HL Deb 16 June 1999 vol 602 cc384-401

(". For section 196(2) of the Employment Rights Act 1996 there shall be substituted—

"(2) The provisions to which this subsection applies do not apply to employment where the employee does his work for the relevant employer wholly or mainly outside Great Britain.".").

The noble Lord said: This is a somewhat technical amendment prompted by the recently reported decision of the Court of Appeal in Carver v. Saudi Arabian Airlines. The existing Section 196 of the 1996 Act excludes the unfair dismissal jurisdiction where under the employee's contract of employment he ordinarily works outside Great Britain.

That phraseology is to be compared with our discrimination legislation, which does not refer to the contract but rather lays down the test of whether the employee does his work mainly or wholly outside Great Britain. The problems which are occasionally caused by Section 196 derive from the first case to reach the Court of Appeal, back in 1977, which decided that great importance should be attached to the words "under the contract": one has to look at the contract and not at what happens later.

Despite the efforts of the late Lord Denning in another case shortly after that first decision to alter what has become known as "the contract test" to a function test, the Court of Appeal has recently confirmed that it is bound by the contract test. So in the case of Carver, the appellant, who had been based in London for some considerable time, was deprived of protection from unfair dismissal.

I suggest that there are a number of reasons for altering the statutory wording, as is proposed in the amendment. First, it is rather artificial to emphasise the contract of employment if that means having to disregard what actually happens to the employee later on.

Secondly, there is scope for abuse. An astute multinational employer could summon prospective employees to, say, Denver, or some other exotic location outside this country, in order to sign the contract and to receive some initial training. However, the company could ensure that the contract provided for the employees to work in Denver or elsewhere as it may direct and then send them all back to London to work. The probable result of the contract test is that unfair dismissal jurisdiction is excluded.

Thirdly, as the Carver case demonstrates, there can also be the peculiar result that the same employee who is deprived of unfair dismissal claims may have rights under the discrimination statutes because of the slightly different wording.

Finally, in addition to introducing some desirable consistency between the different statutes, the wording proposed in the amendment is workable as a simple mathematical test which cannot be manipulated by clever contractual subtleties. In Clause 16, the Government have stood firm and decided that the ability to contract out of the unfair dismissal jurisdiction should be removed. It is in the same spirit that I beg to move this amendment.

Lord Simon of Highbury

This is an interesting proposal about the application of certain employment rights in the Employment Rights Act: to employment outside Great Britain. I am most grateful to the noble Lord, Lord Meston, not only for raising it but for writing to me about his concerns in putting forward the amendment.

I understand his concern that the Act as currently worded does not adequately protect certain individuals whose contracts require them to work abroad, even though they work almost entirely in the UK. I understand that the recent Appeal Court ruling in Carver (née Mascarenhas) v. Saudi Arabian Airlines illustrates the point in question.

Not wanting to detain the Committee on the details of the case, I confine myself to saying that it has some unusual features. The amendment put forward in its wake would perhaps provide some additional employment protection to a small group of people. However, I am not totally convinced that it is necessary. Clearly, Mrs. Carver had ample redress for her plight, as the noble Lord explained, through the Sex Discrimination Act.

That may be an unusual feature. I appreciate that there will not always be a sex discrimination angle to such cases. I am willing to look at the workings of Section 196 of the Employment Rights Act and the application of certain employment rights to employees with employment outside Great Britain. If noble Lords will allow me, I shall come back to them on Report on this issue and I shall keep in contact with them in the meantime as to how we are developing our thoughts.

9.30 p.m.

Lord Meston

I am most grateful to the Minister for that indication. In the same spirit, I shall not detain the Committee further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 21 agreed to.

Clause 22 [CAC: proceedings]:

[Amendment No. 285 not moved.]

Clause 22 agreed to.

Clauses 23 to 25 agreed to.

Schedule 6 [The Certification Officer]:

[Amendments Nos. 286 to 288 not moved.]

Lord Simon of Highbury moved Amendment No. 289:

Page 85, line 39, at end insert— ("23. After section 256 there shall be inserted—

"Vexatious litigants. 256A.—(1) The Certification Officer may refuse to entertain application or complaint made to him under a provision of Chapters III to VII of Part I by a vexatious litigant. (2) The Certification Officer must give reasons for such a refusal. (3) Subsection (1) does not apply to an application under section 41. (4) For the purposes of subsection (1) a vexatious litigant is a person who is the subject of—

  1. (a) an order which is made under section 33(1) of the Employment Tribunals Act 1996 and which remains in force,
  2. (b) a civil proceedings order or an all proceedings order which is made under section 42(1) of the Supreme Court Act 1981 and which remains in force.
  3. (c) an order which is made under section 1 of the Vexatious Actions (Scotland) Act 1898, or
  4. (d) an order which is made under section 32 of the Judicature (Northern Ireland) Act 1978.

