Baroness Donaghy
Main Page: Baroness Donaghy (Labour - Life peer)Having sat through the first day of the Committee stage listening to a debate on a subject about which I know nothing, I have found out two things: first, that I was none the wiser at the end of the Committee but, more importantly, that the Minister conducts business at a brisk pace. I shall try to match that spirit.
This amendment is a potentially good new story for ACAS. I was chair of ACAS for seven years, and still feel part of the ACAS family, so my interest is obvious. I hope that the Minister does not think, therefore, that I am looking a gift horse in the mouth, but I do not want this to be a gift that keeps on taking.
The Government are building on something which already exists in voluntary form as a pre-claim conciliation, or PCC, and intend to make it compulsory as early conciliation, or EC. The ACAS voluntary system has been running since 2009; last year, in 2011-12, there were 23,777 cases, an increase of 34% over the previous year. Three out of four cases did not go to tribunal, saving cost and stress for employers and employees. Recent independent research found that if you include staff time and legal costs, employers save on average £3,700 compared with the costs involved once the tribunal claim is made.
If ACAS is given the necessary extra resources—and it cannot be done without them—we need clarity from the Government about how this is to be achieved. In the Government’s response to the consultation Resolving Workplace Disputes, they recognised that,
“there will be an increased burden on Acas that will require sufficient resourcing. This requirement will be met through the savings that will accrue to the Exchequer as a result of fewer cases requiring determination at ET”.
I think that ET means employment tribunal.
I must admit that that statement filled me with terror. ACAS and the Tribunals Service come under two separate departments—an unfortunate move in my view. What will the process be to identify the savings given the different timelines of the two systems—conciliation first and employment tribunals later? What will the framework among departments be? After all, we are talking about the Treasury, BIS and the MoJ. What precise impacts have already been identified? In another place, it was argued that consultation was unnecessary as the Government had already consulted on the appropriate charging points and fee levels for tribunals in December 2011. The Minister in the other House indicated that consultation had also taken place on the possible impact of fees as part of their assessment which accompanied the announcement in November 2011 of the introduction of early conciliation. I do not see very much about the impact of ACAS on either of those two assessments.
As ACAS put into its submission to the Government:
“The proposal to introduce fees into Employment Tribunals will mean a very significant change to the system which is likely to have an impact on how disputes are resolved in future”.
Clearly, we do not know how this will manifest itself until it is introduced. I am not asking the Minister to produce a crystal ball, which is why I will be moving an amendment later about a review after one year of implementation. I will also say something about unintended consequences in that amendment.
I believe that the impact of the changes will not just be on the process of resolving disputes and the resolving or otherwise of them, but that it will spread beyond the issues covered in the success criteria into much broader workplace matters. Will the extra ACAS resources be provided upfront and how will the criteria for success be measured? Will they be confined simply to a drop in tribunal cases? This is particularly important as a number of cases at employment tribunal are usually determined by the state of the economy or by how many multiple cases are under consideration. The statistics quoted are too often cases of double-counting, with the employment tribunal tail wagging the employment relations dog.
If insufficient attention is given to resourcing ACAS, I am concerned about the impact on other services. The helpline takes more than 1 million calls a year and in itself helps to prevent dispute by providing crucial information impartially to both employer and employee. It is a trusted brand and the continuing development of the website, collective conciliation and promoting good employment relations are all vital elements of ACAS’s work.
I do not need to remind the Minister that most people at work are not in a trade union. The introduction of employment tribunal fees will hold no fears for trade union members. No doubt the Minister will raise one cheer for being a recruitment sergeant for the trade union movement, maybe even two. It will not hold too many fears for reasonably well paid employees either, but it is the job of the ACAS council to be mindful of all employers and employees. There have been some extremely distinguished members of that council over the years: John Cridland of the CBI served for 10 years and the noble Lords, Lord Monks and Lord Morris of Handsworth, are also former council members.
By acknowledging the importance of ACAS and by giving it this new role, the Minister has got it right and I pay my compliments to him. Resourcing ACAS is a good thing in itself, not just as a forerunner to employment tribunals—but even as that it has an exemplary record. The ET system would have collapsed years ago if it had not been for the proportion of pre-hearing settlements reached. I hope the Minister can give me the assurances about resourcing that I seek and the information I ask for.
