Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Debate between Lord Cope of Berkeley and Lord Jones of Birmingham

Wednesday 28th March 2012 Lords Chamber

[Lord Jones of Birmingham]

My Lords, I declare an interest, as I chair and advise many businesses that will benefit in one way or another from the outcome of the implementation, or not, of this statutory instrument.

Listening this afternoon I am left with the impression that, if ever the other place or the general public want to know about the value of this place, it can be found in the marvellous depth of expertise and experience that I sit here and look at today. I do not agree with many noble Lords, but I acknowledge their experience and that they have done it. I hope that as we go home for Easter we could take that thought with us—that there are very few legislatures in the world that could debate a subject such as this one with the experience that I see all around me today.

Of course, there are many reasons why this nation can be attractive to inward investment. There are the factors of economic stability, growth, access to skilled labour, a competitive tax regime—and, I beg of this Government, better and more value and not price-based government procurement. But at the end of the day it is true to say that a flexible labour market, by perception as well as reality, is one reason why we are attractive. I think that the noble Lord, Lord Beecham, was saying that it is a myth that we do not have a flexible labour market, although I may have misunderstood him. We have one of the most flexible labour markets, if not the most flexible, in the European Union. That is why Tata continues to create jobs here before it creates them anywhere else and one reason why GlaxoSmithKline announced that fabulous news just the other day.

I say to the noble Lord, Lord Whitty, that I do not think that I could be identified with the saloon bars of the Home Counties, a place where a crèche is something that two Range Rovers have. I come from the home of the real Range Rover—Birmingham. One reason why Tata is investing in another 1,000 to 1,500 jobs in my hometown, building that product, is because that company knows that it is in the home of a flexible labour market. That company runs, as do so many other sophisticated and large inward investors, by skilling and investing in its people, and it will hardly benefit at all from extending from one year to two years. But the very fact that we have that rule will be one of the bricks in the perception that we are attractive. There is no running away from it—when I go around the world, that is one of the reasons cited. But it is not on that scale that we will target job growth in this nation, if we are to get out of the economic mess. That will happen through small business, getting micro-businesses to take the plunge and employ one person for the first time, and getting a firm that employs five to employ six or one that employs 20 to employ 21. They are the route out of this—the private sector creating jobs—and we have to do everything that we can to ensure that they get all the encouragement they can to do so. Why on earth we have a national insurance contribution from employers for small businesses when they are not making money is beyond me. At the same time, we have to, first, make it factually easier for them to do it and, secondly, ensure that they do not feel that they will be subjected to all the debilitating problems—as they see it—with an employment tribunal if they take someone on.

The noble Lord, Lord Young of Norwood Green, said at the end of his remarks that no business has anything to fear if it complies with regulation. I remind him that they have a lot to fear; it is called the spurious claim, where somebody leaves employ and has a crack at an employment tribunal to get damages for unfair dismissal. It happens a lot, and it never actually comes anywhere because these people are bought off. It is no use people saying, “At the end of the day, that is a small price to pay”. In economic boom times, it may be because, yes, people then take labour on more readily. Yet when we are really under the cosh in this country it is a real inhibitor. People say, “I’m not going to take somebody on, because in the next year or 18 months they’re just going to leave and then do me for constructive dismissal. I’m not going there; I won’t do it”. It happens all the time, and I hear it all the time.

Many of the noble Baronesses and noble Lords who have spoken come from a noble cause of championing labour. I ask them, just for a few moments, to leave their ideology at the door and think more not of those who are in work but of those who are out of work. In the European Union we have a history of regulating and championing those in work, but we are looking at serious, long-term sustained unemployment, especially of the young, throughout the whole European Union because no one is bothering about getting those who are out of work into work. If we really care about that, we have to go to town on ensuring that small businesses take the chance.

I notice that so many unions fight so often on the subject of pensions. When an employer closes a pension scheme to new entrants, they fight while their members are fine, but say that they are doing it for people who are currently not in that scheme. If you care that much for those who are out of work in that situation, why not do the same now? The noble Lord, Lord Monks, said that no one has written an undertaking saying, “You do this and I’ll take on more work”. Let us throw the glove down to small businesses. Let us champion it and say, “Come on, we’ve done our bit—you do yours”.

The amendment speaks of “justice and fairness”. In supporting this statutory instrument, I absolutely agree with the noble and learned Lord, Lord Scott of Foscote; it is despicable if anybody is ever dismissed and does not get a letter from the employer saying why. The other side of that should be concern if they do not want it, because often an employer can write, “Actually, I fired you because you’re rubbish”. There is nothing wrong with that. Perhaps if they knew they were going to get that letter, employees might behave and go to work a little differently along the line. As the amendment speaks of “justice and fairness”, I end by asking: fairness to whom? Yes, it is fairness to a business because it is not going to have so much time, resource, effort and lawyers’ fees going towards fighting so many claims, which occasion after year one at the moment. Yes, it is fairness to the wealth creation of the nation but, at the end of the day, that generates tax which pays for a lot of schools and hospitals. More than anything else, it is fair to the unemployed because it is just one more chance of getting them into the world of work. I support the Motion.

[Lord Cope of Berkeley]

My Lords, I will not repeat what I said last week in Committee but I want to emphasise one point, although I shall not do so as eloquently as the noble Lord, Lord Jones, has just done. Jobs do not exist automatically. In the small and medium-sized businesses with which I have been concerned they need to be created and people need to take risks in order to create them, borrowing money and so on and putting their own money on the line. Obviously they hope that that will be successful—sometimes it is, sometimes not—but they need to be creative. As I say, jobs do not exist automatically and a tribunal cannot decide who does them in every case. This measure will make it just that bit easier for employers to create the sort of new jobs in small and medium-sized businesses that the noble Lord, Lord Jones, was talking about, and will make it more likely that they will do so. We need these jobs and less bureaucracy.

On the question of reasons, which the noble and learned Lord, Lord Scott, mentioned, I entirely accept what he said about good management practice but this is not just a question of good management practice; it is a legal requirement to produce a legal document that could form the basis of legal proceedings in the tribunal and so on. It is different from good management practice, with which I would concur, to say that there must be a legal duty to produce a legal document. That is the difference, and that is why this measure goes along with the extension of the amount of time in the statutory instrument. For those reasons, I support the statutory instruments as they stand and would not accept the amendments.