Vexatious litigants: applications disregarded. 256B.—(1) For the purposes of a relevant enactment an application to the Certification Officer shall be disregarded if—

  1. (a) it was made under a provision mentioned in the relevant enactment, and
  2. (b) it was refused by the Certification Officer under section 256A(1).
(2) The relevant enactments are sections 26(8), 31(7), 45C(58), 56(8), 72A(10), 81(8) and 108A(13).").

The noble Lord said: I shall speak briefly to Amendment No. 289. It has in common with Amendment No. 286, which was not moved, a shared objective to provide some protection for the certification officer against vexatious litigation. I imagine that the noble Baroness opposite has not moved her amendment because the issues in it are covered by this amendment. Therefore, I shall briefly explain the amendment.

Amendment No. 289 inserts another safeguard to provide some protection for the certification officer against persistent and vexatious litigants. At present, people who are declared vexatious litigants by the courts or by the Employment Appeal Tribunal cannot take a case to the courts or tribunals unless they obtain special leave to do so. That protection does not apply to the certification officer. In other words, at present there is nothing to stop vexatious litigants from making complaints to the certification officer which he must determine.

Amendment No. 289 closes that loophole in relation to all the certification officer's complaints jurisdictions. It allows the certification officer to refuse to determine a complaint brought by a vexatious litigant, although it does not compel him to do so. When he refuses a case, he must give reasons to the individual. That seems fair and means that the certification officer must give some limited consideration to those applications.

Provisions contained in the schedule prevent a person from applying to the courts if he has applied already to the certification officer on the same matter. We feel that they should not apply where the certification officer refuses to entertain an application from a vexatious litigant. That will ensure that vexatious litigants can go on to seek special leave from the courts to have their cases heard by them if the certification officer turns them down. Again, that seems fair and proper in the circumstances.

Our proposals comply fully with the European Convention on Human Rights. They do not close off all possibility that vexatious litigants can have their cases heard by the certification officer or the courts. If there are good grounds for the case to be heard, then the case can proceed.

I should add that the amendment does not give the certification officer the power to declare individuals to be vexatious litigants. That is a powerful sanction when it is applied. The certification officer has a very specialised role. He has no existing powers to impose penalties on individual union members. It would sit uneasily with his important but limited role if he were to have a wider power to declare individuals to be vexatious litigants. I beg to move.

On Question, amendment agreed to.

Schedule 6, as amended, agreed to.

Clause 26 [Partnerships at work]:

Lord Tebbit moved Amendment No. 290:

Page 13, line 43, at end insert— ("() For the purposes of this section, "employees' representative" or "employers' representative" shall not include any trade union, trade association or political party.")

The noble Lord said: I hope I shall not detain the Committee long with these amendments. I should like to explain, lest it be not clear, the purpose of the amendments. Amendment No. 290 would provide that neither trades unions nor employers' organisations should qualify to receive moneys under this part of the Bill. Amendment No. 291 would limit expenditure to £100,000 per year except by the consent of Parliament. I notice that it has been announced by the Secretary of State that the sum of £5 million is to be made available in total.

Amendment No. 292 would require recipients to provide proper accounts of how any money which they had received had been spent. Amendment No. 293 would require the Secretary of State to report to Parliament on the use of the money and who had received it.

For much of today we have been appealing to what one might describe as the industrialist and employers' wing of New Labour to ask them to consider some of these amendments in the light of their own experience as employers and industrialists. I think that these amendments appeal to what one would call "the Treasury wing" in that they are primarily concerned with the proper use and accountability of public money.

It seems to me that "partnerships" is the in-word for what we are dealing with in much of the Bill, particularly in relation to these amendments. However, "partnership" does not have the meaning we normally give the word. It does not mean an arrangement in which people come together and share joint responsibility for the costs involved and the consequences of what is agreed.

These partnerships are ones which would put legal obligations not upon trades unions but only upon employers, and by statute rather than agreement. So, "partnership" is the wrong word. We are talking about contractual undertakings which are binding as usual in this world of industrial relations upon only one side.

Nonetheless we have to face the size of the Government's majority and the reality of it. However, I would state in passing that New Labour really does seem to have made some changes in this world. In the days of Old Labour it was Conservatives who lost amendments during Ascot week. Now it appears that it is New Labour who cannot maintain a House in a majority during Ascot week. That is probably welcome. It shows a degree of social change which I am sure we would all welcome. However, I think we will be lucky not to have some of these amendments turned over again in the other place after Ascot week.

We have to try to take Ministers at their word, that the Bill is designed to lower costs, reduce regulation and make industry and commerce more competitive. In the press release issued by the DTI on 24th May (P/99/438), I notice the words: Light touch regulation will help artnerships,—Byers".

It goes on to explain—I think we will all smile at this: That is why, in implementing our plans, we shall introduce light-touch regulation to enforce the entitlements we are providing".