I support my noble friend’s amendment. As she mentioned, I was a member of the council for a good, long time. In fact, I think I am the record holder at about 15 years. One of the pleasures of being a council member was that mostly when you have been associated with large organisations, you are very aware of complaints and people who are dissatisfied about the way the organisation works. That was extremely rare with ACAS. Its record of people, employers and workers alike, being respectful and grateful for the role that it played in sorting out particular disputes was very pleasing and satisfying. The evidence that has been gathered over the years of ACAS’s life shows that good value has been delivered for the public money that has gone into it. ACAS has been a well regarded body all around the country and in all parts of the community. I am pleased to see it getting some support and recognition, and an expanded role, in this Bill.
However, I have two concerns, which partly overlap with those already expressed. I hope the Minister will be able to allay some of those concerns. As all the changes in this Bill go through in this area, particularly in relation to unfair dismissal, will he agree that employees are going to be in a slightly worse position, at least, than they are at present? Is there not a tilt in the law, particularly on unfair dismissal, towards the employer? I will pick out one thing: the increased risk of an applicant having to put down a deposit to take their case through to a tribunal. Is that not going to make them more reluctant to take that risk? They are probably already in a most uncomfortable position, having been fired and now facing the possible ignominy of taking their case against an employer to a tribunal. I am concerned about that generally, but in particular that this is going to lead to a very long queue at ACAS. Will there not be increased demand for its services, with people more insistent that the conciliation stage delivers a result than perhaps they are at present, so that they then avoid the rather hazardous steeplechase course that leads to a tribunal?
I underline the point that the noble Baroness, Lady Donaghy, made about resources. This is not a cost-free exercise. ACAS is already a pretty busy organisation with a lot of people looking to it for help, very often in fairly desperate personal circumstances. If the Minister believes that the maxim for this part of the Bill is, “Blessed are the peacemakers”, then I hope very much that the peacemakers get some money to make sure they can do their job.
My Lords, I thank the noble Baroness, Lady Donaghy, for the amendment. It is, quite rightly, an interesting area to probe. I also compliment her on her work as chair of ACAS and the work of its board.
In summary, this is a nice problem to have. We all agree that ACAS is a terrific institution. It probably sounds rare for this Government to say that they thought it was a very good institution, but we believe strongly in it as an important place to resolve difficulties. That is why we intend to put much more in the way of resources into it, and it will become a fundamental block for early resolution of a lot of disputes. We know it acts fairly and properly, it has a good track record, and we are keen to support it.
I know that many noble Lords have read our recently published impact assessment on resolving workplace disputes, which helps to answer a number of issues that have been raised. We will produce in the new year a further impact assessment on how this process will work and whether the funding should be upfront, which the noble Baroness asked for. We are working to determine the extent of the funding and how best it is to be provided. I hope that by the time we get to the Report stage in the Chamber, quite a lot of the questions will have been answered.
It is important that we get it right and that we listen to the words of the chairman, who said, in front of the House of Commons Committee, that he was confident that ACAS would be adequately funded for its new task. Do not, therefore, take it from us; take it from him that he is confident he will get the right funding. We are working closely with him and the organisation to make sure that we do that. I totally accept and agree, as do the Government, that it is critical that ACAS is properly funded, and we will be able, in the normal course of its annual report, to see how that funding is operating. Noble Lords will be able to judge for themselves annually how that is improving and, through the normal avenues, determine that the progress we hope for on all sides of the House is being made as satisfactorily as possible.
I thank the noble Baroness for this probing amendment. It gives me an opportunity to lay out clearly how we are going to proceed. On that basis, I hope that she will withdraw the amendment and look to see how this develops in the next month or so.
I thank noble Lords who took part in the debate, and particularly the Minister for his response. As he said, it is a good problem to have, and I am glad that he has again publicly acknowledged the work of ACAS and the need to produce substantial funding. I asked four or five questions, and I understand that he is not in a position to answer them today. I note what he said about producing the impact assessment on the process, which is still being worked out. It may well be that by Report stage we will all be gloriously happy. Would it be helpful if I dropped him a note to remind him of those questions, or is he satisfied that they will appear in Hansard?
