HL Deb 16 June 1999 vol 602 cc375-406

House again in Committee.

Clause 16 [Agreement to exclude dismissal rights]:

Lord Sainsbury of Turville moved Amendment No. 277:

Page 9, line 11, at end insert— (" (6) Section 197(1) of the Employment Rights Act 1996 does not prevent Part X of that Act from applying to a dismissal which is regarded as unfair by virtue of section 99 or 104 of that Act (pregnancy and childbirth, and assertion of statutory right).")

The noble Lord said: In moving Amendment No. 277 I should like to speak also to Amendments Nos. 300 and 301.

Clause 16 will ensure that employees on fixed-term contracts will no longer be able to sign away their rights to unfair dismissal protection at the end of the contract. Our Amendment No. 277 to the clause addresses an omission in the current provisions, and has an effect upon waiver clauses already agreed before the Act comes into force. The amendments to Schedule 8 (Amendments Nos. 300 and 301) are consequential on the abolition of dismissal waivers.

We shall deal with other transitional arrangements in the commencement order for the clause. We intend to ensure that waivers agreed prior to abolition do not extend beyond their originally envisaged term, or any extension of the term already entered into by the time the clause is brought into force. Some employees could otherwise be locked into waiver clauses, perhaps for many years after their abolition, by the repeated extension of a fixed-term contract containing a waiver entered into beforehand.

The Employment Rights Act 1996 provides that fixed-term employees who have waived their right to claim unfair dismissal are nevertheless protected, in the majority of cases, if they are dismissed for specified reasons which are regarded as automatically unfair. This is achieved either by disapplying the waiver provisions or by enabling employees to complain that they have suffered a detriment if they are dismissed for these reasons, although for other purposes detriment does not include dismissal.

However, there are no such arrangements in connection with two of the reasons for dismissal which are regarded as automatically unfair. These are the reasons set out in Sections 99 and 104 of the 1996 Act which protect employees against dismissal on grounds of pregnancy or maternity, or because they have asserted a statutory employment right. This is a defect in the legislation. The result is that employees who have entered into unfair dismissal waivers cannot seek redress if their fixed-term contracts are not renewed for these reasons. With the abolition of unfair dismissal waivers this will generally cease to matter, since in future employees will not be able to waive their rights, whatever the reason for their dismissal. However, employees who have already entered into waivers before the abolition is brought into force will remain at a potential disadvantage unless specific provision is made for them.

The amendment to Clause 16, therefore, disapplies the waiver provisions as far as concerns the reasons set out in Sections 99 and 104 of the 1996 Act. It will ensure that employees who have entered into waivers before abolition will nevertheless be entitled, after that date, to bring a claim for unfair dismissal if their contracts are not renewed on grounds of pregnancy or maternity or because they have asserted a statutory employment right. It is clearly right that they should be protected in this way, and I urge the Committee to rectify the defect in current legislation by accepting these amendments. I beg to move.

The Earl of Mar and Kellie

Amendment No. 277A, which stands in my name, is part of this group of amendments. Its provenance is the Law Society of Scotland. The amendment removes any doubt about whether the effect of the clause is retrospective. Contracts entered into before the commencement of this Act would not be affected if this amendment were accepted. Parliament should not retrospectively alter contracts negotiated and entered into freely by two consenting parties. The amendment will ensure that the new provisions will apply only to new contracts negotiated after commencement. Only after commencement can negotiations take full account of the current law.

Lord Birkett

My Amendment No. 277B also falls within this group of amendments. It arises out of concerns that I expressed at Second Reading, which I shall not weary the Committee by repeating tonight. I simply remind noble Lords that they relate to the theatre, in particular long-running shows often, but by no means exclusively, in the West End. Musicals can. and happily often do, run for years. To ensure the freshness of those shows the management usually gives fixed-term contracts of a year or so. Those contracts contain precisely the waiver referred to a moment ago by the noble Lord, Lord Sainsbury. By that waiver the employee, the stage performer, agrees not to claim unfair dismissal in the event of his contract not being renewed for a further period. Sometimes those contracts are renewed but by no means exclusively.