It is a light touch of enforcement, but enforcement nonetheless. It continues: Instead of detailed and prescriptive regulation"—

I thought we had quite a lot of detailed and prescriptive regulation here in the Bill this evening— we shall look for agreement achieved through a genuine partnership". So it continues. But, if public money is to be handed out, we have a duty to see that it is used properly, for the purposes which Parliament intended, and that it is properly accounted for. Hence these amendments.

I notice in the same press release in the Notes for Editors that the point is made that the matching funds of at least 50 per cent from non-public sector sources will be required for successful projects. I believe they mean for successful applications to finance a project rather than for successful projects. The noble Lord, Lord McIntosh, shakes his head, but I like press releases to say what they mean and not confuse matters.

We have to ask ourselves why that is a requirement. The requirement is there essentially to ensure that there is additionality; that this money does not come 100 per cent from public sources, but that we expect other sources of finance will be perhaps from employers, trade unions, in some circumstances perhaps from academic institutions or the like. If that is so, then we have to ask why it should go to organisations which are essentially rich. On the whole, the employers likely to seek this money will be organisations which, if they thought the project was worthwhile, would finance it themselves. Certainly the same is true of trade unions, which are, in general terms, also rich.

I might say in passing that I hope the Minister, when he responds to this debate, will tell us a little more about the restriction that the money should come from non-public sector sources. Does that exclude money from a public sector employer such as, for example, London Transport—while it remains in the public sector, which I understand may not be for much longer? We still have some nationalised industries about, though probably not for much longer. Will they be regarded as employers, or will they be regarded as public sector financiers in the terms of this Bill? If we are to seek additionality, then we should not give this money to rich organisations.

I note also from the Notes to Editors—it is an intriguing press release in that the most interesting bits are the Notes to Editors and not what the Minister actually said—that the point is made that in order to demonstrate additionality it has to be established that these projects would not go ahead or would go ahead more slowly on a smaller scale without support from the fund.

There is also an interesting section under the heading, "How will bids be assessed?". There are some sensible points made in that regard, but there is nothing in the press release as to how they will be reviewed; how it will be decided whether or not they have been successful and what lessons should be drawn. If we are to be able to assess whether or not these projects have been successful in their use of public money, the key elements are that proper accounts should be kept; that those accounts should in some way be presented to Parliament; and that at all times we should restrict the amount of money until we are sure that the projects are having the effects which were intended. To that extent these amendments are not intended to obstruct the purpose of the Bill, but rather to reinforce it. I hope they will be viewed in that light. I beg to move.

Lord McCarthy

While I support much of what was said by the noble Lord, Lord Tebbit, my main problem—I am sure he will agree that we take this series of proposals as one—relates to Amendment No. 290 which affects Amendment No. 261. I understand the noble Lord is not against giving employers money, or employees. In fact, he would not have tabled the amendment if the clause had read: The Secretary of State may spend money or provide money to other persons for the purpose of encouraging and helping employers … and employees … to improve the way they work together". He simply does not want to give money to "their representatives". He has not explained why that should be. Managers, after all, are the representatives of employers. He is saying he does not mind giving money to Rupert Murdoch, but not to his managers. The case with trade unions is different: representatives need not be employees, but they might very well be. He is saying that you cannot give money to lay representatives who are employees. It is an odd breakdown.

It all turns on one's view of partnership. If 'the noble Lord thinks that it has a representative element, or if he thinks it is about collective bargaining, which I know he does not like to think about and certainly not this late at night, or if he is thinking about representing the views of Rupert Murdoch and the views of the union membership collectively, then these people would be required. However, I cannot go along with this rather strange amendment.

Lord Tebbit

Perhaps I can help the noble Lord. I would not be particularly anxious for Rupert Murdoch to be the personal beneficiary of this money. It would probably be quite difficult to demonstrate additionality, even in the sum of £5 million in his case. I would object if it were to go to the newspaper proprietors' association, the collective of newspaper proprietors.

I have no worries about the money going to organisations of workers, as long as they do not fulfil the function of a trade union which, to my mind, is a similar function to that fulfilled by collectives of employers, for example the Engineering Employers' Federation. I do not object to the money going to organisations of workers, but it should not go to wealthy collectives.

Lord McIntosh of Haringey

I always enjoy listening to the noble Lord, Lord Tebbit, in his jocular mood. He enjoys taking this kind of stance in the House. Then, when you read what he says in the News of the World on Sunday, you realise that behind his remarks is seething indignation against all the things that he is prepared to laugh about when he is in your Lordships' Chamber.

The noble Lord has done his homework. He has read the press release and the note to editors issued on 24th May when the Prime Minister and the Secretary of State for Trade an Industry spoke at the TUC partnership conference. I suspect, knowing him, that he has probably done his homework and read the speeches as well, but I doubt whether he has really understood what is behind the partnership fund that is set up by Clause 26.