Naturally, I have noted the questions and I will save the noble Baroness time because I have excellent officials working on this. We take her questions seriously, and I hope that as the assessment continues we will go skipping as lambs in the new year when we have seen the outcome.
I thank the Minister for that answer. We will be monitoring the situation closely and are keen to have answers about resourcing. In that context, I beg leave to withdraw the amendment.
In moving Amendment 20A, I recognise that the new procedures will be implemented. The importance of an early review is to find out not only the impact that they are having on the process and the working relationship between tribunals and ACAS, but also whether there is a wider impact on employment relations, as I mentioned in speaking to an earlier amendment. A review will help to assess the issue of adequate resourcing—I have said most of what I want to on that subject—and to identify any unintended consequences of the new procedures.
First, I welcome the statement in the Explanatory Notes that an ACAS conciliator will be able to continue to try to achieve a settlement after the prescribed period has expired. This is important, as there are various stages before an employee and the employer come to terms with a reality check. Experience shows that there is a high proportion of successful conciliation and settlement in the first two to three weeks of an application being submitted—about a third of the total. Then there is a lull and another flurry of settlements when the tribunal date is announced. Finally, some settlements are reached at the door of the tribunal. Conciliation officers see themselves as part of that whole process and it would be counterproductive to put an end-stop on their involvement.
Secondly, it is important to see how the issuing of certificates by ACAS is working—some of that discussion took place when we were considering previous amendments. If it is carried out in the context of an underfunded organisation with inadequate staffing levels, it will simply be an additional administrative process for both parties. It will not reduce the number of cases to tribunal; in fact, the system could collapse under the weight of applications.
Thirdly, it is essential that as few deadlines as possible are set within the process. Keeping it simple will avoid confusion and maximise the potential for successful conciliation. An early review of the legislation will help to tease out whether the process is unnecessarily rigid and therefore counterproductive. It will also help to see whether the system is well balanced. Looking at the possible extreme outcomes, you could have unsuccessful conciliation because an employer holds out in the hope that an employee cannot afford to pay the tribunal fee. At the other extreme, an employee who has taken the decision to pay the fee to the tribunal will be psychologically unprepared for conciliation.
Then there is the issue of no-win no-fee lawyers, who might see a vacuum in the market. For a small fee, they might promise an assessment of the case and then pick the more promising cases to tribunal for a fixed or percentage fee that covers the cost of the tribunal fee. Far from reducing the number of ET cases, it could provide a welcome commercial opportunity for some and flood the employment tribunal service.
The ACAS conciliation process depends for its success on examining the strengths and weaknesses of each party’s case and having the opportunity to challenge perceptions of the merits of each side’s case to encourage consideration of different perspectives. If that process is curtailed in any way—not intentionally, of course—the Government will not succeed in their objective.
Citizens advice bureaux also provide advice and sometimes representation to some applicants. Some 250,000 people, I think, went to a CAB last year on employment-related problems and 1,900 were represented by the CAB at an employment tribunal. With the reductions in funding it is facing, it is likely that more people will be at risk of falling into the hands of those whose motivation is making money rather than good employment relations. It is against that background that I am asking the Minister for an assurance that a review will take place as early as practicable, just to make sure that the Government have the balance right. I beg to move.
I can give noble Lords a very simple answer because both the Government and the people observing us will want to make sure that there is a review of how ACAS is performing. As the noble Baroness will know better than I, having been the chair of ACAS, it has to report annually to the Secretary of State, and we will insist on that. For those who are interested, it is set out in Section 253 of the Trade Union and Labour Relations (Consolidation) Act 1992. I can tell the noble Baroness that early conciliation will form part of that report, so in our view there is no need to have a separate report from what is embraced in the annual report. I hope that satisfies the noble Baroness, but I want to say that it is fundamental that this is reviewed and that the whole thing is taken seriously. The report is published and will be available in the Library of the House, so everyone has an opportunity to read it and make sure that everything is progressing in the way we all hope it will.
