Amendment No. 43:

Page 25, line 2, leave out from beginning to ("by") in line 3

The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 44 and 45. These amendments all relate to the provisions in paragraph 19(2)(3) and (4) of Schedule 1, which provide for the cost of ballots regarding union recognition. It is sometimes confusing to have to follow the effect of an amendment which picks a word here or there out of a clause. In this case, as the wording concerned is very short, I should like to read to Members of the Committee an abbreviated version of it as it would be if my amendments were accepted.

The paragraph would say: (2) The gross costs of the ballot shall be borne by the union (or unions); (3) If there is more than one union, they shall bear the gross costs in such proportions; (4) The person appointed to conduct the ballot may send the union (or unions) a demand", and so on.

The effect of the amendment is to remove from the employer the liability to contribute 50 per cent of the cost of the recognition ballot, leaving the union or unions to pay the whole cost instead of just half. The justice of the amendment is simple. A union wants recognition, with which the employer disagrees, as he is entitled to under the Bill. The union invokes the machinery to test the views of the workers. The ballot may or may not prove to be in favour of the union's proposal. There is certainly no justification in making the employer contribute to the cost of a negative ballot which shows that he was right to resist the claim for recognition.

If the ballot proves to be in favour, then the union will benefit from the addition of new, dues paying members and, presumably, enhanced status. Once again, there is no reason why the employer should contribute to costs which the union will recover over time, even though he resisted the application in the first place. The payment of the costs is not the same as the rules relating to costs in civil litigation.

A liability to contribute to the cost of the ballot imposes an additional burden on employers, especially those operating small businesses about which I spoke earlier. They are the ones who will be most affected by disputed requests for recognition. The Government disclaim any intention of imposing unnecessary burdens on business. I believe that the paragraph, if unamended, will do just that. I beg to move.

Lord McIntosh of Haringey

On the face of it, the amendment seeks to encourage a union to minimise the costs of a recognition ballot. That is certainly a good thing. However, making the union pay for the whole ballot is not the way to do it.

The approach that we have taken is to divide the costs of a recognition ballot between the union and the employer. That means that neither party has an interest in going ahead with a ballot it is unlikely to win, or an extravagant, costly ballot. Both parties have an incentive to keep costs down, and, indeed, if they think they are not going to win, to avoid having a ballot at all. That is a thoroughly desirable alternative. This is the principle that the Government have applied to both recognition and derecognition ballots.

These amendments would not encourage co-operation by employers. They would give an employer scope to increase the cost of a ballot to deter a union from seeking recognition or to punish it for doing so. That would be petty and would not help to foster good employment relations. The present solution, where the costs of a ballot are split between employer and union, gives both an incentive to hold a quick, clean ballot. It is the best solution both financially and in terms of employment relations. Therefore, I hope that the noble Baroness will withdraw her amendment.

Baroness O'Cathain

Can the Minister tell us what impact the employer has on the overall costs of the ballot? For example, what say does the employer have in that respect? Is it the union calling for the ballot that determines what costs will be involved? Indeed, there could be many costs involved. There could be side meetings which would mean the cost of hiring rooms, and so on, as well as the cost of providing entertainment and even suppers. Under the Bill as is stands, what sort of input would the employer have as regards the total costs?

Lord McIntosh of Haringey

The ballot has to be organised by an independent organisation. The Electoral Reform Society has organised many ballots. The costs which we are discussing—which are shared between the union and the employer—are the costs of the independent balloting organisation. What unions or employers do on their own behalf is quite another matter and is a matter for them.

Lord Cavendish of Furness

Before the noble Lord sits down, in accepting that these costs constitute a disincentive to hold a ballot, do the Government accept that the cost is material? Is the Minister therefore saying that for a small company of 21 employees, for example, the cost, has the same materiality as for a giant trade union? I find that hard to believe.

Lord McIntosh of Haringey

The costs of a ballot depend in part on the number of people being balloted. A ballot in a small company will cost less than a ballot in a large company. A large company or a small company could receive a request for recognition from a large union or a small union. The burden of the costs will be greater for a small union than for a larger union; it works both ways.

Lord Cavendish of Furness

I am sorry but that is not the case. In the case of a small business of, for example, 21 people which is perhaps not wealthy, the Minister has accepted that the cost of a ballot could be material and could lead to a disincentive to hold a ballot. That being so, that is a material consideration. However, it cannot possibly be as material to a giant, powerful, rich trade union as it is to a small company.

Lord McIntosh of Haringey

As I say, it works both ways. This matter is more material to a small union than to a large union and it is more material to a small company than to a large company. A ballot comprises fixed costs and variable costs. The variable costs depend on the number of people who are being balloted; the fixed costs comprise the costs of preparing the questionnaire, and so on.