As I said at Second Reading, we do not need statutory authority for this partnership fund because the £5 million is being found from DTI resources and it can be spent at executive discretion, subject to scrutiny by Parliament in the normal way, particularly by Select Committees and the National Audit Office. However, we have chosen not to do that; we have chosen to seek statutory authority for it because we believe that the partnership principle pervades this legislation. I do not expect the noble Lord to agree with me. He is deeply cynical about these things and, with his history, I can understand it.

We wanted to show that not only were we prepared to put legislative provisions in the Bill to encourage partnership by making sure that neither one side nor the other could indulge in exploitation, but that we were positively encouraging partnership by putting a small amount of taxpayers' money, not government money, to encourage partnership schemes and initiatives in order to progress the thinking of the Government and, in general, the employers and trade unions. The noble Lord seems to think that this research fund would impose legal obligations on employers only and that it would produce statutory results. That is not the way I see it; indeed, it is not the way the Prime Minister or the Secretary of State saw it. We are using a statutory method for declaratory purposes, if you like, to do something which is certainly non-statutory and which would, in our view, contribute to the cause of partnership in industry.

I do not need to repeat what the Secretary of State and the Prime Minister have said or what the noble Lord, Lord Tebbit, repeated to the Committee. He has rightly said that there is a fund of £5 million over five years; that there is a limit of £50,000 on any one project; and that 50 per cent matching funding is required for any one project. He also rightly advocated proper financial scrutiny and control over any expenditure under this heading.

I turn now to deal with the noble Lord's amendments. The partnership fund which we intend to set up under this authority will be designed to promote new partnerships at work and develop a new non-confrontational approach to employment relations. Amendment No. 290 would exclude trade unions and trade associations. The amendment refers to trade associations, but the noble Lord referred to employer organisations. I take it that there is no difference in his mind in that respect, although there is in mine. That would completely undermine the purpose. If you cannot have employers involved in these projects and if you cannot have organised employees involved in them, who is left? Who will actually be involved?

The amendment also refers to political parties. Of course, there is no question of providing funding for political parties or for anyone else for political purposes. Amendment No. 291 would restrict the funding to £100,000 a year without a resolution of both Houses. Parliament is already burdened with secondary legislation requiring either negative or affirmative approval. Therefore, we would be seeking parliamentary authority for relatively small amounts of money.

The sum of £5 million has been allocated from within the existing budget of the Department of Trade and Industry. It is an appropriate sum of money which will ensure that the fund can make a real contribution to developing partnerships based on employment relations in the United Kingdom. We will of course be putting into place clear rules and criteria governing the operation of the fund in order to ensure value for money. Recipients of funding will be required to demonstrate that their project offers value for money. The department will monitor and evaluate all funded projects. That does not just mean monitoring them as they proceed but evaluating whether they have achieved their objectives—a very proper consideration and one to which the noble Lord referred.

The department will also require recipients of funding to provide all the information necessary. Any scheme that is set up will have terms and conditions attached to any offer of grant, which will include the requirement to provide all appropriate monitoring and financial information. Requiring this information to be audited in every case by an external accountant qualified to do so, pursuant to the Companies Act 1985, as required by the amendment, would be disproportionate and burdensome.

The proposal for a new subsection (5) is disproportionate. The offer of any grant under the partnership fund will include standard procedures for ceasing to pay and for clawing back the money if conditions have been breached or if it has been used in contravention of the conditions of the programme. We will ensure that there is full financial accountability in the case of the partnership fund and any subsequent programmes. The department publishes each year its expenditure in its expenditure plans report. An annual report will also be published in respect of the partnership fund. I can assure the noble Lord that that will include the results of monitoring and evaluation.

There is no reason to include a provision for an annual report and, as I have indicated, there is no reason to impose the particular restrictions on the fund which these four amendments would introduce. However, I understand that the noble Lord's objection to the fund is much more fundamental. As far as he is concerned, it is an issue of confidence. I do not hope to gain his confidence but I hope to gain his recognition that his amendments are undesirable.

Lord Tebbit

I am grateful, as always, to the noble Lord who has responded to my amendments in a most excellent and constructive way in so far as he is able to do so. I think I must be getting naive in my old age because I had not realised from reading the press release that this was not new money. I suspect that it was not the intention that those who read the press release should realise that it was not new money. It is just another little bit carved off the DTI's money which has already been allocated to this matter. It has either been taken from some other programme or it is money that the department had spare. In my day at the DTI we did not have spare money. We were rather parsimonious. However, that is another matter.

Lord McIntosh of Haringey

I remind the noble Lord that during the first two years of the Labour Government—or, as he would describe it, the New Labour Government—we have operated under the revenue budgets inherited from the previous government. If there is anything to spare, it has come from the allocation that the previous government provided.

Lord Tebbit

I accept entirely the tribute which the noble Lord pays to the generosity of funding on the part of the previous administration. However, although the global sums are the same, the purposes for which they are used may not be. However, we shall not argue one way or the other about the odd £5 million in what is a quite substantial budget.