I thank my noble friend Lord Young for his contribution and the Minister for his answer. I am afraid that I am not entirely satisfied, mainly because the ACAS council report has to be essentially apolitical and must not comment on government policy, so the likelihood is that the judgment will be made on the efficiency of its organisation and the effectiveness as it sees it of the new procedure. It would not take account of the things I mentioned on an earlier amendment, including the wider impact on employment relations; that is, elements that might be said to be more political, with a small “p”. It also does not take account of an independent assessment of the adequacy of funding or of the impact at employment tribunals because it would not be proper for ACAS to comment on how the tribunals run their business. There are concerns, perhaps more particularly around the certificate. ACAS might have its own judgment about how effective it is as a process, while an independent assessment might make a different judgment. I am not saying that that would happen, but just relying on the annual report of the ACAS council may not provide the information we are looking for.
In agreeing to withdraw the amendment, I hope that the Minister will take account of the points I have made.
My Lords, I remind Members of the Committee that all employment disputes are currently determined by full employment tribunals or by an employment judge sitting alone. Legal officers can be appointed under the Employment Tribunals Act but can determine cases only where the parties have agreed the terms of determination or the case has been withdrawn.
To date, no legal officers have been appointed in the employment tribunals system. Clause 10 states that legal officers should be able to determine specified types of claims where both the employee and employer have consented in writing. We welcome that aspect. However, while we support the principle of rapid resolution of disputes, we have some concerns about the proposal to permit legal officers to determine employment disputes. Legal officers currently do not receive the equivalent training to that of employment judges and may not be employment law specialists, but decisions made by a legal officer would have the same status as an employment tribunal decision. If legal officers are to determine some basic cases, it is essential that any decision can be reviewed by an employment judge or through an appeal to an employment tribunal.
The amendment therefore requires the Secretary of State and the Lord Chancellor to consult on the level of professional attainment, and the remit and mechanism for appeal, of legal officers empowered to make determinations and decisions. We see this as an important area. Although some of these cases may appear to be basic, there can indeed be complex problems underlying them. Therefore, the training and remit of legal officers are fundamentally important. I should welcome a response from the Minister. I beg to move.
I was having second thoughts on whether I should speak to this amendment because I would not really be doing so with my former ACAS hat on. However, that should not prevent me commenting.
The proposal for legal officers has been dusted down off the filing cabinet many times. I was a member of industrial tribunals, as they were then called, from 1974 to 1989, and therefore have had a long involvement on both sides of the fence on this. I am sure that the idea of legal officers was discussed in the 1970s, 1980s, 1990s and the noughties. In fact, the idea must be so old that it must be growing hairs like gooseberries. I congratulate the Minister on again bringing out this item from the filing cabinet. However, I should point out that that does not make it an antique worth buying.
This is intended to be a cheap way of obtaining legal services, and I suspect that the legal profession will wake up to this one quickly. I suspect that it will be disliked by employment judges; equally, there is a danger that it could second-guess the conciliation process at ACAS. Even more equally, in a time of austerity when the Government are seeking to cut the number of public servants, I should have thought that it was fairly unlikely that a whole platoon or army of these, dare I say, young law graduates or whoever will be employed by any department to do this job. And, if so, which department would it be? Will they be part of the Employment Tribunals Service, or will they be direct employees of BIS or another adjunct of the Ministry of Justice?
I am sorry that in this case I cannot be very enthusiastic but I support the amendment because I think that it may at least give some idea of government thinking on this matter. However, I give a warning that, even though this measure has been recommended many times, the devil is in the detail and the practicalities usually overcome any action on this.
My Lords, I originally intended to delete from the Bill any reference to this form of officer. However, I must point out that the Law Society, which has also briefed me along with the TUC and many other bodies, has already expressed some concern about this provision. It says:
“The Bill provides a new power for Legal Officers to make determinations in some (to be specified) Employment Tribunal Claims. The Society recognises the potential for Legal Officers to perform some duties, but stresses that they must be suitably qualified”.
It is clearly concerned that we will have people who are not suitably qualified making decisions on some of these highly complex potential arbitration cases. Therefore, I echo what my noble friend Lady Donaghy has said: the Government have to be rather careful about this. Given that specialist advice warning, I hope that they will look at it very carefully.
