Enterprise and Regulatory Reform Bill

Debate between Lord Young of Norwood Green and Baroness Turner of Camden

Tuesday 26th February 2013 Lords Chamber

[Lord Young of Norwood Green]

My Lords, in Committee a number of noble Lords expressed our concern about confidentiality in settlement agreements and the inability of these agreements to be raised at an employment tribunal in the future. We felt that this was a totally wrong direction for the Government to proceed in. The worst aspect of this would amount to what we consider to be a charter for bullies. As the legislation currently stands, despite the attempts to introduce a number of amendments, which were rejected by the Government, there is no protection. We believe that this is a thoroughly unsatisfactory approach that will be detrimental to basic employment rights in relation to potentially unfair dismissal. It is on those grounds that we seek to test the opinion of the House.

[Baroness Turner of Camden]

My Lords, I support my noble friend’s amendment to Clause 12. It would make it easier for employers to end employment by offering the individual a sum of money in return for a compromise agreement. The clause extends the “without prejudice” rule, which exists where a compromise agreement is offered as a means of ending an existing dispute. Any negotiations cannot then be considered by an employment tribunal. Clause 12 enables an employer to offer a sum of money and a compromise agreement in return for leaving employment when there is no pre-existing dispute. These negotiations will remain confidential and cannot be admitted as evidence before an industrial tribunal.

The TUC opposes these provisions as it believes that they will send a clear signal to employers that it is acceptable to sack employees without following a fair dismissal procedure. The provisions are also complex and can lead to legal wrangles, particularly where an employer has not acted properly in the negotiations and could be accused of discrimination. For these reasons, I support my noble friend.

Enterprise and Regulatory Reform Bill

Debate between Lord Young of Norwood Green and Baroness Turner of Camden

Monday 10th December 2012 Grand Committee

[Lord Young of Norwood Green]

My Lords, Amendments 20MA and 20MB are intended to probe the definition of aggravating features—I fear that this will be an aggravating speech in that respect—and to highlight what is perhaps the key to all of this, which is the proper training of managers in grievance and disciplinary procedure, and even in training, I think. I say that genuinely, because it is a subject that I have brought up time and again in these debates. If the Government could only focus more on that than on the firing of employees, they would do industry a much bigger favour.

Amendments 20MA and 20MB would include in the definition of aggravating features consideration of whether an employer has established any grievance or disciplinary procedure and has provided adequate training to its managers in following those procedures. Underlying much of the Government’s changes to employment rights in the Bill and elsewhere is the idea promoted by Adrian Beecroft, among others, that the most urgent problem facing employers is not being able to get rid of underperforming workers and that by stripping away employment rights, we will have a more productive workforce, creating more jobs.

I could not help noticing the reaction of a medium-sized employer in the north, a removals company, to the Chancellor’s Autumn Budget Statement. It welcomed the fact that there would not be an increase in fuel duty because that would enable it to take on more employees, some of whom would be on zero-hours contracts. I did not hear the caveat, “We would have taken them on, but we will not be able to fire them in future, so we won’t”. That shows me what is really focusing employers’ minds in whether they hire more employees. After all, we are told that that is the Government’s driving motive behind the Bill.

We believe that stripping away employment rights is fundamentally misconceived and stems from a real lack of understanding of how the law works in practice. Contrary to what the Government claim, it is not difficult to dismiss an employee, but the employer must follow the proper disciplinary procedure. Time and again you will hear that that has not happened. Employers have inadequate or, in some cases, no disciplinary procedures in place. It is then that they are rightly challenged by the employee.

Including it as a consideration in whether to levy an additional financial penalty would send a strong signal to employers that it is unacceptable not to make adequate provision for a formal disciplinary or grievance procedure and for the training of their managers. As well as incentivising proper training and procedure, which would, we hope, lead to fewer claims being brought in the first place, the listing of possible considerations under the definition of aggravating features in the amendments would also provide greater clarity about what actions by an employer might result in a financial penalty under Clause 14.

The Explanatory Notes state:

“Section 12A does not prescribe the features which employment tribunals should take into consideration when determining whether a breach had aggravating features; this is for the employment tribunal to decide”;

and that, furthermore:

“The concept of aggravating features in section 12A is not the same as the existing regime of aggravated damages in discrimination claims in England and Wales”.

To my knowledge, the Government have not set out anywhere a list of features which might be deemed aggravating by the tribunal. We urge the Government to provide further clarity on that issue. I beg to move.

