Lord Monks
Main Page: Lord Monks (Labour - Life peer)Enterprise and Regulatory Reform Bill
Lord Monks Excerpts
Baroness Donaghy
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.
Lord Monks
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.
Lord Monks
I intervene again, although I will not make a habit of doing so. In my earlier remarks I referred to a steeplechase that the applicant needs to negotiate to reach the employment tribunal. The tribunal is not a sort of holy grail by any means. The average compensation payments are pretty low when you get there, although there are some spectacular exceptions, and often do not compensate for the loss of employment.
To all the points already introduced into the debate this afternoon, such as needing to be in a job for two years and having to go through the ACAS procedure, the Bill adds the issuing of a rather formal certificate, which the noble Baroness, Lady Turner, is concentrating on. You may then have to pay a deposit for some, or all, of your case and then you arrive in front of the tribunal, which does not have lay members—people who have direct experience a bit like yours—to give you a bit of reassurance.
It is a daunting prospect and, while I can guess some logic behind the need for an ACAS certificate at the end of the conciliation service, it raises a number of points. First, why is it necessary? It is not necessary now and I am not aware of there ever having been any state of confusion. If the two parties have not agreed, the case continues. Anyway, ACAS has to issue a certificate. How long it will take will depend on its case load and whether it is another bureaucratic stage. I know that the time clock does not start running until after the certificate is issued, but it seems that there is scope for some legal problems.
I would be interested in an explanation, if it is possible to get one today, on the reasoning behind this particular stage being put in. Is there some doubt about whether conciliation has failed? Is there a need to signal that conciliation has failed and that you cannot consider it any further informally in some way? Often, conciliation goes on right up to the tribunal itself, even maybe during the tribunal. However, if you have signed the certificate concluding that process rather formally, the informal scope for conciliation is reduced. I wonder if the Minister could explain a little more about this provision.
Lord Young of Norwood Green
My Lords, this is again a legitimate probing amendment. I, too, would be interested in getting some reassurance from the Minister about the process of conciliation. We hope that the conciliation process will work but there are going to be cases—I guess a significant number—where it does not. I suppose that the aim is to ensure that we do not insert any more delay than is necessary. The point about a certificate has already been raised. It would be useful if the Minister could confirm that the clock does not start running again until after the certificate has been issued.
Lord Monks
I support this amendment. Clause 7 is one of the key clauses in this part of this rather complex Bill, and I object to it. It rips up, rather contemptuously, several decades of history in the employment field.
There is general agreement that worker and employer representatives on tribunals do a good job. The original idea was from the Conservative Party, way back in the 1960s. From my experience over many years, I know that presidents of the Employment Appeal Tribunal have often said that the views of lay members were crucial. Lay members had a sense of what was going on and a feeling for the issues in the workplace from which judges would inevitably be rather distant. Often, judges followed the view of the lay members. They made sure it complied with the law, checked that there was nothing wrong and would adjudicate if there was a disagreement between the two, which often there was not. Very often, there was consensus between the employer representative and the worker representative. They were not a marginal presence sitting on the edge of the legal proceedings; they were right in the middle of them and central to them.
I acknowledge that times have moved on and tribunals and the Employment Appeal Tribunal have become more legalistic than we hoped. We hoped there would not be eminent QCs and eminent juniors on the kind of case that the noble Lord, Lord Brooke, referred to, that these things would be sorted out more cheaply and informally before a tribunal and that we would see everything done in a much less legalistic and more cost-effective way. However, over many years, the legal profession has colonised the tribunal system to a regrettable extent.
The lay members on the employment tribunals, originally, and on the Employment Appeal Tribunal have tried to push that back a little, keep its feet firmly on the ground and keep the costs of the whole exercise down. Clause 11 says that we are giving up on that and that the legal profession can have the lot, at least the ones that manage to get round the Grand National course and actually get their case there without falling at several Becher’s Brooks on the way. Inevitably, when they do get there, the whole thing will be more legalistic. That is not a criticism of the judges—I have seen some very fine ones in the Employment Appeal Tribunal, and elsewhere—but the whole experience of the EAT will be much changed and made much weaker than needs to be the case.