The noble Lord may have misunderstood my remarks about partnerships. They were not particularly directed to partnerships in the sense in which they are referred to in this section of the legislation. I can see that there is a case for both sides of industry—if we may use that expression—coming together and coming together with outside bodies (possibly academic and research bodies) to carry out work in this area to see whether we can increase the efficiency of the use of labour in British industry. I spoke in a rather more general manner, in what one might call a Second Reading manner. It was certainly not my intention—nor do I believe it would be the effect of the amendments—to disqualify employers as such from participating in the scheme. It is organisations of employers—not Joe Bloggs Engineering Limited—such as the Engineering Employers Federation that I wanted to cut out. I may differ slightly from the noble Lord in that I regard those collectives of employers as being the equivalent of the collectives of employees; that is, the trades unions. We may differ slightly as regards how we look at these matters. However, I shall read carefully in the Official Report what the Minister said before deciding whether to bring back these amendments at Report stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 291 to 293 not moved.]

Clause 26 agreed to.

Clause 27 agreed to.

10 p.m.

Schedule 7 [Employment Agencies]:

Baroness Miller of Hendon moved Amendment No. 294:

Page 86, line 11, at end insert— ("Provided that regulations made under this section shall only be made with the purpose of protecting employees' rights and not otherwise to interfere with the commercial relationship between such agencies or businesses and employers.'"')

The noble Baroness said: The amendment deals with a matter of considerable importance. seeks to limit the extent of the regulations that the Government are considering making to govern employment agencies business. The amendment was drafted before the publication of the Green Paper, The Regulation of the Private Recruitment Industry. The draft regulations now revealed are possibly worse than was previously rumoured. If carried into effect, they will tear the heart out of the industry and will damage it beyond the possibility of continuing as a viable operation. This possibly will come as no surprise and will not be regretted by many on the Benches opposite. As long ago as 1983 the Labour Party published an election manifesto which was so left wing that it was described by the right honourable Member for Manchester Gorton, a senior member of the party, as "the longest suicide note in history." That suicide note said: We will take urgent steps to abolish private employment agencies". Those urgent steps were high on the list of priorities had the electorate been so misguided as to return the Labour Party to power.

What was the reason for that manifesto objective? Unashamedly, it was, to ensure that the Manpower Services Commission developed a national job centre network". That would have been nationalisation through the back door. In that case it would have been nationalisation without compensation. I hope—no doubt the Minister will reassure us—that new Labour has foresworn that ambition. I am prepared to assume that it has simply not understood the destructive nature of its proposals.

If it claims that it does not know, it is not for want of being warned by the industry and my honourable friends in the other place, even in advance of the draft regulations. It is difficult, if not impossible, in practice to amend regulations after they are laid before Parliament, even under the positive resolution procedure. It is therefore essential that Parliament draws a demarcation line limiting the parameters of those regulations before the government's views become absolutely set in concrete.

There are three major areas where the industry has major concerns that the regulations the Government propose would be totally destructive to the industry. At the same time the regulations will do nothing to improve the employment prospects of those employed directly by agencies or who normally expect to obtain work through them. On the contrary. They will also do nothing to help employers to find temporary or permanent staff. On the contrary.

I accept that some of the Government's proposals are for increased clarity, promotion of flexibility in the labour market, protection of employment agencies' clients, the curbing of payment abuses and the safeguarding of clients' money. To those objectives the Opposition obviously subscribe. I have also had a letter from one of the leading employment agencies in the country assuring me that not only does it support the general direction of these objectives but that it and the majority of the industry already voluntarily meet the standards the Government are seeking.

As I said, there are three major areas in the draft regulations which cause the industry major concern. The first concern relates to the process of what is called "Temp to permanent", where a temporary worker gets on so well with the hiring firm that it offers him or her a permanent job. Agency contracts provide that in such circumstances it should be paid the usual finder's commission for introducing new staff. The Government's argument against this is that some employers do not like paying the commission. Who does like paying bills? But without this right to be paid for temporary staff who move to permanent status, the employers would poach the temps for nothing. Approximately 50 per cent of temporary workers find permanent work through temporary employment. That is why the proposed regulation on its own would be very destructive for the industry. The high percentage of temporary workers who find permanent jobs makes nonsense of the argument that it somehow puts temporary workers at some disadvantage in the labour market. If it did, there would not be so many of them converting to full-time employment. Again I say, on the contrary.

The second destructive proposal in the draft regulations is that the production of time-sheets by the worker as a condition of the worker being paid is, in future, to be prohibited. This is unnecessary nannying. In my time I have employed dozens of temps. At the end of the week they produce a time-sheet to confirm that they have attended from, say, nine to five on five days. How else will the agency know what to pay the temp, who is usually paid on an hourly basis? How will the agency refute an argument from an employer that the temp did not show up until 10 a.m., or went home early, or did not come in at all? In what way is a timesheet any different from the clocking-in system used in many factories? The prohibition of this common-or-garden device used throughout industry will leave the agencies open to abuse and fraud and is equally destructive of the viability of their industry.