I want to emphasise that I think that the noble Baroness, Lady Brinton, had it spot on about the reasonableness issue. I know a great number of judges who sit on employment tribunals, and their background is not always in employment relations. They are interchangeable. They go on to the High Court in many cases. I think that they value very much an area of law which is a much more vague part of our legal system in the sense that it is about the workplace and the different power structures of a workplace.
It is important to the judges that they have people with experience of the employment relations world—not employment law, but the employment relations world. That comes back to what I said earlier. I accept that, as the Minister said, this is about whether the case was carried out properly, but it is in a context where the employment situation has to be taken into consideration. We are not talking about equals in a power struggle; we are talking about a very different level of perception. This is about perception: it is important that people see that, up there, there is an employer and an employee sitting in judgment. I think that the applicant and the respondent would be much more likely to respond to a result—as I said, perception is important in the employment world—than they would if a judge, possibly a brand-new judge who had not sat on the case before, were sitting alone. This issue is important, and we would like the Minister to reconsider it.
I am not denying the issues that the noble Baroness refers to. No one is. We completely understand those issues. As I referenced earlier—the noble Lord, Lord Monks, referenced it, too—the judge can turn to external advice to support them in a case if they need to. There are complicated circumstances but, in relation to this amendment, the reality is that they are being invited to make a judgment based on the law. It is not about the extenuating circumstances; it is not a question of asking, “Should we give them more money?”. It is about the law and the interpretation of the law in coming to a judgment. Other aspects are involved, which is why the ACAS system is so good because it is conciliatory between two parties. In this instance, however, where you are being asked to interpret the law, we believe that the judge is the person to do that. We totally understand all the permutations around employment disputes, but at the end of the day it is the judge who will determine it. An employer or an employee should want their case to be found within the law by someone who can interpret it.
I want to support this amendment. Clause 12 generally complicates a situation which is reasonably clear at present. It will make life a little more complicated for workers and probably not that uncomplicated for employers. Essentially, it seeks to make it easier for an employer to end the employment relationship by offering an individual money in exchange for a compensation agreement—the title is changed in Clause 18. Let me explain the situation. At present, where there is a dispute, the terms of an offer cannot be reported to a tribunal. It is called a “without prejudice rule”; in other words, what has gone on before is kept away from tribunal cases. Clause 12 will change that and extend the without prejudice rule so that employers can offer an employee money and an agreement where there is no pre-existing dispute and no application has been made. The worker does not even know that there is a dispute, and the employer says, “Here’s some money, get lost”. This is giving the signal that you can fire staff for an arbitrary reason without following any dismissal procedure.
It was not just this side of the House—I remember some wise remarks by the noble Baroness, Lady Brinton, at Second Reading—that welcomed the dismissal by the Secretary of State for Business, Innovation and Skills of the report from Adrian Beecroft, chief executive of Wonga, the payday loans company. He introduced the concept of no-fault dismissal, which was roundly dismissed by the Secretary of State. I very much welcome what he said about it.
However, this provision in Clause 12 is not that far away from that. It is quite similar. It is expressed differently and rather technically, and is not that easy to follow, but essentially the key thing is that there is no unfair dismissal provision. You have not been warned and do not know anything, but the employer can say, “Here is X amount, get lost. Sign here”. You can no doubt go through the tribunal if you wish, but the provisions legalise that signal. I hope that this is not Beecroft through the back door, or “Beecroft-lite” as some people have been calling it, and that we can persuade the Government to take another look at this and recognise that, although it is in different clothing, it is rather similar to what this well known venture capitalist came up with—a measure that he thinks will create jobs and I think will increase unfairness.
I support this amendment because the improvement of employment relations should be the dog, not the termination of employment the tail. The emphasis throughout this clause is on avoiding proper procedures, not on following and adopting them. An employer can go to the ACAS website and get one side of A4 on decent procedure on discipline and grievance. Such procedure does not have to be long or complicated. I know that in the public sector it is usually 60 pages long, and nobody ever reads it, but you can do it on one side of A4 and it will be a perfectly proper procedure for dealing with employee relations.