I have been thinking about how judges might operate this, because the Minister would say, “Well, if he wants one, the judge can have a couple of wing people—even four, we are expanding it”. It could look like the Nuremberg war crimes tribunal. “Why do we need an extra two?”. I do not know where that came from, as we have never felt that one from each side was not enough. I would be interested to know where it did come from.
I can see the first judge who comes forward after this Bill goes through saying, “I think I need two lay helpers for this particular case”. I do not think that many judges will feel comfortable doing that. Such judges would be regarded as a wimp by their peers, who will ask, “Why do they need a couple of people holding their hand when dealing with these cases? What effect is this going to have on the budget, if we have to pay some expenses for the lay members? Is this not all about cost savings, economies and making sure that the cuts work effectively in this area?”.
I am interested in the Minister’s reply to these points. I hope that the Government will pause before they go further down this road. They have already done it, in a way, to employment tribunals. The same provision is already there and I suppose it will be argued that this is a logical continuation. However, it is the continuation of a bad practice; and it is in the peak body this time, which makes it qualitatively different.
Baroness Turner of Camden
My Lords, we have got on to talking about Clause 11, which I opposed at Second Reading on the basis that it was quite unnecessary. I did not really understand why the Government decided to proceed along these lines because the tripartite system that we have works extremely well. The lay people who serve in it are highly respected and in no way put off by the somewhat legalistic environment. They are quite well able to look after the whole situation as concerns workplace arrangements—they know about workplaces, which is why they are appointed to serve on the tribunal.
I still do not really understand why the Government believe that a judge sitting alone on unfair dismissal cases is likely to be more competent. Do they expect him to find more ways to go against the employee? Have they decided that they want a judge sitting alone because the decisions are more likely to be the kind that the Government would like? We know that they are not very keen on tribunal hearings anyway. I want to know why the Government think that this is a good idea.
In the document that the Government have already issued, they have indicated that the points at issue would be legal points, which is why it would be a good idea to have a judge sitting on his own. However, I remind the Government that they have already introduced LASPO, which means that there is no access to legal aid in employment cases. In fact, the individual who is not represented by someone he can afford to appoint to look after him, if he does not have a union to support him, will be entirely on his own and will have no access to any form of legal aid because LASPO has decided against it, as far as employment cases are concerned. An unfortunate individual such as this would have only himself to rely on before a judge sitting on his own. That is not a good idea. It would be far better to have lay people still operating, and I very much hope that the Government will reconsider their position here because it is not fair. It means that individuals will very often, if they are taking up their case themself, be left without anyone to represent them. That is not a good idea if they are going before a judge sitting on his own who is guided simply by legal principles, not by what happens in a normal workplace.
Lord Young of Norwood Green
My Lords, this clause gives us real concerns. The concept of a settlement agreement whereby an employee waives their right to go to a tribunal is something that we find unacceptable. It undermines some basic principles. In the circumstances, Amendment 20G is quite appropriate in that it would ensure that the employee could request union, workplace or legal representation at the settlement negotiations. The whole idea of an employer being able, for any reason whatever, to pick on a particular employee and enter into the kind of negotiations that are recommended in the Bill is totally unacceptable because it could open the door to all kinds of discrimination. For those reasons, we believe that if there is to be any possible settlement, although we are opposed to the concept as it is currently defined in the Bill, the employee ought to be entitled to be accompanied by a union, workplace or legal representative. I beg to move.
Lord Monks
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.
Baroness Donaghy
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.
Lord Monks
I support my noble friend in this amendment. He gave the statistics for the current situation and pointed out that the median award is just £4,500. Set against the mean annual salary or average salary, that is very low indeed. This is just a mechanism for transferring the costs of dismissal away from the employer and reducing the employer’s potential liability. I disagree with it and again it is the wrong signal to send. It is not a huge signal—I do not want to be accused by the Minister of gross exaggeration, as might have been the case once or twice earlier in our debates—but it is clearly the duty of the Committee to indicate that this is a transfer, a potential loss for the employee and a potential gain for the employer.
While I am on my feet, if at some point in the subsequent proceedings the Minister can explain the difference between the no-fault dismissal provisions of Mr Beecroft and the provisions in Clause 12, I shall be very interested to hear it. In practical terms, they are very similar.
