Enterprise and Regulatory Reform Bill

Debate between Ian Lavery and Julie Hilling

Monday 11th June 2012 Commons Chamber

[Julie Hilling]

The Minister gives one example, and we could collectively give many examples in which the opposite has happened—many examples over the years when it has been British factories that closed and French and German ones that stayed open.

There is already an inequitable relationship between employer and employee. Before Government Members nod their heads in agreement, let me say that power is still firmly in the hands of the employer. Employers can do as they like as long as they follow simple and fair procedures. If an employer wants to dismiss a worker for misconduct, all they have to do is carry out a proper investigation, allow the employee representation and give them the right of appeal. As long as the employer has a reasonable belief that the employee has done something wrong, they can dismiss them.

[Ian Lavery (Wansbeck) (Lab)]

Does my hon. Friend agree that it was Beecroft who suggested that it was fine to sack someone if the employer just disliked the employee, and that that was fair?

[Julie Hilling]

I agree with my hon. Friend that the Beecroft proposals are appalling as they relate to the rights and defence of individual workers. I shall say a little more about that in a moment.

In order to dismiss somebody, the employer does not have to prove that the employee has done anything wrong. The employer just has to have a reasonable belief that it was them. As long as the employer has followed a simple procedure and carried out a proper investigation, the employee has no case at a tribunal. The tribunal will not re-hear or re-judge the case and can find in favour of the employee only if the employer has not followed a fair process. If an employer wants to fire an employee for capability, all the employer has to do is tell them where they are failing and give them the opportunity to improve—again, a simple, fair process.

The employee is not protected if they are disabled or sick. The courts have already said that the employer does not have to behave like a charity. If the employee is unable to fulfil their contract of employment, they can be dismissed. Yes, they may have a case for discrimination if the worker is singled out and treated differently from non-disabled workers, but if a fair procedure is followed and a reasonable adjustment is made if necessary, the worker can be dismissed.

Let us not forget that an employer has two years to decide if an employee is suitable—two years to decide whether an employee is an asset to the company or not. Unless the employer is discriminating on the grounds of gender, race, sexuality and so on, the employee cannot go to a tribunal at all.

I do not believe that we have thousands of bosses out there who want to dismiss workers with no just cause. Why would they, when it costs so much to recruit and train a new worker? Even if we do have rogue employers, they can already dismiss workers on a whim. All they have to do is pay them what a tribunal would give them—redundancy pay, and not even at the rate of the company scheme if it is better than the statutory scheme, any holiday pay and any notice period. The only extra sum that an employment tribunal will ever give is an award for future losses. That is not normally more than six months’ pay and the average is considerably less. To get that, the employee must prove that they were unfairly dismissed and show that they have been applying for jobs with no success.

It sounds as though I am giving a lesson on how to be a bad boss. I am not; I am simply trying to point out how the employer already has massive power. I have lost count of the number of times I have had to use the trade union mantra, “Unfortunately the law is as it is, not as we would like it to be,” when I have had to give the news that an employee who had been dismissed had no case for a tribunal. Let me give the House some examples. A senior manager in the railways was charged with gross misconduct. We fought the charge and he was found not guilty. A month later the employer paid him off— 30 years of service down the drain, limited chances of another job and no chance of going to a tribunal.

A travel centre worker with 17 years’ experience had no problems until her manager changed and she ended up off work with stress. She could not prove that her manager had bullied her, and because the employer followed proper processes, she was dismissed under capability procedure. A worker who had worked for the same company for 30 years was selected for redundancy on the basis of last in, first out—after 30 years—even though this is not allowed to be the sole criterion. His redundancy payment made it impossible for him to go to a tribunal. I could go on and on with examples.

A great deal has been made of the cost to employers. They can get free legal advice from ACAS on all their policies and procedures. They do not need to employ a solicitor at a tribunal. As long as the employer has been fair and has not discriminated, they have nothing to fear. ACAS already offers mediation and I welcome the extension of that, but I believe that the proposed fees for tribunals are wrong and will act as a barrier to justice for those least able to pay. The judge can already make a deposit order of £1,000 to a claimant if the judge believes that there is no reasonable prospect of success at the tribunal.

Let us imagine ourselves in a situation that far too many people find themselves in. They are sacked. They have no idea how they are going to meet their mortgage payments or put food on the table. Then they have to find money to take their case to court. The Government are just so wrong on this. They seem to have missed the point that many claims to tribunals are for very small sums—unpaid holiday pay, no notice pay, or wrongly calculated or no redundancy pay. Such simple cases are already heard by a judge sitting alone and are often worth less than the proposed fees.