[Baroness Turner of Camden]

My Lords, I hope that the Government will see fit to accept the amendment, because I should have thought that it was in their interests. One of the aspects that comes out from discussion of the Bill is that the Government are anxious to stop people going to tribunals. Of course, if you have managers properly trained and a series of agreed procedures, it is far more likely that issues will be settled in-house, so to speak, rather than having to go to a tribunal in the first place. Therefore, it seems very much in the interests of the Government to accept this wording, which talks about the aggravating circumstances but also, I hope, will act as an incentive to employers to make sure that their managers are trained. If you have a trained management, you are much less likely to have an issue that needs to be taken to a tribunal. As we know from our previous discussions, the Government are endeavouring to limit the number of issues that get to a tribunal. I should have thought that acceptance of the amendment was in line with that policy.

--- Later in debate ---

[Lord Young of Norwood Green]

I will not pursue this further but I maintain my point. We roam far and wide in dealing with amendments but, if we want to do something as serious as that, it ought to be on the basis of either an amendment or a debate. I say no more than that. I leave it to my noble friend Lady Turner to deal with her amendment.

[Baroness Turner of Camden]

I thank everyone who contributed to this small debate. Of course, it is not about discrimination at all. It is quite irrelevant to introduce discrimination in a debate on an amendment which simply says that, if someone pays the deposit and does not proceed with the case because they accept the advice of a judge, they ought to get their money back. It is as simple as that. It has nothing to do with discrimination at all. I see that the noble Earl accepts that.

Enterprise and Regulatory Reform Bill

Debate between Lord Young of Norwood Green and Baroness Turner of Camden

Wednesday 5th December 2012 Grand Committee

[Lord Young of Norwood Green]

I wish to put the record straight on one point. I specifically mentioned that there was a proper way to deal with—to use the Minister’s phrase—“bad employees”, or employees who fail to live up to the mark. If the appraisal system is done properly, then there is a route to dismissal.

[Baroness Turner of Camden]

My Lords, I am still in opposition to this clause. Of course, we know that we cannot press it in Committee. We will take away what has been said during this debate, which has been very interesting and useful, and see what we come up with on Report.

Certainly, I am not at all happy with what has been said. I do not believe that this helps the good employer—quite the reverse. It helps the bad employer who seeks to get rid of employees as easily as possible, which was what Beecroft was all about; we opposed that, as did a lot of other people. We cannot press this now, and it is not our intention to do so, but we shall have a close look at what has been said before we come back again on Report. There are aspects of this clause that I do not like, and which I would like to pursue further.

--- Later in debate ---

[Baroness Turner of Camden]

I want briefly to speak in opposition to Clause 13 and to say that, according to my briefing from the TUC, it is also opposed to the proposals to reduce the cap for compensatory awards in unfair dismissal and other cases. The Government are proposing to reduce the statutory limit for compensatory awards. They claim that reducing the statutory cap would help to reduce employees’ expectations in unfair dismissal claims. However, there is concern that the main effect of these proposals will be to make it cheaper for employers to sack staff unlawfully. Clause 13(2) gives the Government a power to cap the compensatory awards. It is not just the TUC that is concerned about this. The Law Society says in its briefing:

“The Government is seeking a power to vary the compensatory award in line with annual average earnings. The Society queries the arbitrary nature of this limit, which will prevent a substantial number of claimants who have been unfairly dismissed from recovering their full losses”.

Older workers, who are more likely to have accrued higher occupational pension and other entitlements, may find it more difficult to get new employment and will be disproportionately affected. Recent unemployment figures show that nearly half of unemployed workers over the age of 50 have now been out of work for a year or more. Obviously, they find it very difficult to get alternative work. The link with annual salaries could mean also that low-paid and part-time workers could lose out. For all these reasons it is suggested that this clause should not be proceeded with. I am therefore raising my objection to Clause 13.

[Lord Young of Norwood Green]

I will be very brief. I think my noble friend Lady Turner has expressed our concerns quite clearly. I await with interest the Government’s assurances that they want to get this right. As it stands, we will obviously be returning to this clause on Report.

Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Debate between Lord Young of Norwood Green and Baroness Turner of Camden

Wednesday 28th March 2012 Lords Chamber

[Lord Young of Norwood Green]

My Lords, I thank the Minister for his contribution, although that does not mean that I agree with it. I also thank him for the speed with which he responded in writing to the questions that had been raised but, again, I do not necessarily thank him for the content. I do not feel that he helped to clarify or justify the Government’s proposals, and that is why we have put down these amendments to the two orders.

The noble Lord, Lord De Mauley, said that people felt the introduction of lay members was motivated by further proposals. I do not think that you can really blame people for that, given that the Government have indicated that there are likely to be further movements in employment law. Even if you were not of a suspicious nature, the Beecroft report being delivered to No. 10 might at least have caused your antennae to wave about a bit in anxiety. Therefore, my question to the Minister is: can we expect more in this vein, with the view being taken that if only we lift these restrictions, somehow that will open the floodgates to employment and that the restrictions are the barriers that are really holding back SMEs or even large firms? We believe that that is a false analysis predicated on entirely the wrong views.