This arrangement is entered into quite freely with the agreement of unions, management and the performers themselves, and it works very well. But the Bill as now drafted would make such a waiver clause impossible. At Second Reading the noble Lord, Lord McIntosh, gave it as his opinion that the mere failure of management to renew a contract at the end of a fixed-term contract could not of itself be construed as unfair dismissal. Although I absolutely agree with that opinion, which has the uncommon virtue of common sense, the noble Lord's words cannot be construed as having any legal force. In case anything should go wrong I have tabled this amendment which, stated simply, gives the Secretary of State power to alter the situation should he think it beneficial to do so.

Regardless of how the Committee views the amendment itself, I should like to make two tiny points before sitting down. In many industries, including the theatre, it is very sensible in complicated and small matters of this kind for the profession concerned to make very clear its policies, procedures and practices for the benefit of employers, employees and unions. It is very important that those matters are set out more clearly than they have been in the past.

The second matter which I believe will be very important after the passing of this Bill is that wherever there are conciliation procedures already in place within an industry it is very important that those, as it were, domestic procedures should be followed through before cases come to official tribunals. Both those matters will help the situation in the future considerably.

9 p.m.

Lord Meston

I support the noble Lord, Lord Birkett, in what I suppose he might call "The Mousetrap" amendment or the "Les Miserables" amendment. The existing provisions of Section 197, which the Bill will remove, have been described as an uneasy compromise between the need to prevent abuse of the fixed-term contract to avoid legislative protection and the legitimate need for short-term employment and flexibility.

The trouble is that our law does not distinguish between those situations in which the employer has a genuine and good reason for offering short-term contracts and those who may wish to exploit the potential for abuse by keeping a workforce without statutory protection through repeated extensions of short-term contracts with waiver clauses. That is the potential abuse which the Court of Appeal has identified and which the Government are alive to and wish to remove.

In fact there are two real mischiefs. First, the employer and the employee contract out of the protection which Parliament intended most employees to have. Secondly, where in reality the employment relationship will be continued by renewal at the end of the fixed period, the ability to contract out of statutory rights by waiver and to offer a new contract to the same person gives that employer a lever which can be unfairly used and which can create stressful uncertainty in the mind of the employee. Those are the two mischiefs and I fully understand why the Government wish to deal with them.

I agree with the noble Lord, Lord Birkett, that there may be cases where the genuine fixed-term arrangement is justified. That is certainly recognised in continental jurisdictions. Therefore, it may be that something along the lines of the noble Lord's amendment should be considered. Most of the case law in this area has been generated for some reason by the BBC. We do not know why, but it appears that the BBC favours that particular contractual arrangement and then—dare I say it?—gets it wrong and ends up in court. There are also academic bodies and even, I believe, government departments which in the past favoured these arrangements, and possibly for perfectly good reasons.

While I entirely support the general thrust of getting rid of Section 197 as it stands, there may be an argument for preserving some sort of discretion to allow it in entirely appropriate situations such as the noble Lord, Lord Birkett, suggests.

Lord Sainsbury of Turville

I shall deal first of all with Amendment No. 277A. We intend to ensure, in the commencement order for Clause 16, that it does not apply to waivers entered into before commencement. This is the effect sought by the noble Earl's amendment. Therefore, I invite him to withdraw it.

Amendment No. 277B would introduce powers to specify classes of employment in respect of which unfair dismissal waivers could be agreed. As my noble friend Lord McIntosh explained at Second Reading, the abolition of unfair dismissal waivers will restore a fundamental right to fixed-term employees. I firmly believe that all such employees are entitled to that right. The amendment suggests that waivers can be of mutual benefit to employers and employees. That is not my view. I do not believe it is ever of benefit to employees to be asked to give up the right to seek redress if they are treated unfairly. I see no case for allowing waivers to continue in any field and the power sought by the amendment is therefore unnecessary.

Of course, the Government have no wish to harm the theatre industry. On the contrary, we want to see it continue its great success and the enormous contribution it makes to the economy and to the national culture. But we do not consider that there is any danger of that from Clause 16. We do not consider that there would be any harm. Theatrical employees clearly have just as much right not to be dismissed unfairly as employees in other fields. If their employers are concerned that they may find themselves in difficulties if they decide to dismiss them when their fixed-term contracts expire, the remedy is in their own hands. The abolition of waivers will not prevent them from not renewing the fixed contracts of employees. It will simply mean that they must be carried out for a fair reason and in a fair manner. On that basis I see no reason why "The Mousetrap" should not continue indefinitely and give pleasure to our grandchildren in the future and be renewed constantly with new people. That process simply has to be done in a fair and reasoned manner. I believe that policies and procedures could be developed to make certain that that is done properly and, therefore, employment tribunals will not have to be significantly involved.