All this provision does is encourage employers, with a nod and a wink, to forget about employment procedures such as those on discipline and grievance. Instead, they can just have a nice quiet chat, especially when the employee is feeling a bit low, and say, “Surely you’d be better off out of here. Times are going to get worse and it’s going to be even harder for you. Let’s have an amicable departure”. It is still quite easy to get rid of people from an employment situation in this country if it is dealt with properly. However, employers are very often terrified of dealing with these procedures because they are unfamiliar with them, cannot be bothered or feel, as an employer, that they are doing a good job by employing people and therefore have the right to get rid of them as and when required. A good employer will recognise that to get the best out of an employee, the employee needs to know where they stand, to know what the procedures are in their situation, to have a letter saying how much they are getting paid and what their conditions of service are, to have a little bit of an idea what their future is, and to understand their part in the scheme of things and what their role is. It can be a job description, but what an employee is looking for is to know what their role is.
To me, this just sums up the attitude of a bad employer rather than a good one. I urge the Government to reconsider. If an employer has a decent discipline and grievance procedure, it is perfectly possible to talk to an employee without prejudice about what is expected of them. If that employee fails to meet those expectations within a reasonable time limit, stated in writing if necessary, it is perfectly possible to see that employee out of the building without any danger of going to a tribunal.
The Government are emphasising the wrong end of the stick on employment relations and concentrating too much on reassuring bad employers that they can get rid of employees without any comeback. That is the wrong way round and, long-term, the Government will live to regret it.
My Lords, I will make a simple statement. We have to get an atmosphere in Britain in which employers are less frightened of taking on more staff. I have to say to the Opposition that, if you are an employer, for a long time now there has been a general feeling that you are better off not increasing the number of people you employ. Some of us have fought against that and employed more and more people, but it is not a general trend. I think the Opposition, and particularly the Trades Union Congress have got to come to terms with this psychological fact. It is important for employers to feel that the problems that may open up for them if they make a mistake in employing someone are at least reasonably limited. That is why the Government’s approach in this Bill is absolutely right—it simply, delicately and very slightly seeks to shift the balance so that employers begin to feel that there is a real reason for them no longer to be afraid.
The trouble is that, in this whole discussion, there are 200 years of accumulated dislike of the concept of employers. I find that very hard to understand. The noble Baroness, Lady Turner, speaking from the TUC brief and from a long history as a negotiator, could hardly hide from us the feeling that people ought to employ people and that they will do it automatically. The truth is that we have found, over the past few years, an increasing reluctance to employ, although we ought to have a society in which we restrain our use of material resources and extend our use of human resources. That is what sustainability actually means. However, to do that you must have a format within which people are not so worried that they do not employ.
The very moderate steps being taken here are essential if we are to see an increasing number of people in employment. The unemployment figures are much better than many thought they would be, and I think this Bill will help. If it helps, then it will do more good for the working people of Britain than anything else. I am very unhappy that the Opposition are suggesting that the Bill is in some way anti the workers in factories and businesses; it is not. It is a mechanism to get more people into jobs by removing the feeling that employment is too dangerous an activity to step further into than you really have to. That is the change we have to make and we need to make it now.
I do not want to prolong things as I realise that we are winding up. We had this debate when we were discussing the regulations on employment tribunals and the noble Lord, Lord De Mauley, was in the lead. The very same remarks as those made by the noble Lord, Lord Deben, were uttered then by the noble Lord, Lord Jones of Birmingham. This is not a new debate. The only thing that I would say is that some of us come from a climate—I will remind the Committee that I was chair of ACAS—where we support employers as well as employees. We want to create good employment relations because we believe that that is good for growth in Britain.
We know that companies fail because they are sometimes badly managed and sometimes undercapitalised. I do not know of many companies that failed simply because an employer could not get to grips with getting rid of a bad employee. I have been a manager myself and have dismissed people, and I fully accept that there are poor employees. However, what we need in this country are decent skills and a good vocational education system, and I think the Government are trying to tackle that. We also need good management—something that I do not believe has been sufficiently emphasised in this discussion—and we need to be able to explain to employees where they fit in in the scheme of things so that they understand that and feel involved. Those are the points that I wish to make. This is not a new debate.