The third major problem that the Government are causing the industry, for the benefit of no one except, in this case, possibly the Treasury, is a complicated one. Draft Regulation 7 requires agencies to supply temporary workers only as a contractor, not as an agency. There may be some advantage in doing that, so as to make sure that the agency takes responsibility for the health and safety of the temporary workers that it supplies. But the regulation will also have an uncalled-for effect. It means that the agency would have to charge VAT on the whole of the sum billed to the employer instead of only on its commission. The wages of the worker are of course exempt from VAT.

Many employers will not be affected by the requirement as they will offset the VAT against their own liability. However, there are many VAT-exempt organisations which rely on temporary workers: schools, hospitals and some charities. This additional cost to tax-exempt organisations inevitably means that they will employ fewer temps and reduce job opportunities to many people who need to work as temps or part-time for a variety of personal reasons. The protection of temporary workers as regards health and safety can be achieved by a more carefully drafted and specifically targeted regulation stating explicitly what is meant.

I am sorry to have burdened the Committee with points that might have been made when the regulations become final. They may yet need to be repeated. However, I believe that these problems need to be nipped in the bud now, before it is too late and the Secretary of State's mind becomes set, notwithstanding the consultation.

I referred to my understanding of the standards that the Government are trying to achieve—strangely, not by what should have been a Bill on its own, but by the regulations authorised by another Bill. In reaching those standards, what the Government must not do is over-regulate.

As recently as 3rd June, the Secretary of State, in a speech to the British Chambers of Commerce, recognised that the burden of regulation falls most heavily on small business. Not all employment agencies are small, but many of them are. The Secretary of State admitted that there had been a tendency to introduce overly detailed and prescriptive regulations which were often far from user friendly. He also said that Whitehall had paid too little attention to the cumulative effect and burden of regulation. I agree with the Secretary of State in all of those remarks. This is not a political point. Every government have been guilty in this respect, and every Secretary of State has promised to do something about it—usually without any success at all. I wish the present Secretary of State luck.

To help him in that objective, I have proposed an amendment that will ensure that in producing his regulations under the present Act he does not, by over-regulation, do incalculable damage to an important industry which provides a vital service to employers and workers alike. I beg to move.

Lord Tebbit

Although I agree with much of what my noble friend said, I hope that she will not at this time press these amendments to a Division. If we could hold back the process just a little, it would be enormously helpful. It was announced in the recent Honours List that Sir Dennis Stevenson would become a life Peer. As I understand it, he will probably sit on the Government Benches. He will be a most useful ally to my noble friend in dealing with matters concerning employment agencies, as he will probably know more about the subject than any other Member of the House. It would be helpful to await his wisdom.

Lord Simon of Highbury

My Lords, I am delighted to hear that preview of yet another star being recruited to our Benches. That is very good news for all of us. More power to their elbow, say I. However, I cannot agree that the noble Baroness's amendment will leave us in a good position to look at this important question. I follow much more the view of the noble Lord, Lord Tebbit, that it would be wise, not merely to hear from a further good mind on the subject than those already available in this place, but to take time for the consultations. They will attempt to distinguish, in examining this case, between good and bad regulation. The noble Baroness is often inclined to regard regulation as a burden on small industry, as if we can make regulation go away. We cannot. What we must do is ensure that it is good and effective for the purposes that government choose.

What the amendment seeks to do in its one-sidedness is to limit the scope of the Government to make very important changes to modernise and improve the regulatory framework governing the private recruitment industry, which is a very important one. We have set out our proposals in the consultation document and shall consider the results of that very carefully.

But the amendment that has been tabled provides that regulations made under Section 5 of the Employment Agencies Act, shall only he made with the purpose of protecting employees' rights and not otherwise to interfere with the commercial relationship between such agencies or businesses and employers". It is very important that we import certain wider safeguards into the relationship. Those who look for temporary employees, for example doctors or lorry drivers, have the right to know that the bureau supplying them has checked their qualifications. That is part of the commercial relationship which would not be covered by this amendment. Certainly, that is one matter that the regulatory process should examine and ensure.

If we use this regulatory process it also allows us to improve some very bad practices that have grown up in the 22 or 23 years during which the current law governing employment agencies has remained unchanged. Certainly, the market-place during that time has changed in many ways due to measures, some good and some bad, implemented by the previous government. There is a requirement for change; one cannot say that the market is static.

I shall not go through a whole list of these matters because that is what the consultation is about, but I wish to deal briefly with the term "temp to perm" fees so that there is no misunderstanding. As the noble Baroness said, these are the fees that the hirer must pay to a bureau if he decides to take on a temporary worker permanently rather than continue to hire him through the bureau. Clearly, it is the case that these fees are being used to deter hirers from engaging permanently the temporary staff supplied to them. Whatever statistics the noble Baroness quotes, we want to convert more people from temporary to permanent employment if possible, assuming that is their wish.

