Deregulation Bill

Lord Low of Dalston Excerpts

Tuesday 3rd February 2015 Lords Chamber

Moved by

[Lord Low of Dalston]

3: Clause 2, page 2, leave out lines 15 to 21 and insert “omit from “reducing” to the end of subsection (3) and insert “an adverse effect on the complainant, or a serious adverse effect on any other person, of any matter to which the complaint relates.””

[Lord Low of Dalston (CB)]

My Lords, I shall move Amendment 3—which is in my name and the names of the noble Lords, Lord Lester and Lord Hunt, and the noble Baroness, Lady Thornton—in the absence and at the request of the noble Lord, Lord Lester, who is currently recovering from heart surgery. I am glad to be able to report that he is doing well, but there would be no better “Get well soon” message that we could send him than to accept his amendment today.

Clause 2 amends Section 124 of the Equality Act 2010 to remove the power of employment tribunals to make recommendations to employers in cases where there has been a finding of unlawful discrimination, harassment or victimisation but the claimant no longer works for the employer. These are commonly referred to as “wider recommendations”. Its effect will be that, in future, an employment tribunal will be able to make a recommendation aimed at preventing or reducing the adverse effect of the discrimination on only the claimant in the particular case. In 2013, a BIS survey of employment tribunal applications found that only 16% of claimants in discrimination claims were still working for the employer against which they made their claim. This means that the effect of Clause 2 will be that in 84% of discrimination cases the employment tribunal will no longer have power to make recommendations to employers to take steps to improve their practices to avoid discriminating against other employees. This will be a significant reduction in the powers of employment tribunals.

Amendment 3 would remove the provision in the Bill which takes this power away from tribunals, thus preserving employment tribunals’ current power to make wider recommendations following a finding of unlawful discrimination. The power to make wider recommendations is of strategic importance for employees and employers. So far as employees are concerned, even when, as in the great majority of discrimination cases, the employment relationship has broken down and the employee has left the employer’s employment, they can help prevent or reduce future discrimination and are an effective way of tackling systemic issues and practices. So far as employers are concerned, recommendations are an important way of helping employers who have discriminated to improve their practice. An employment tribunal hears evidence about the circumstances in which the unlawful discrimination occurred and is thus well placed to identify steps the employer can take to rectify any discriminatory practices. Recommendations also offer an important means by which employers can learn from their mistakes and help avoid future discrimination claims.

The power to make wider recommendations is criticised on four grounds: first, that they impose a burden on employers; secondly, that the power is little used; thirdly, that there is no evidence that wider recommendations are effective in changing employers’ practices; and, fourthly, that there is no means of enforcing wider recommendations.

As regards burden, the impact analysis attached to the Government’s consultation on reform of enforcement provisions in discrimination cases suggested that this provision, when operating as expected, will affect only between 0% and 3% of employment tribunal cases, which, it suggests, is likely to result in 17 cases a year. It is hard to maintain that this will constitute an undue burden on employers and business. Moreover, by limiting the cases in which wider recommendations could be made to those where the discrimination, harassment or victimisation has a serious adverse effect on persons other than the person bringing the claim, Amendment 3 addresses criticisms that the wider recommendations power imposes a disproportionate burden on business.

On the point that the power is little used, perhaps it is too early to tell, as it has existed only since 2010. However, on the basis of a review of over 400 employment tribunal judgments issued between December 2012 and September 2014, the Equality and Human Rights Commission concluded:

“Given the benefits to employers and employees which can result from wider recommendations, concerns that the power is little used should be addressed by encouraging employment tribunals to actively consider whether a wider recommendation should be made … not by removing the power”,

entirely.

As regards effectiveness, recommendations mainly concern the provision of training for managers and a review of policies or procedures. I might draw attention to a number of cases, but in order not to detain your Lordships too long I will mention just a couple. One case concerned where a disabled woman was denied a reasonable adjustment that should have been made for her. The employment tribunal ordered that within six months,

“line managers and human resources are to receive adequate training on understanding and implementing the Respondent’s disability leave policy and to ensure that the policy is properly communicated to employees as is appropriate in the circumstances”.