Lord Brookman

Let us consider a case where 20 people are balloted. What costs are involved? Are we talking about 20 postage stamps or a sum of £20, £30 or £10? Is that going to break the Bank of Monte Carlo?

Lord Cavendish of Furness

It is more likely to break the hank of a small business which is struggling and having more and more regulation put upon it than it would a giant, powerful trade union—

Lord Brookman

Is it the case—

Lord Cavendish of Furness

I have not quite finished. The Minister said that the cost is material and will constitute a disincentive in this regard. I did not suggest that; I think that it is an absurd idea.

Lord Brookman

I apologise for interrupting the noble Lord. However, I believe that a company which is in that kind of difficulty would need a trade union to pull it out.

Baroness O'Cathain

On the point of costs, the Minister mentioned the Electoral Reform Society. The activities of that organisation would involve more than merely the cost of postage stamps. After all. it has its administrative costs, its overheads and all the rest of it. I ask for clarification whether there is a market as regards bodies which organise ballots or are we just talking about the Electoral Reform Society? Is there a competitive element here?

7.15 p.m.

Lord McIntosh of Haringey

I should not have named that organisation as I am no doubt giving it a competitive advantage. There is a market in this area. There are other organisations which provide these services.

Baroness Miller of Hendon

As we do not know the costs involved, I sought to make the point that if a ballot did not succeed because the workers did not wish to have recognition of collective bargaining it seems extraordinarily unfair that the employer—who may be a small employer—may have to bear the costs of something that he did not wish to occur in the first place. I listened with interest to the comments of the noble Lord, Lord Brookman. He said that he thought the relevant costs were so small they should not inconvenience an employer in any way. If the costs are so small I do not see why unions should not bear these small burdens if they wish to adopt the measure in the first place. The noble Lord, Lord Brookman, mentioned the cost of postage stamps in this regard.

Lord Brookman

I agree with the noble Baroness. Let us do a deal; we shall swap the 40 per cent for 10 per cent and we shall pay all the postage.

Baroness Miller of Hendon

It is nice of the noble Lord to start to do deals with me but I am sure that the Members of his Front Bench would not agree with that. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 44 and 45 not moved]

Lord McIntosh of Haringey moved Amendments Nos. 46 to 50:

Page 25, line 9, leave out ("written") Page 25, line 13, leave out ("21 days starting with the day") and insert ("15 working days starting with the day after that on which") Page 25, line 44, after ("declaration") insert ("under this Part of this Schedule") Page 26, line 4, leave out ("42") and insert ("30 working") Page 26, line 6, after second ("day") insert ("after that")

The noble Lord said: These amendments have already been spoken to with Amendments Nos. 12 and 9. I beg to move Amendments Nos. 46 to 50 en bloc.

On Question, amendments agreed to.

Baroness Turner of Camden moved Amendment No. 51:

Page 26, line 14, after ("effect") insert (", subject to the following provisions of this paragraph,")

The noble Baroness said: This is by way of being a probing amendment to what I repeatedly said at Second Reading is a good Bill. The amendment derives from my own experience as a union official during the period when previous governments have sought to introduce legislation governing the conduct of employment relations. There have of course been numerous attempts in the past 30-odd years. Many of them were concerned with legislating for trade union recognition. Others, of course, were designed to constrain the ability of unions to act on behalf of members.

I believe that most people involved with industrial relations would agree that in the UK both employers and unions have been somewhat chary of involving the law too much. I say this with great respect to my noble friend Lord Wedderburn who sometimes agrees with me on that point. Of course it is accepted that as regards individual rights the employment tribunals and the EAT were welcome innovations. However, the enforcement of collective rights is a different matter. Previous attempts by governments—noticeably Conservative ones—have sought to make collective agreements legally enforceable. That has by tradition been resisted by unions. In fact I can remember when it used to be union policy to negotiate agreements which stated quite specifically that they were enforceable in honour only, and not legally enforceable.

Many employers were prepared to co-operate in that regard as both sides wanted to keep the lawyers out. The experience of the United States was not felt to be particularly encouraging in that regard. I remember that when I went to the States during that period I was surprised to discover that it was quite usual for a union's labour lawyer to accompany officials to negotiations with employers. One result of that was enormously thick agreements and, incidentally, no lessening in the number of industrial disputes. In the present Bill when the CAC makes an adjudication about recognition it can make the resulting agreement legally binding. The objective of the amendment is to allow both parties if they wish—I emphasise the expression "if they wish"—to opt that this should not be so. In other words, there could be an agreement that is binding in honour only. I shall be interested to hear the Minister's views on this point. As I said earlier, this is a probing amendment. I beg to move.