On the question of lay members, why do we believe that they ought to be a key part of the process? I do not intend to go through all the reasons as we had a full and frank debate in Grand Committee. When industrial—now employment—tribunals were first formed, the whole idea was that there would be a different approach and a different style. Along with that came lay members. What do they bring? They bring real knowledge and understanding of industrial situations. That is not to say that judges do not, but they do not have the same perspective. Will the proposal alter fundamentally the nature of unfair dismissal claims? We believe that it will. We believe that lay members play a fundamental and important role in the proceedings.

The noble Lord, Lord De Mauley, told me that the safeguards are there and are real. I listened carefully and the only safeguard that I could see was that it would be a judicial decision. That does not strike me as a real safeguard. I will not use the word “whim” but it depends on a view that lay members are not necessary in a significant number of cases. It must be significant or we would not be going down that road. If we are talking about preserving the nature of employment tribunals in which the views of people who have real experience in a wide range of industries and occupations, lay members play a vital role in ensuring that those views are taken into account and that the perspective of cases receives the widest possible analysis. Will it cost a bit more? Inevitably, it will, but we believe that it is justified in the circumstances.

On the second Motion, on the question of the length of unfair dismissal, it is true that there has been a history of different periods. We have gone from two years, to one year, to six months. Is the Government’s proposal justified? We do not believe that it is. Although it has fluctuated over a significant period, there is no evidence to show that it has had a direct effect on employment levels. That is why I said at the outset that it is predicated on the wrong analysis. Since the qualifying period was reduced from two years to one in 1999, more than 1.75 million jobs have been created in the UK, so it does not seem to be a barrier or impediment. The Minister quoted the chamber of commerce. Similarly, I could say that, interestingly, the SME Business Barometer survey asked 500 SMEs about the main obstacle to success. Top of the poll as the biggest obstacle was the state of the economy, with obtaining finance next. Just 6 per cent of respondents listed regulation as the main obstacle to growth.

In the correspondence that I received from the Minister, even he struggled to demonstrate that the unfair dismissal claims were the root cause of the problem. First, they cannot be disentangled. We cannot disentangle employment tribunal claims from the multiple claims; the Minister admitted that in the correspondence. We do not believe that the proposals are evidence-based.

I will quote again from the Chartered Institute of Personnel and Development. Surely it has some credibility when it states:

“Making it easier to dismiss staff without due cause is far more likely to harm the prospects of UK plc by fostering crude and out-dated attitudes to employment relationships that will put employees off from ‘going the extra mile’. Unproductive and disengaged workers will cost firms far more than the threat of tribunals”.

I believe that the institute is right about that.

If we want to give employers helpful advice, some things that the Minister suggested were right, such as more use of ACAS and mediation. However, the key for employers is how they treat their employees. We never suggested that training would be finished in a year; we are talking about continual learning in today’s workplaces. We are saying that the first year of employment is a long enough period to assess a new employee if the employer is making sure that they are being mentored and are responding to their training programmes. Are we really saying that at the end of that period an employer cannot assess whether an individual is going in the right direction and will make a worthwhile contribution to the organisation? My experience tells me that a year is a significant period of time.

This would signal the wrong route to employers. If we extend the unfair dismissal period, we will be trying to convince ourselves—without any evidence—that this will make employers take on more people. Of course we want employment to increase, but the way to encourage this is to ensure that we create the right economic conditions. I cannot resist saying to the noble Lord, Lord De Mauley, that while the focus is definitely on reducing the deficit—and I welcome the increase in apprenticeships—we still have not seen the growth that was predicted, the forecasts for which have been significantly reduced.

My final reason for moving the Motion was that I read the letter in reply to the noble and learned Lord, Lord Scott of Foscote, who made the reasonable request that an employee should be entitled to be given a reason for dismissal before they were dismissed. Unless the noble and learned Lord is more easily pleased than I am, he will be disappointed with the final paragraph, in which the noble Lord, Lord De Mauley, stated that the Government consider that requiring employers to give a written reason before giving notice would be an additional administrative complexity for them and would increase their costs. Does that send the right signal to employers about how to treat employees? Surely it is totally the wrong advice to give them. If they are handling their employees in a proper, structured way, and if they have the right HR procedures, they should have nothing to fear from an employment tribunal. On these grounds, I beg to move.

[Baroness Turner of Camden]

My Lords, I support my noble friend’s Motions. We had a wide-ranging debate on both these orders in Grand Committee. I opposed both, and I still do. Both orders undermine the employment rights that many people have fought for over the years. The first deals with the qualifying period and the right of workers to receive a reason for dismissal. The second provides for the removal of lay members from industrial tribunals that deal with cases of unfair dismissal. As noble Lords indicated in our previous debate, this has been opposed not only by the TUC and the CBI but by the Engineering Employers Federation and Citizens Advice.