Some in the industry admit that they use "temp to perm" fees to stall that process. The existing measures to ensure that workers are not prevented from working for other employers are being undermined by terms in the contract issued to hirers which provide for huge transfer fees to be paid in those circumstances. What we are looking at in draft regulation 8 in the consultation document is not a proposal to control the level of fees but to restrict the circumstances in which fees may be charged so that they are not used to restrict workers' ability to take jobs. After all, in a well functioning labour market employers and work-seekers require to be able to contract with whom they choose. Draft regulation 8 provides that "temp to perm" fees should be limited to cases where workers are subject to a current contract with the bureau under which the latter undertakes to find work for those workers.

The proposals allow the bureau to protect its legitimate interests while ensuring that "temp to perm" charges are not used to limit labour market flexibility or act against the interests of workers and hirers. I submit that that will basically enhance flexibility in the labour market, which is one of the matters that the Benches Opposite—certainly the noble Lord, Lord Tebbit—always tell us that we must do. We must have more flexible labour markets, as we tell our European colleagues all the time. The regulation seeks to create greater fluidity in the market-place. I believe that the amendment moved by the noble Baroness would stop that. That is why I wanted to make that point very strongly.

I turn briefly to Amendments Nos. 29.5 and 296. I do not wish to ignore the points made on VAT, which I am sure that the Treasury will be looking at carefully, as will the employers. Nor do I wish to duck the issue of timesheets. But those are matters on which I am sure we shall obtain good answers from industry in due course. There is no need to give the final answers at this stage.

As regards the two amendments, my right honourable friend the Secretary of State for Trade and Industry. during Report Stage of the Bill in another place, said, in response to an Opposition amendment, that Le would consider making regulations under the Employment Agencies Act 1973 subject to the affirmative resolution procedure.

Members of this House will know that the Select Committee on Delegated Powers and Deregulation recommended that this should be done. The Government indicated in their response to the committee's report that it concurred with its recommendation. Amendment No. 295 before the Committee this evening takes forward that commitment and makes regulations under Sections 5 and 6 of the 1973 Act subject to the affirmative procedure.

Amendment No. 296 alters Section 13(7)(i) of the 1973 Act. A lacuna in the wording of that section provides that orders cannot be made to exempt particular bodies in respect of part only of their activities. If they are exempted they must be exempted entirely. That was subject to comment by the Joint Committee on Statutory Instruments in 1984. The purpose of this amendment is to allow orders which will, for example, enable membership societies to be exempted in so far as they provide services to their members, but to remain subject to the legislation as regards services provided to non-members. I commend Amendments Nos. 295 and 296 to the Committee. I urge the noble Baroness to consider flexibility in the labour market and to withdraw her Amendment No. 294. I hope that that concludes dealing with employment agencies for the moment.

10.15 p.m.

Lord Tebbit

Perhaps I may intervene again very briefly. The Minister has left me rather less happy than I might have been. Over the years I have frequently used temporary staff from employment agencies. Wearing that hat I have found pretty unpleasant the charges which I have listed made for persons supplied as temps. However, if I put on a different hat, which I wore at one time during my involvement with an employment agency, it seems clear to me that temporary staff are an asset of the agency. To say that they are unable to charge when they lose such an asset and the revenue stream attached to it, having found an employee for an employer, seems a little hard.

I appreciate, as the Minister said, that it does not apply where the agency guaranteed work on a full-time basis. But in all reason the burden on agencies, particularly some of the smaller ones, would virtually put them out of business. It is not an easy matter. As an employer of agency staff from time to time I believe that some of the agencies make an excessively high barrier. I understand that the Government would not wish to regulate the size of the fee but making it impossible for an agency, particularly a small one, to charge a fee of that kind would result in the elimination of a number of small agencies. It would probably not unduly damage the Manpowers of this world, but I believe that small specialist agencies would be extremely hurt. I hope that the Minister will look again at what he has said and reconsider it.

Lord Simon of Highbury

My Lords, the appropriate answer at this stage is that I have no doubt that the position which the noble Lord has made clear to us will also be made clear by the agencies as we go through the consultation process. We have already made the points that I have tried to make this evening. They are contained in the draft regulations about which we are consulting. I am sure that this point will reappear. I take note of what has been said. We shall consider it seriously as we go along as it is a good and clear point.

Baroness Miller of Hendon

My Lords, the Minister is always extremely courteous when he replies to me, as indeed are both the noble Lords, Lord McIntosh and Lord Sainsbury. They have all treated my amendments with great courtesy, which I very much appreciate. However, notwithstanding that, and even notwithstanding the earlier intervention by my noble friend Lord Tebbit, for whom I have the highest regard especially in the whole area of industrial relations, I must point out that I have been lobbied extremely hard by the employment agencies. For the three reasons that I have given, they have told me that this provision will put them out of business. I am concerned to ensure that that does not happen. Only as recently as yesterday morning, I was asked to table an amendment to delete the whole of Schedule 7. That is how strongly the employment agencies felt about this. Noble Lords opposite will understand that I am not taking this view lightly.