That is something which the law requires of all employers. If one begins to make exceptions many more exceptions could be made for similar kinds of arguments which ultimately do not stand up. I am sure that the noble Lord does not wish to suggest that theatrical employers should be free to act less fairly than others. I urge him to withdraw his amendment.

On Question, amendment agreed to.

[Amendments Nos. 277A and 277B not moved.]

Clause 16, as amended, agreed to.

Clause 17 [Part-time work: discrimination]:

Baroness Miller of Hendon moved Amendment No. 278:

Page 9, line 15, at end insert ("unless such unfavourable treatment is reasonably justified.")

The noble Baroness said: In moving this amendment I shall speak to Amendments Nos. 279 and 281 to 283. As regards Amendment No. 278, I would not like it to be thought that I am in favour of anybody being treated unfavourably. But under this Government's egalitarian philosophy, as contained in the Bill—for example, in the provisions in Clause 15—any distinction between one employee and another is regarded as a detriment even if there are valid reasons for that distinction.

In this clause, the Government propose to give the Secretary of State powers to make regulations to secure that part-time workers should not be treated less favourably than full-time workers. However, although subsection (2)(c) states that the Secretary of State may specify whether circumstances do or do not constitute less favourable treatment, we believe that that is a bit vague and that it is a blank cheque. We agree that there can be circumstances where less favourable treatment may be justified. It seems that the Government, by the wording of paragraph (c), concede that that is correct. However, nowhere in that enabling paragraph is there any requirement for the concept of reasonableness to be inserted. In various Bills, the Government seem to resist that concept, but in this case it is essential. This clause enables the Secretary of State to create new criminal offences.

At this time of night I do not want to get into discussions about when it may be reasonable for an employee to be treated unfavourably compared with another. Each case must depend on individual circumstances. That is why a test of reasonable justification is required.

The Secretary of State will obviously have to decide his detailed exemptions for himself. I cannot think of examples at this stage although I could, if pressed. Indeed, I could give a very simple example from my former business. Because of a lack of public transport on the industrial estate on which my factory was based, the manager used to pick up and deliver employees to and from the main road at the beginning and the end of the day in my minibus. There was no possibility of doing that during the middle of the day because he was far too busy. If we had had a part-time worker who had to cover the half-mile each way on foot, that might have been regarded by some official as "unfavourable treatment" compared with that given to other employees.

There is a danger in legislating in a way that makes it more expensive and more difficult to employ part-time workers. Employers simply use more full-timers. "What is wrong with that?", some of your Lordships may ask. The result would be that many working mothers and many disabled people would find it that much harder to be self-supporting and to have the dignity of working. If the Government make it much too hard to employ part-time workers, they will damage the very people whom this Bill is trying to help and protect.

Amendment No. 279 is necessary because it creates an absolute criminal liability on someone who may innocently commit an act which regulations made under this Bill will criminalise. A junior employee may very well technically "aid" the commission of an offence simply by doing something he is instructed to do, which on the face of it is perfectly normal but which under some subjective test is later deemed to be "less favourable" to a colleague.

Once again, I find it hard to give an example, but I cannot imagine why the Government seek to introduce into the relationship of employer and employee the concept of criminal liability with regard to matters that ought to be dealt with by the civil courts or the employment tribunals. In my view, it is just intimidation of employers and does nothing to further "employment relations", which is what this Bill is supposed to be about. However, if the magistrates' courts are to be involved, the least that can be done is to permit the defences that are available for many other, far more serious, offences. I refer to the concept of a guilty mind, or mens rea as it was called before the recent abolition of legal Latin.

Amendments Nos. 281 and 283 are identical and relate to the regulation-making powers conferred on the Secretary of State under Clauses 17 and 20. Clause 17 deals with discrimination in the case of part-time workers. Clause 20 is a very wide-ranging power to confer rights on, any individuals who are of a specified description".

Under Clause 20, the Secretary of State can deem that an individual is a party to a worker's contract, who the employer is deemed to be, and, having done all that, he can modify it as regards any individuals.