The Government are also wrong to dismantle our successful and admired tripartite industrial jury system of employment tribunals and employment appeals tribunals. As the Law Society has stated:

“Lay members add to the concept of justice and they enhance the fairness of the tribunal by bringing practical experience in employee and employer relations.”

As my hon. Friend the Member for Streatham (Mr Umunna) said, the Federation of Small Businesses is wholly against the proposals for compensated no-fault dismissal. It states that it has seen no evidence from countries where compensated no-fault dismissal is in place to demonstrate that it encourages employers to hire. In fact, it believes that it might lead to more employment tribunal cases on the grounds of discrimination, thereby producing exactly the opposite result to the main policy objective.

The FSB also believes that there is a risk of creating a two-tier labour market and, specifically, that lower protection creates a risk that workers will not be attracted to small companies, making it harder for them to recruit. Those taking employment in small firms could be the lower skilled and less productive workers willing to accept lower protection and those finding it harder to access credit, such as mortgages. The FSB also believes that that would fundamentally change the dynamic relationship between workers and their employers and could deflect attention from the need for good management and replace it with a hire and fire culture. I could not agree more.

The Government have stated that they must make changes to the tribunals system because of the rising number of tribunal cases, but the level of single claims, where individual workers make complaints about their treatment, has remained fairly steady—in fact, it fell by 15% between 2010 and 2011. Around 60,000 individual cases a year, of a work force of 26 million, does not seem all that excessive. Anyone listening to Government Members would believe that tribunals were a real cash cow for the employee, but the average award is £5,400 and the average cost to the employer is £8,500.

I welcome the possibility that tribunals could impose financial penalties on employers who break the law. I have never understood why employers can break employment laws with impunity. The law is the law, it seems to me, and those who break it deliberately, especially if they do so regularly, should be punished. I am also concerned by all the statements we have heard from Government Members about health and safety and ask the Minister to assure us that no amendments will be made that relate to health and safety legislation.

The economy is in recession not because workers have too many rights, but because the Government are cutting expenditure too far and too fast, hitting business confidence and choking off growth. Removing the rights of workers will only increase job insecurity, harm work force morale and productivity, and lower consumer confidence. This is not about making it easier to hire workers, but about making it easier to sack them. It is unwanted by responsible business people, unnecessary and yet another example of a Government who are out of touch and have no idea how to govern in the 21st century. It seems to me that they just want to take us back to the 19th century. With 2.7 million people unemployed and more than a million young people unemployed, the Government should simply get a grip.

Business and the Economy

Debate between Ian Lavery and Julie Hilling

Monday 14th May 2012 Commons Chamber

[Julie Hilling]

What was my hon. Friend’s view when he heard the Prime Minister say:

“You call it austerity, I call it efficiency”?

[Ian Lavery]

If I was not in the palace of varieties and the great hall of democracy, I would answer that exactly as I would like to.

I have mentioned public sector jobs—500,000 of them. Those jobs have not been lost. They have been torn from the economy; they have been stolen from ordinary people; they have disappeared because of the actions of this Government. Those jobs have been lost because of nothing other than the ideology of an incoming Government. We are desperate for growth, jobs and investment, but what do we have? We have a double-dip recession.

There is good news in my area, with Bernicia and Akzo Nobel having decided to locate there. That is absolutely fantastic, and I hope that it will continue, but there are problems with the regional growth fund and with not distributing money fast enough. Statistics announced at the weekend suggest that each job costs some £33,000, but that is not what it was like under the old regional development agency system. We had a shining light—a beacon—in One North East, which was providing brilliant results for the region. Sadly, though, it was abolished within weeks of the Government being elected.

If new companies are to be encouraged into our region, they need to be incentivised. Enterprise zones are fine, but if an area is not part of one and is surrounded by them, it will have huge problems, as we do in Wansbeck. The enterprise zone needs to be extended up through the Alcan site and around the town of Ashington, but the capital allowances must come with that extension. It is no good extending enterprise zones without capital allowances; it may as well not happen. I appeal to Ministers to consider extending the enterprise zone in south-east Northumberland around the Alcan site and to bring with that what capital allowances can be afforded.

We need to protect deprived areas from the effects of the discussions that are taking place in Europe about EU state aid. I urge the Government to give serious consideration to ensuring that small and medium-sized enterprises will still be able to get EU state aid after 2013. That is essential because otherwise we will have a double whammy. We also need infrastructure in south-east Northumberland in the form of the Ashington, Blyth and Tyne rail line, so that we can get to and from other areas.

The Queen’s Speech offered little to my constituents. We have done everything we can to try to get them on to an even keel. I simply ask: do this Government care?