The Minister referred to losing flexibility in the job market. I do not think that that would be the result of my amendment. It states that the regulations shall be made only with the purpose of protecting employees' rights. It does not state anything else. Over half of temporary workers take up full-time employment. The Government's provisions would tear the heart out of the whole business of supplying temporary staff. In those circumstances and despite the great courtesy shown it to me by all the Ministers opposite, I feel that I must test the opinion of the Committee.

10.21 p.m.

On Question, Whether the said amendment (No. 294) shall be agreed to?

Their Lordships divided: Contents, 28; Not-Contents, 51.

Division No. 2
Anelay of St.Johns, B. Kingsland, L.
Annaly, L. Luke, L.
Arran, E. Mackay of Drumadoon, L.
Attlee, E. Miller of Hendon, B.
Berners, B. Northbrook, L.
Blatch, B. Northesk, E.
Bridgeman, V. Norton of Louth, L.
Dean of Harptree, L. Parkinson, L.
Fookes, B. Roberts of Conwy, L.
Glentoran, L. Rowallan, L.
Harmar-Nicholls, L. Seccombe, B. [Teller.]
Harris of Peckham, L. Tebbit, L.
Henley, L. [Teller.] Torrington, V.
Home, E. Wynford, L.
Acton, L. Hoyle, L.
Alli, L. Hunt of Kings Heath, L.
Amos, B. Lockwood, B.
Archer of Sandwell, L. Lofthouse of Pontefract, L.
Bach, L. McCarthy, L.
Bassam of Brighton, L. McIntosh of Haringey, L. [Teller.]
Burlison, L.
Carter, L. [Teller.] McNair, L.
Clarke of Hampstead, L. Maddock, B.
Clinton-Davis, L. Monkswell, L.
Crawley, B. Morris of Castle Morris, L.
Davies of Coity, L. Peston, L.
Davies of Oldham, L. Pitkeathley, B.
Desai, L. Ramsay of Cartvale, B.
Dixon, L. Rendell of Babergh, B.
Dormand of Easington, L. Sainsbury of Turville, L.
Dubs, L. Scotland of Asthal, B.
Evans of Parkside, L. Sewel, L.
Farrington of Ribbleton, B. Simon, V.
Goudie, B. Simon of Highbury, L.
Gould of Potternewton, B. Stoddart of Swindon, L.
Grenfell, L. Symons of Vernham Dean, B
Hacking, L. Thurso, V.
Harris of Haringey, L. Wedderburn of Charlton, L.
Hilton of Eggardon, B. Whitty, L.
Hollis of Heigham, B. Williams of Mostyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

10.31 p.m.

Lord Simon of Highbury moved Amendment No. 295:

Page 88, line 33, at end insert—

("Regulations and orders . For section 12(5) (regulations and orders: procedure) there shall be substituted— (5) Regulations under section 5(1) or 6(1) of this Act shall not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament. (6) Regulations under section 13(7)(i) of this Act or an order under section 14(3) shall be subject to annulment in pursuance of a resolution of either House of Parliament." ")

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendment No, 296:

Page 88, line 36, at end insert—

("Exemptions . For section 13(7)(i) there shall be substituted— (i) any prescribed business or service, or prescribed class of business or service or business or service carried on or provided by prescribed persons or classes of person." ").

On Question, amendment agreed to.

Schedule 7, as amended, agreed to.

Clause 28 [Unfair dismissal: special and additional awards]:

Lord McIntosh of Haringey moved Amendment No. 297:

Page 14, line 12, at end insert— ("(3) In section 14 of the Employment Rights (Dispute Resolution) Act 1998

  1. (a) subsection (1) shall cease to have effect, and
  2. (b) in subsection (2) for "that Act" substitute "the Employment Rights Act 1996."")

The noble Lord said: Amendment No. 297 repeals Section 14(1) of the Employment Rights (Dispute Resolution) Act 1998. This is necessary because Section 14(1) amends Section 117(6) of the Employment Rights Act 1996 but that section is being repealed by Schedule 8 to this Act as a result of the rationalisation of the existing system of special and additional awards provided by Schedule 8. Because Section 14(1) is being repealed, this amendment substitutes the words "the Employment Rights Act 1996" for the words "that Act in Section 14(2) of the dispute resolution Act.

Amendment No. 302 reflects Amendment No. 297. It repeals Section 14(1) of the Employment Rights (Dispute Resolution) Act 1998 which is made redundant by this Bill. I beg to move.

On Question, amendment agreed to.

Clause 28, as amended, agreed to.

Clauses 29 to 32 agreed to.

10.35 p.m.

Lord Simon of Highbury had given notice of his intention to move Amendment No. 297ZA: After Clause 32, insert the following new clause—