In another case, the Ministry of Defence was found liable for both direct and indirect discrimination in its handling of the promotion prospects of an RAF group captain. The employment tribunal commented that it was shocked that senior personnel were not fully competent in, nor apparently had they been trained on, codes of practice in respect of the Equality Act or the predecessor legislation. The tribunal made a number of recommendations including: first, that all personnel involved in promotion and recruitment should have training in equality and diversity as set out in the Equality Act and the code of practice; secondly, that decisions of the appointments and promotions board should be recorded in writing, with reasons clearly explained and these should be retained for at least 12 months; and, thirdly, that the resolution of the service complaints procedure should not be unilaterally suspended pending the outcome of an employment tribunal complaint. I submit that those are not inappropriate recommendations for an employment tribunal to make with a view to improving the employment practice of the employers with whom it is concerned, and that the effectiveness of its decision would be substantially diminished if it did not have the power to make such recommendations.

On enforcement, it is perfectly true that the employment tribunal does not have power directly to enforce the carrying out of wider recommendations. However, the Equality and Human Rights Commission reviews all employment tribunal cases where there have been findings against employers, prioritises cases where there have been wider recommendations and works with employers to secure the implementation of such recommendations.

Finally, it must be said that the Government’s approach on these matters is not entirely consistent. From 1 October 2014, the Equality Act 2010 (Equal Pay Audits) Regulations 2014 require an employment tribunal to order an employer who loses an equal pay claim to carry out an equal pay audit unless specified exemptions apply. These audits require, among other things, that employers develop an action plan, with a view to ensuring that they do not fall foul of equal pay policies in the future. I submit that this is the better approach, the right approach and the approach that should be similarly followed with regard to wider recommendations. Precisely the same considerations apply, and it is hard to see why tribunals should not have the sort of powers in relation to the making of wider recommendations that they have in relation to the ordering of equal pay audits.

This matter was considered in Committee when an amendment to delete Clause 2 entirely was judged an amendment too far and was rejected. However, I submit that the more surgically crafted amendment of the noble Lord, Lord Lester, deals with the issue that we are considering in a more proportionate way and, as such, is deserving of your Lordships’ approval. I beg to move.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, the Minister is not going to take this amendment away and come back. It is a very kind offer to make. We had an extensive discussion on this clause in Committee. The Committee voted by quite a substantial majority to retain it. What we have here is an amendment that is offered as a compromise but which seems to the Government to make the situation a good deal more complicated.

What we have in Clause 2 at the moment is a straightforward repeal of the requirement on tribunals to offer non-enforceable recommendations on wider issues. It does not reduce or abolish the right of tribunals to offer comments on particular cases and it certainly does not lower what they can do in this overall area. It does, however, simplify the position. By contrast, the amendment offered by the noble Lords, Lord Lester and Lord Hunt, would lead, we argue, to a more complicated system for tribunal recommendations. It would reduce the protection for claimants and set up more complex arrangements for tribunals. It would allow a tribunal to make a recommendation if it thought that it would completely obviate—not just reduce—the adverse effects evident from the case. That is a much higher standard of proof for the complainant than we require under the present system or that would be required following the repeal.

I will comment briefly on the general issue from the Equality Act. This was intended by the Government to be a light-touch element in the very large number of tribunal cases. I understand that there have been around 1 million employment tribunal cases in total, of which around 10%—100,000—were discrimination cases. Some 3,000 of these discrimination cases were successful and in 40 of them there were recommendations. Therefore, we are talking about a very small number. The range of recommendations includes the question of equal pay where there is a requirement for equal pay audits, which is enforceable. An equal pay audit ordered by an employment tribunal is a precise and mandatory requirement with sanctions for non-compliance to advance equal pay in the small number of organisations where a breach of equal pay law has been found and it is also a direct transparency measure as it has to be published.