Rightly—I give them full credit for having done so—the Government have made the regulations under the two clauses subject to positive resolution of both Houses. However, I do not think that that goes quite far enough. The regulations under both clauses are so far-reaching, give such extensive and so far unspecified powers, and may affect so many persons—employees and employers alike—that it is vital that no regulation is even drafted before the Government have consulted widely. In some ways, that will assist the Secretary of State to convince Parliament to approve the regulations.

Amendment No. 282 is an administrative amendment, affecting part-time workers. Such workers are often those most in need of work. I refer, for example, to single parents; to older workers who may not want, cannot obtain, or may not be able to undertake, full-time work; and to disabled persons who are not physically able to work full time. We suspect that over-regulation of this sector of employment may very well make it uneconomic for employers to take on part-time workers. The same would apply to over-bureaucratic regulation. An employer may decide that, taking everything into consideration, including the national minimum wage and the working time directive, it is in his own interests to employ a full-time worker.

The purpose of the amendment is to point out to the Government that we are worried that the regulations may very well destroy jobs. If the Government are confident that we are wrong, they should be prepared to prove it by publishing a report on the effect of Clause 17 after its first two years of operation. I beg to move.

9.15 p.m.

Lord Sainsbury of Turville

Perhaps I may deal with Amendments Nos. 278, 279, 281, 282 and 283. As your Lordships will be aware, the provisions in this clause provide a power under which the Government intend to fulfil their obligations under the part-time work directive. The directive sends a powerful message that part-time work is not second-class work. Rather it is a valuable tool in the labour market which can be of enormous benefit both to businesses and their employees. As such, part-time workers have a right to be treated on the same basis as others. They should not suffer worse treatment simply because they work fewer hours.

That is the fundamental principle lying behind the clause and the directive. However, it does not mean equal treatment whatever the circumstances. The directive recognises that there may be objective justification for different treatment just as, for example, employers may be able to justify a requirement which impacts more heavily on women than on men if there is good reason for the requirement which is unrelated to the employee's sex.

The clause also recognises the need to provide for such justification. In particular, the powers in Clause 18(1) allow for regulations to be made to provide for no less favourable treatment for such purposes and to such an extent as the regulations may specify. This power will be used to ensure that those who have objective justification for offering different terms and conditions to full and part-time workers will be able to do so. I am therefore entirely sympathetic with the principles behind the amendment, but it is unnecessary since the ability to justify differential treatment will be spelt out in the regulations.

It may also be misleading. The wording in the directive allows for objective justification. While this will most likely be reasonable as well, there is a clear definition in European law of what constitutes objective justification. To use a different phrase in the Bill, as the amendment proposes, could lead to confusion as to employers' obligations. We shall be consulting fully on the regulations, and this will provide an opportunity for those who may be affected by them to comment on the provisions. I can assure your Lordships that the debate we are having today will inform the drafting of the regulations.

We are not legislating to require employers to offer part-time work. We wish to encourage that, but the statute will not require employers to find part-time jobs where it is not an economic viability. It will simply require that where such jobs exist the employees should have no less favourable treatment than colleagues doing equivalent work full-time. As I said, the regulations will allow employers to justify any less favourable treatment if that can be done objectively.

Before looking at Amendment No. 279, I should make it clear that if we use the power to create a criminal liability at all we envisage a very limited use, reflecting the provisions of the Disability Discrimination Act 1995. Under that Act, someone who knowingly aids an unlawful or discriminatory act will be treated as himself discriminating unlawfully unless he reasonably relied on a false or misleading statement by another person that the discriminatory act would not be unlawful. The person who made that false or misleading statement will be committing a criminal offence if he or she knowingly or recklessly made it.

Your Lordships will see that the criminal offence is very narrowly defined. It is not intended to use the powers in Clause 17 to create extensive criminal offences. However, to avoid any confusion we intend to have all the data on the operation of any offences, including any necessary definitions, together in the regulations. The draft regulations will be subject to wide consultation, and so it is not possible at this stage to say exactly how this or any other power would be used. However, I can assure the Committee that the regulations will reflect the spirit of this amendment; namely, that the power to create offences will be used sparingly and with restraint.

Turning to Amendment No. 281, the Government recognise the importance of consulting widely on the details of the regulations that we are proposing in the clause. It is an important general principle that the people who are affected by regulations should have a chance to comment on what the Government are proposing. As I have mentioned, the Government intend to consult widely on the detail of the regulations. The directive does not have to be implemented until 7th April 2000 and so there will be time available for full consultation to take place. We shall want to hear from all interested parties. I can assure noble Lords that all views expressed in this House on the subject will he taken into account. It is quite unnecessary to make this a legal requirement. We are committed to the procedure and will carry it out.