Lord McIntosh of Haringey

I am grateful to my noble friend for that explanation. If I have understood correctly, I believe that the amendments are intended to enable an employer and a union who have had a procedure imposed on them by the CAC because of their inability to agree to modify or end that procedure. However, that is exactly what sub-paragraph (5) of paragraph 27 does. It provides that if the parties agree in writing that all or part of the procedure is not to be legally binding, or if they agree to vary or to replace the procedure, they may do so. They are therefore free to replace the legally binding procedure with some other arrangement which is not legally binding if they so wish.

I think that part of the confusion is our fault in the sense that we could be misled by the end part of sub-paragraph (5) which states that, the written agreement shall have effect as a legally enforceable contract made by the parties". What we intend to be legally enforceable and what the sub-paragraph states is legally enforceable is not the original agreement which had been imposed but the agreement to end or vary the procedure imposed by the CAC. It is necessary to give the new agreement legally binding force to override the previous procedure. It does not have to impose any new legal obligations on the parties unless they wish it to do so and provide for that in the agreement. My noble friend's amendments are unnecessary because the wording achieves that. Similar arguments apply to Amendments Nos. 81 to 83, which are in the same group.

Baroness Turner of Camden

I thank my noble friend for his reply. In the light of his explanation, I shall withdraw the amendment. I shall look very carefully at what he said to see whether it would be a good idea to clarify sub-paragraph (5) on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 52 not moved.]

Lord Wedderburn of Charlton moved Amendment No. 53:

Page 26, line 23, at end insert— ("( ) In determining a complaint where the only remedy available is specific performance under sub-paragraph (6), the court shall not imply any term in the relevant contract, method or agreement falling within this paragraph which affects—

1. (a) the rights of employers, workers or an independent trade union to take action in contemplation or furtherance of a trade dispute, or
2. (b) the operation of subsections (2) and (3) of section 180.")

The noble Lord said: Amendment No. 53 reverts to the question raised earlier in the Committee's discussions. It attempts to point towards the new machinery, which will either form itself or be formed, in a situation where a collective agreement specified—as to method at least—by the CAC is legally binding. Speaking not only as a lawyer, I am unhappy at the way in which there has been very little debate, both in the other place and here, about the question of what follows from the new world of legally enforceable agreements, which, to a remarkable degree, my noble friend Lady Turner has just touched upon.

Amendment No. 53 takes us into a situation where an agreement or contract has been specified by the CAC, or under a CAC declaration, and one side or the other raises not a new question but a very old question—which I am sure that the noble Lord, Lord McIntosh, will appreciate—namely, that of one side saying to the other "You have broken the procedure". That is the oldest sentence in arguments about industrial relations and collective agreements. The problem is not new. One side says to the other, "You should have taken this course in the procedure before"—in some cases—"you called industrial action".

The new feature then provides for the innocent party to take action in a court for the only remedy which is permitted; namely, a specific performance, a matter we touched on earlier. In doing that, the innocent party will have a claim to that remedy—and that remedy alone—but of course within the procedures of that court. I suspect that I am right in saying that the Government have not yet vouchsafed just which court it will be. There were a number of types of actions under Schedule 1 which could be brought in the county court. Two of those have now been knocked out and the county court does not seem to be the favourite vehicle for that sort of action. Indeed, in such commentaries on the Bill that I have seen, most people assume that the action will take place in the High Court. When the schedule gives no guidance and the parties have a contract in front of them in respect of which they say there has been a breach, they would have a right within, at least, the new rules of the noble and learned Lord, Lord Woolf, to go to the High Court.

The first question is whether that is right or whether the plaintiff is to have a total claim as to the court. If that is right, then we must ask what is likely to happen in a High Court action against the background of this new type of enforceable collective agreement. I am aware that collective agreements could be enforceable under the old regime but, as the noble Baroness opposite knows very well, this is a new type of collective agreement which is enforceable by reason of a CAC declaration. If one got that far, it would mean that appeals would rely then on a question of law to the Court of Appeal or to your Lordships' Judicial Committee.

More importantly, in 1988 the Court of Appeal established that the interpretation of a collective agreement—not its legally binding character—should be drawn from the normal principles of employment law contracts, which are normally individual contracts. In one case it interpreted a minute of the Railway Staff Joint Council—a body well known to my noble friend Lord McCarthy—on the basis of implied terms and expressed terms; that is to say, "Is this the whole contract which I have before me?" "No. There are some implied terms". What kind of implications could we envisage in a contract which is in front of the High Court and it decides that such evidence as it has is not the full contract between the parties? That is highly likely because the CAC is not obliged to establish all the terms between the parties.

In many other systems of labour law, the court implies that there are "peace obligations", as they are called. Let me say that I cite foreign cases not because of a need to travel to conferences in delightful places but because we can learn from different jurisdictions. In Germany and Sweden, the peace obligation is the basis of the whole labour law system, either as a relative peace obligation, which covers points within the expressed agreement, or as an absolute peace obligation prohibiting all industrial action during the life of the agreement.