Lord Marland
I am not going to get into that for the moment, but I am sure we will pick it up later. The Government take the matter of this cap seriously and that is why we are consulting on it. The consultation closed on 23 November and we will publish the response before we reach the Report stage, so we will be able to have a good debate on it. I thought that the noble Lords, Lord Young and Lord Monks, made some very poignant remarks, and we share their concerns. We also acknowledge the keen detail of the facts that have been presented. There are very few cases which get to the limit, but they are important. The average award is £5,000, of course, and the cap is £72,300. We recognise that, we understand it; we know that we have got to get it right. We are obviously sympathetic to a number of the cases that the noble Lord, Lord Young, has mentioned and, with that, I hope that we can revisit this in the spirit of co-operation because I think it is important, and that we can be conjugated—conjugare, which means to bind together in the same outcome—in time to come.
Lord Monks
I shall not detain the Committee for very long. I was disappointed to hear the noble Lord, Lord Deben, make the points in the way that he did. Not only is this not a new debate; it is an old debate. It was debated in this Parliament in Victorian times in relation to intolerable factory conditions. It is a debate about sending children up chimneys. Noble Lords can wince at that but the debate is an old one. I recognise it and have heard it in many employer circles. I recall that over the 10 years from 1997 to 2007—I am not making a party-political point here—we added a million jobs in this country. The employment market boomed. As noble Lords will know, a large number of those jobs went to migrant staff—although that is another issue for another day—but the fact is that there was an incredible expansion of jobs at that time.
Lord Deben
The noble Lord must remember that almost every one of those jobs was created by the Government and paid for by the taxpayer, and that has been a significant burden for Britain. We are now creating proper jobs which make money for the nation. It is a wholly different situation. I can create a million jobs if I pay for them out of taxpayers’ money. That really is not an argument that can be put forward.
Lord Monks
That is not a constructive suggestion. Many of those million jobs were in the private sector. Unfortunately, far too many of them were in the south-east of England and not in the poorer regions. I accept that the noble Lord has a point in that the public sector was the major driver of the economy and of the regeneration of our cities in the north of England and in Scotland and south Wales. A large number of jobs were created. There have been some exaggerated claims about the possible effects of the national minimum wage and so on but that is probably another debate for another day and well beyond the scope of this clause. However, in the OECD league tables, the British labour market is ranked number three for flexibility. This country is the third easiest when it comes to employers being able to sack people. I wish that employers would stop moaning about this, look at some of the evidence from abroad and get on with seeking to help to increase employment by looking at what they can do themselves and at the changes that the Government can make, possibly in relation to national insurance and so on. That would boost employment opportunities far more than giving a licence to some employers—I think that they are a minority but they are not very good employers—who would take advantage of these kinds of provisions.
Lord Marland
My Lords, if we are to make any progress on this Bill, we have to take a more conciliatory position between ourselves. I believe that underlying all this is a conciliatory position, because ultimately we all want more jobs and more people employing others. We all feel passionately about that. We cannot always come at this from the polarised position of the TUC. Indeed, we as government are not coming at this by saying, “Beecroft says this, so we must do it”. In fact, as a department, we rejected quite a few things that Beecroft said because we did not think that they were in the interests of employees. Therefore, we are not taking a polarised position based upon part of the argument. In the end, we are all interdependent. Without the employer, we do not have employees, and without employees, we do not have a return to prosperity.
It was a pleasure to negotiate with unions in the north. Sellafield was my area of responsibility. I much admired the way in which they came to the table and to understand that they had to improve their working terms and conditions for Britain to become competitive again. It is to their eternal credit that after two rounds, three pinfalls and one submission, we got to a very amicable and successful direct contact where there was mutual respect. As an employer, the first company with which I was involved in setting up, the majority of people who worked there were shareholders. We believed that that community spirit was the best way forward.
I have already conceded on this matter and we do not really need to debate it, but we have a roaming brief on this issue. I think that all parties agree that we need to have a cap on awards but we need to make sure that we get it right and that it is fair. It should not be in favour of the employee or the employee: it should be fair and balanced. This House is good at being fair and balanced.
I am grateful for the contributions, which have been fair and balanced at times. When they have been fair and balanced, we have started to make progress. I think that in our hearts we all want the same thing. At the end of all this, we will have the same thing. It will leave this place a better Bill. It will have been challenged. It will not have been challenged by taking unreasonable, polarised positions. If we did, we would not end up with something reasonable at the end.
After all this, I hope that the noble Baroness will support this clause.