Furthermore, the amendment would impose a requirement to consult before any revisions to the regulations were made. In most cases the Government will want to do so. But there could be occasions when the Government needed to make rapid and purely technical revisions, for example, to close a loophole which had been discovered and which prevented the regulations fulfilling the purpose that Parliament intended. In that case there would be neither the time nor the need for consultation. In order to maintain this flexibility for government, I must oppose the amendment. However, all regulations under this power will be subject to affirmative resolution, as has been made clear, and your Lordships will have the opportunity to scrutinise them properly.

These comments apply equally to Amendment No. 283, and I must oppose it also as unnecessary arid inappropriate. However, I am happy to reaffirm the commitment given in another place that the Government will carry out full public consultation on detailed proposals before exercising this new power. Again, arty order will be subject to affirmative resolution.

Amendment No. 282 would commit the Secretary of State to reporting on the impact of the regulations on the level of part-time working in the economy. Although I agree that in general there should be an effective monitoring of all legislation, there are a number of reasons why the amendment is unnecessary and indeed ineffective in this case. First, this measure is not solely concerned with increasing the number of part-time jobs. At least as important will be the effect it has on the status of part-time work and hence the quality of the available jobs. It also aims to open up the wider range of part-time opportunities, especially in areas which may be thought currently to be unsuitable for part-time work. A simple measure of the level of part-time work will not pick up those important changes and so will underestimate the effect of the regulations.

Secondly, we are not aiming at a quick fix with the provision. With these regulations we are aiming for a long-term effect on workplace culture and on perceptions of part-time work. There is unlikely to be concrete evidence of significant change within the first two years, and it would not be worth conducting a study so soon.

Thirdly, as anyone who has worked in the retail trade will know, there has been a long-term trend towards an increase in the level of part-time work in the economy, but the rate of growth has not been constant. Also, over recent years the workplace culture has been changing, for example, as employers recognise that they may be unlawfully discriminating on grounds of sex if they discriminate against part-time workers. Thus we do not expect the regulations to cause a revolutionary change, but rather to reinforce existing trends and provide clarity for workers and employers.

It is almost inevitable that the level of part-time work in the economy will change in the future regardless of government action. However, it would be difficult to untangle the effects of all the factors I have mentioned and to establish accurately to what extent any change was due to the regulations or to other economic and social factors.

Having said that, I assure noble Lords that the Government have every intention of monitoring the effects of the legislation they put in place. We shall be keen to review the success of part-time work provisions but we shall take a wider view than the amendment contemplates. Part-time work is already regularly monitored in statistical surveys and we shall consider carefully what else needs to be done to assess the wider effects of the new legislation.

This amendment would add nothing to the Bill and would involve government researchers in work which would not give us any useful information. I hope the noble Baroness will be convinced by the assurance I have given in discussing the amendments and so will be persuaded to withdraw them.

Baroness Miller of Hendon

I took comfort from the Minister's assurances that my amendments were unnecessary. I shall read carefully what he said. I was somewhat more perturbed when he said he thought some would be ineffective. However, at this stage, I accept what he says in good faith and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 279 not moved.]

Lord McIntosh of Haringey moved Amendment No. 280:

Page 10, line 17, at end insert— ("() Regulations under this section which create an offence—

  1. (a) shall provide for it to be triable summarily only, and
  2. (b) may not provide for it to be punishable by imprisonment or by a fine in excess of level 5 on the standard scale.")

The noble Lord said: This amendment was spoken to with Amendment No. 234. I beg to move.

[Amendment No. 280A, as an amendment to Amendment No. 280, not moved.]

On Question, Amendment No. 280 agreed to.

[Amendments Nos. 281 and 282 not moved.]

Clause 17, as amended, agreed to.

Clauses 18 and 19 agreed to.

Clause 20 [Power to confer rights on individuals]:

[Amendments Nos. 282A and 283 not moved.]

Clause 20 agreed to.

Lord Meston moved Amendment No. 284: After Clause 20, insert the following new clause—

    cc384-401
  1. EMPLOYMENT OUTSIDE GREAT BRITAIN 8,712 words, 1 division
    2. cc401-6
  2. TRANSFER OF UNDERTAKINGS 1,884 words