Those who supported the Government in our previous debate did so, as I understand it, because they believed that if employers did not have to comply with employment laws, they would be able to employ more people. I doubt that. I oppose the orders for a different reason: I believe that, in a civilised community, the worker has rights which must be observed. An overriding one must be the right to continued employment unless there are very good reasons for this not to be maintained. Is it right that employees should simply be regarded as disposable? The loss of employment is often a disaster; not only for the employee but for his or her family. Many may face a decline in living standards and perhaps years spent on benefits. The trauma is even worse when the decision is felt to be unfair and if there is little alternative work available.

I agree that conciliation or mediation should be tried rather than immediate reference to a tribunal, but this is attempted nowadays and may not always work out. The opportunity to go to a tribunal should exist if such procedures do not provide an acceptable solution. The presence of lay representatives from both sides of industry or commerce, in addition to a judge who presides, produces an informal—and informed —atmosphere, conducive to a fair hearing by litigants. Most organisations familiar with our present arrangements, including many judges themselves, are supportive of the involvement of lay representatives.

The Government want to change the arrangements for hearing unfair dismissals so that the litigant will appear before a judge sitting alone. In other words, there will be a more legal set-up but no access to legal aid, since this is being removed by legislation recently before our House. There is no doubt that the Government believe there have been too many tribunal cases and that there will be fewer under their new proposals—and no doubt fewer successful cases. This is grossly unfair. There is no more important area of life than the work that most people do. Without it, life changes dramatically, not only for the individual concerned, but the family which he or she has to support. The loss, if unfair, should be compensated. The least the Government can do is examine how these changes impact upon people, which is what is proposed by my noble friend’s Motions. I hope the Government will accept them. If they are interested in fairness and justice, they can really do no other.

Postal Services Bill

Debate between Lord Young of Norwood Green and Baroness Turner of Camden

Wednesday 4th May 2011 Lords Chamber

[Baroness Turner of Camden]

My Lords, I rise to support my noble friend’s amendment. As he rightly says, the new clause that he is presenting to the House would set a restriction on the sale of shares in an initial public offering to 30 per cent of the value of an RM company within the first year of the clause coming into force. The text of the Bill places no constraints at all on what the Secretary of State may do. It is true that he has to report to Parliament, but that is after the decision has been taken. No constraints at all are placed on what he may or may not do. That is unfortunate because we are talking about what is after all a major public institution, and it is very important to ensure that it is not underpriced. It is important to avoid a scandal whereby a valuable part of our national infrastructure is underpriced. My noble friend has set this out in detail. The new clause would be an important addition to the Bill. We need to ensure that some constraints are put on what the Secretary of State may do when, and if, the Bill eventually becomes law.

[Lord Young of Norwood Green]

My Lords, I support the amendment in the name of my noble friend Lord Lea of Crondall. It provides for the disposal of shares to take place in tranches or batches, rather than all at once. The Government have not set a clear timetable for the sale, and they have not explained whether there will be a general sale of shares to the public, an IPO, a restricted sale to certain categories of buyer, or a trade sale by auction to a single buyer, such as a private equity firm or postal competitor, which may raise competition issues. The Government have not explained whether they would sell the whole company at once, with all the risks of selling cheaply, or whether they would be prepared to sell in tranches.

There is a huge amount of evidence, of which we have heard some details from my noble friend Lord Lea, that when privatisations have taken place, the value for which the businesses were sold was too low. That has been most clearly demonstrated when a general sale of shares has taken place and the shares traded. It is easy to see what price they traded at and how that compared with the original sale price. If there is a big gap and the original sale price is much lower, it indicates that shares should have been sold at a higher price. The taxpayer has lost out and someone has made a successful profit as a result.

A number of examples were given by my noble friend Lord Lea. I should also mention other sales. The sale of Associated British Ports was 35 times oversubscribed and the share price rose by 23 per cent on the first day of trading. Amersham International sold for £71 million and the share price rose 32 per cent on the first day of trading. As early as 16 May 1984, the Public Accounts Committee, in its 17th report, expressed concern at stock in public corporations being sold, in the words of the committee,

“at an immediate substantial premium creating windfall gains for the investor at public expense”.

That is what we should be concerned about. The report recommended considering sales in tranches, as was normal practice in the sale of large quantities of government bonds. Selling by tranches worked in a number of cases. For example, in the case of National Power, the share price rose by 22 per cent a day after the first tranche sale but only 4 per cent after the second tranche was sold. There was a similar situation during the sale of Powergen, whose shares rose by only 3 per cent in the second-tranche offer.

The amendment proposes that shares representing no more than 30 per cent of the value of the business can be transferred in the first year after the Act comes into force. I hope that the Minister can give us a reasonable assurance that serious consideration will be given to the danger of a sale that does not take place in tranches, and that the Government will be prepared to address this issue. I look forward to her response.