Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Lord Lea of Crondall Excerpts

Monday 19th March 2012 Grand Committee

We are, in parallel, talking about the legal aid Bill and the scope of cases that will be excluded, and the ability of those of small means and little power to have access to justice. If, in the employment field, we are also about to deny these nearly 3 million people some small access to justice, then frankly there has to be a hugely convincing economic argument for so doing. I am afraid that the Government have come nowhere near to making one. I suspect, because it is not in the impact assessment to any degree, that they do not have that evidence. I therefore hope that the Minister can address this issue when he replies.

[Lord Lea of Crondall]

My Lords, following the same line of thought as my noble friend Lord Whitty, the section of the document beginning on page 25, which is headed:

“Resolving Workplace Disputes Government Response: Overarching IA Evidence Base”,

kicks off by saying that the “Problem under consideration” is that “Employers are worried”—employers this, employers that and employers the other. That is what you might call the Mandy Rice-Davies approach to evidence—it may be good or it may be bad but it is not what most of us would be looking for when we think about evidence.

On page 28, after it says:

“The Government will therefore commission an independently chaired fundamental review of the relevant procedural rules, and will ask the judiciary and other stakeholders to play a full part in that review process”,

paragraph 18, which is what I would like the Minister to comment on, says:

“There is therefore little to be gained by introducing major rule amendments now that may shortly be undone or altered as a result of the fundamental review. Further, reform at this stage should seek to avoid any risk of introducing more inflexibility and prescription when that is what the fundamental review is designed to strip away”.

Then there is a sentence that I think can be translated slightly differently from what is on the page:

“However, after an assessment of the evidence submitted in response to the consultation, the Government believes that a more limited set of reforms can be implemented without awaiting the review’s recommendations”.

In other words, as I read it, “We have got a political doctrine that is fundamental to the nature of what you might call the evidence”. Whether or not that is what a judge would normally consider to be the sort of evidence on which a jury should take a decision is rather problematical.

The other point I wish to make relates to that. The anecdotal nature of what is being said is not the way in which you would expect the two sides, if I can call them that, to relate to each other. One anecdote is worth as much as another. That is why the system of Explanatory Notes introduced some years ago is vital to getting good legislation and why we should be very careful about the nature of evidence.

Finally, on a slightly different plane, the noble Lord, Lord Jones of Birmingham, and other noble Lords on the other side have made very general remarks about the monstrous flow of legislation that is making life difficult in this country. If one looks at employment and unemployment in Germany, where the mittelstand offers much more in the way of management training and so on than we do, one wonders why the Government’s kneejerk reaction to almost any problem is to listen to employer’s anecdotes and to accept them as the main base of evidence. The Prime Minister now says that it is a good idea to take a look at Germany. If the Germans saw the basis on which we take our decisions about employment and what generates employment, I do not think that they would see other than a caricature about what you might call a “top-end” and the “well mannered dog business”. We have a vast number of mittelstand-type businesses in this country and many of them are undertrained. It is a long process, but this kneejerk recourse to the worst sorts of politicking with the British industrial system is not a creative solution.

[Lord Razzall]

My Lords, it looks as though I have to declare those interests and companies that I have set out in the Register of Members’ Interests, although whether they will benefit from the passing of these orders will depend on whose arguments are correct. I have some sympathy with the points that have been made from both sides of the Committee—although having read particularly the debate in the other place, one would have thought that, from the Labour side, these proposals were going to take the country back to the days of the Tolpuddle Martyrs and, from the government side, that all the problems of unemployment in this country will be solved by passing this order.

I do not share either of those views. This is not part of an agenda designed to take us back to the dark days of poor trade union relations or poor employment relations. I have every confidence in the Secretary of State, who happens to be a member of my party, to ensure that that will not happen. As the noble Lord, Lord Whitty, and one or two other Members on that side have indicated, there is a danger that one can overstate the opportunity for passing this order to extend the period of unfair dismissal from one year to two years. One can overstate the argument. Indeed, as the noble Lord said, most of the evidence in the survey saying that this will have an effect is anecdotal. He put it rather well when he said that if you get three employers having a drink in a pub—I do not know why he picked Hertfordshire—that is what they will complain about.

However, as someone who has been involved for a number of years in the SME sector, I believe that there is a marginal case here for saying that employers are nervous of taking on new employees in small businesses because of the impact of the unfair dismissal rules. There is a case for saying that if they were marginally relieved from one year to two years, people would be taken on.

One point that has not been made is that there is very little evidence that under the current one-year rule many unfair dismissal cases are brought by people who have worked between one and two years. There are very few such cases, which leads me to think that what happens is that people take advantage of the one-year rule to lay people off before they get into the unfair dismissal bracket. If we extend that to two years, action will not be taken until they approach the end of the second year, which will add employment of a further year for people who have been taken on. It will also mean that if somebody knows that they can get rid of somebody who turns out not to be very good before the end of two years rather than one, in some cases they may be more prepared to give that person appropriate training that will keep them in employment for longer.

I will make a point about the context in which the orders were put forward. One does not have to be privy to the inner secrets of government—one just has to read the newspapers or watch television—to realise that a huge battle is going on over how our employment legislation should be framed. Mr Adrian Beecroft has been commissioned to look at the laws. He starts from the proposition that almost all employment regulation and restriction should be swept away. On the other hand, a number of people in both governing parties want to see a significant improvement in family-friendly policies such as paternity leave and maternity leave.

While the battles rage, I very much hope that noble Lords will come out on the right side of the arguments. There is no doubt where I stand on them, and I suspect that there is no doubt where the Secretary of State stands on them. If the proposals come to your Lordships' House, I hope that they will be resisted. In the mean time, this is a modest proposal, and if it is the price we pay for averting something that might be a lot worse, I urge noble Lords to accept it.

--- Later in debate ---

The noble Lord, Lord Young, referred to the Government’s focus on small and medium-sized enterprises.

[Lord Lea of Crondall]

I am grateful to the Minister for giving way, but he has changed the ball park completely now. Instead of saying that we have evidence, he is saying that we have a problem of perception. If there is a problem of perception, it is the Government’s job to change the perception, unless it is evidence.

[Lord De Mauley]

Exactly, and that is what we are trying to do.

The noble Lord, Lord Young, referred to the Government’s focus for growth on small and medium-size enterprises, for which the impact of a tribunal case is often greatest. This measure is intended to deliver a decrease in the number of cases being lodged against small and medium businesses. A two-year period will also give them enough time fully to assess new members of staff and to benefit from skills retention in cases where they might otherwise have dismissed an employee in borderline cases because they do not have the access to sophisticated HR and legal resources.

The noble Lord, Lord Young, also suggested that this could lead to an increase in the number of discrimination cases. I do not buy that assertion. Already, discrimination actions are frequently brought simultaneously with unfair dismissal claims. That suggests to me that, if a discrimination claim has a reasonable chance of success, it is already being made. Indeed, because there is a time limit on making such a claim, it is already now important that, if a discrimination claim is to have a chance of succeeding, it is made simultaneously, so we cannot see that reducing the availability of unfair dismissal as a route will lead to a significant increase in discrimination claims.

The noble and learned Lord, Lord Scott, asked about the changes to the written statement of reasons. The statement of reasons is linked to the qualifying period and the specified fair reasons for dismissal, which are set down in law. The objective of the qualifying period is to provide both parties with time to get the working relationship right. If it does not work out, this will not necessarily correspond to one of the specified fair reasons for dismissal. Of course, the employee can ask for a written explanation and I cannot see any reason why an employer would not provide it.