Tribunals (Maximum Compensation Awards) Bill

Damian Green Excerpts

Friday 17th June 2011 Commons Chamber

[Mr Chope]

Obviously I cannot quarrel with the statistics that the hon. Lady quotes, but the issue is causing the coalition Government concern. That is why on 11 May the Department for Business, Innovation and Skills announced that the Government would look in detail at the case for reforming compensation for discrimination:

“Compensation levels for cases of discrimination are unlimited and employers worry that high awards may encourage people to take weak, speculative or vexatious cases in the hope of a large payout. This can lead to employers settling such cases before they reach a Tribunal.”

The Government therefore seem to think that there is a problem.

I see my hon. Friend the Minister for Immigration on the Front Bench—we could have done with his wisdom on asylum cases in the previous debate. I hope he will be able to bring some of that wisdom to bear on this subject in particular, as I had the opportunity to talk to an official from his Department who said that the Government were carrying out a review of the subject. The point that I made to my hon. Friend’s official was that that is all very well, but how will it deal with the rulings in the European Court of Justice. In the ECJ case Marshall v. Southampton and South-West Hampshire Area Health Authority (No.2) (1993) IRLR 445, the court decided that the cap that had previously been put on discrimination compensation did not provide an adequate remedy under European Community law.

[The Minister for Immigration (Damian Green)]

I am grateful to my hon. Friend for giving way so that I can confirm to him now, should the debate run out of time before I have chance to reply in full, which I very much look forward to doing, that the Government will be launching a public consultation on this specific matter later in the year. As he has already said, this is a matter that the Government are considering and receiving recommendations on, and we want the widest possible input into the public discussion of this important matter.

[Mr Chope]

I am grateful to my hon. Friend, but I thought that in the announcement on 11 May his colleague with responsibility for employment relations had announced the extension of the Government’s review of employment law into this area. The question I was trying to get an answer to was how compatible the Government’s aspiration to introduce a limit on compensatory awards was with the ECJ case to which I have just referred. The issue was drawn to my attention by staff in the House of Commons Library who wondered whether my Bill would cut across EU law, and that is why I have included clause 2, which states:

“This Act shall have effect and shall be construed by the courts of the United Kingdom as having effect notwithstanding the European Communities Act 1972”,

thereby reasserting the sovereignty of this Parliament to decide on such issues and not be subject to rulings from the ECJ interpreting European Union law.

Some firms of solicitors are already on to this point. I have a report from Lee Rogers, an associate at Weightmans solicitors, who says that the Government may face obstacles if they decide to impose such a cap. I really wanted to find out from my hon. Friend whether the Government recognised that this was a problem and, if so, how they would overcome it. There is no point in going out for consultation on something where the Government’s ability to manoeuvre is restricted by European Union law, unless the Government are saying that they will override that law. The fact that my hon. Friend does not seek to intervene again suggests to me that either the message that went through his office was misinterpreted, or that when he sought information from the responsible Minister he did not get a clear answer, so he has done the best that he can in his inimitable way from the Front Bench today with the problems that the Government obviously have on this issue. The public do not believe that compensation for discrimination should be in the hundreds of thousands of pounds; they think that is unreasonable.

People talk colloquially about something costing an arm and a leg, and I would not want to make this issue seem anything other than serious, but if somebody were to lose one leg below the knee, under the criminal injuries compensation scheme they would be entitled to £33,000. If they were to lose one arm and one leg, they would be entitled to far less compensation than is paid to people who bring successful claims for discrimination before an employment tribunal. We value the damage of hurt feelings from discrimination cases far more than the criminal injuries compensation scheme values the actual loss of a leg or an arm and that is absolutely ridiculous, so if the Government were able to bring in some amending legislation that would be very useful.

I also cannot understand why, if the Government are concerned about the level of compensation and tribunal awards, they allowed the ceiling for such awards to be raised in line with inflation in a recent statutory instrument. If they felt that the awards were already too high, why did they not rein them back and not increase their maximum level in line with inflation?

This is a simple, straightforward Bill, and I hope that it receives hon. Members’ support so that it can be discussed in Committee, and so that the Minister can be asked probing questions and answer those I have put to the House this afternoon.

--- Later in debate ---

[The Minister for Immigration (Damian Green)]

I thank my hon. Friend the Member for Christchurch (Mr Chope) for giving the House the opportunity to discuss this matter. He said in his opening remarks that he regretted my absence from the previous debate, particularly when there was reference to asylum seeking. In that context, I would say that what he proposed in his Employment Opportunities Bill was the biggest single incentive to increasing the amount of asylum seeking in this country that I have seen in potential legislation. That was why I was extremely pleased to be in the Division Lobby voting successfully against it.

I move on to the current Bill. My hon. Friend is right to point out the concerns that businesses have raised about the high levels of compensation sometimes awarded by employment tribunals in cases of unfair or wrongful dismissal or discrimination. The debate has been particularly timely, on which I congratulate him, because as I said, one aspect of the Bill is currently under active consideration by the Government as part of our general review of employment law.

I should make it clear to the House that there already exists a limit on compensation for unfair dismissal. It stands at £68,400. The average award is considerably below that level, as the hon. Member for Kingston upon Hull North (Diana Johnson) said. The median award for unfair dismissal is £4,903, and the mean is £9,120.

On 27 January we launched a consultation on proposals to improve the way in which workplace disputes are resolved, and we published an employers charter to give employers more confidence to take on workers and support growth. In that consultation, we sought views on changing the formula for calculating employment tribunal awards, including that current limit on compensation for unfair dismissal. Among other things, the consultation sought views on increasing the current qualifying period for unfair dismissal rights from one to two years. The consultation closed after 12 weeks on 20 April 2011, and we are currently considering our response. We will publish that, setting out what we intend—