If nothing were done we would need a hot precedent—by which I mean an unusual case which established people's reactions to the whole system. That is how it would work. As we saw earlier this afternoon, it would not need an employer who is typical of employers in any way; it would need a case which would bring out the hostility or otherwise of other parties. If the High Court implied peace obligations into one example of the new collective agreement which is legally binding, my prediction would be that the whole system would crash to the ground. There would be an enormous argument about whether there should be an implied obligation and whether the court was right to give that impression.

If one looks at the individual employment contracts, which the Court of Appeal tells us to do in Mr. Cresswell's case in 1994 involving the Board of the Inland Revenue—about which one of your Lordships' should know something—the duty of co-operation was firmly established at the centre of employment laws. In the case of Mrs. Ticehurst in 1992, the Court of Appeal went much further. It established that a worker who returned to her work with her group—in her case a junior management group—with the wrong attitude and not being prepared to say she would not take action again, that by itself was a breach of the employment contract.

I am well aware that it is only those lawyers who look at employment law who come across these bizarre cases. I am happy to make plain the assertion that these are typical cases, slightly pressing at the edges. If the High Court applied the same concept to the interpretation of collective industrial relations, then a co-operative trade union might be caught more frequently than one would think by reason of implied obligations of peace; it might be caught perhaps rather more frequently than a union which was less co-operative since the intentions of a co-operative union might be held to a higher standard.

These are uncharted waters. The amendment says that there should be no such implication and, secondly, that nothing should be implied concerning Section 180 of the 1992 Act, as this Bill refers to it.

If the Government would be prepared to say that they will look at this, I think it would be of enormous help. I am well aware that the legal establishment outside employment law will tell the Government that it is quite impossible to cope with injections of orders to the court. It is not at all impossible. We do it every day. We tell the courts what they can and cannot do and let them get on with it. Sometimes they get on with it so well that we have to come back and tell them that they must not do something else.

However, something must be said about this. It is not in the Government's documents, and it is not in the Bill. It is nowhere to be found. We should be told, first, which court it is to be; secondly, what is to be the approach of the court to implied terms in regard to co-operation and whether or not it is to be the same as in individual contracts of employment; and, thirdly, whether the Government are prepared to say something on the face of the Bill, and not just in a code, which will prevent the case that will knock its Schedule 1, as Lord Montgomery used to say, out of the ground and out of earshot. I beg to move.

Lord McIntosh of Haringey

I hope I can reassure my noble friend but I am very sceptical about my ability to do so, with good experience. It has never been the Government's intention in this Bill to restrict in any way the ability of unions to organise, or workers to take part in, industrial action. Indeed, the whole of Schedule 5, to which we shall come later and which is about the unfair dismissal of striking workers, goes in the opposite direction by providing protection for workers where industrial action is properly balloted and otherwise organised within the law.

The Government intend to use the power contained in paragraph 127 of Schedule 1 to draw up a model for collective bargaining. The imposed procedure will be exactly what it says, a procedure for bargaining. It will not impose new requirements on employers or unions beyond the procedural duty to bargain in the way set out in the method. It will certainly not constrain the ability of unions to organise, or workers to take part in, industrial action.

I am legally advised that there is no risk of the Bill leading to the courts—and I should say to my noble friend that this does mean the High Court or, in Scotland, the Court of Session—reading into the proposed procedure terms which restrict industrial action and, as a result, restraining such action. It is not possible to restrain industrial action by an order of specific performance. The procedure will contain no condition restricting individuals within the terms of Section 180 of the 1992 Act. I am advised, therefore, that the noble Lord's amendment is unnecessary.

However, since my noble friend Lord Wedderburn is moving this amendment, I undertake to study carefully what he has said. If there are any new matters which the Government have not so far considered, we shall, of course, examine them and will, if necessary, be prepared to bring forward an amendment at Report stage. I shall be glad to discuss the issue with my noble friend between now and then. In the light of that assurance, I hope that he will feel able to withdraw the amendment.

Lord Wedderburn of Charlton

I am delighted to hear the words that preceded my obligation to withdraw the amendment, and one especially. We can read it in Hansard, but I believe the noble Lord said something to the effect that it is not possible to restrict industrial action by an order for specific performance. I contest that. I ask the noble Lord to look at it again. It may not be the normal case, but it is possible to restrict industrial action, and indeed a lot of other things—and the case that I made did not rest only on industrial action—by specific performance. I would be very grateful if the noble Lord would look again at that question. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Amos

I beg to move that the House do now resume. In moving this Motion, may I suggest that the Committee stage begin again not before 8.35 p.m.

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

House resumed.