By contrast, wider recommendations in discrimination cases are effectively discretionary for employers and do not have to be made where an employer loses a discrimination case. Wider recommendations are generally broad-brush proposals; for example, a recommendation that human resources staff undergo equalities awareness training. These are non-enforceable recommendations about training, company culture or a range of other areas that are made by tribunals that may not themselves be very closely aware of the culture of the companies concerned. They are recommendations from the outside.

The noble Lord, Lord Hunt, suggested that, although the amendment is in some ways defective, he would like the Government to take it away and improve it. The amendment, even if modified as the noble Lord proposes, would, in our opinion, result in a quite complex and heavy set of requirements. These could mean, for example, that tribunals might be required to consider wider recommendations in a very large number of cases while quite minor omissions by employers, such as failing to train a manager or to update a diversity statement, could become unlawful acts under equality law. I regret, therefore, that the Government have to decline the invitation to take this away and improve the quality of the amendment.

Our repeal will not prevent tribunals from making non-binding observations on employers’ practices. These could reasonably include the type of points mentioned by the noble Lord, Lord Low, in specific cases. For all employers, losing a tribunal case and having to pay compensation, which our repeal will not affect, itself concentrates employers’ minds and persuades them to learn from their mistakes. The lack of enforcement already there means that they have to take them into account.

The noble Lord, Lord Hunt of Wirral, also talked about introducing the word “proportionate” into the legislation. As someone who struggled in the EU balance of competences review to define “proportionate”, I am conscious that it opens a large door to lawyers and that it is very difficult to discover precisely what proportionality means.

The noble Lord, Lord Beecham, raised the question of the introduction of fees and I recognise that that is of course a serious point. He will in turn recognise that the Government are struggling to contain public expenditure. It is important to emphasise that the Government have been careful to ensure that fee waivers are available for people of limited means in order that they are not excluded from seeking redress in tribunals. The Government have committed to reviewing the introduction of fees, although of course it will be for the Government after the next election to take on that review. We are considering the scope and timing of the review and will bring forward our plans in due course.

I hope that that provides sufficient information to persuade the noble Lord, Lord Low, to withdraw the amendment. The House did support the Government’s repeal proposal at Committee stage last autumn and I stress that we proposed a straightforward repeal of an unenforceable power that creates a perception of burden and unfairness.

[Lord Low of Dalston]

My Lords, I am grateful to the Minister for his reply and I am grateful to all those who have spoken, especially to the noble Lord, Lord Hunt of Wirral, who I thought went out of his way to suggest ways in which there might be a meeting of minds between the proposers of the amendment and the Government. I am sorry that the Minister is not prepared to respond more flexibly to the invitation from the noble Lord, Lord Hunt, to be flexible, which I am afraid does not give us a lot of room for flexibility on our part, although we might well have shown it had the Minister agreed to accede to the suggestion made by the noble Lord to make time for a further look at the amendment.

The Minister said that this is intended to be only a light-touch measure. I cannot see how more light touch it could possibly be. He gave us the statistics showing that there were 1 million tribunal cases over the period he referred to, of which 100,000 were discrimination cases. Some 3,000 of those cases were successful, and in only 40 cases were wider recommendations made. It is hard to see how this could be more light touch than that. You cannot say that the tribunals have been abusing this power.

The Minister went on to suggest that there is no need for such a power by dismissing as immaterial or unimportant the sort of cases in which it has been used. He said that it had been used in minor cases such as the failure of a company to train a manager. Well, I am not sure how much less minor it is possible to be than failing to train your managers properly. He also suggested that our amendment would make the situation worse. I cannot see that because it seeks simply to reinstate the position as arrived at in the Equality Act. It does not seek to be more draconian than that or more burdensome on employers. I think I showed in moving the amendment that it is hard to argue how the use of this power, as it has been used, constitutes a burden on business and employers.

No one in the House or even in the country is more expert on these matters than the noble Lord, Lord Lester, and I am sure that we are all extremely sorry that he is not able to be present today to give us the benefit of his wisdom. However, I am perfectly sure that he would not be moving an amendment of this kind if he did not think that it was a useful component of discrimination law and the light-touch enforcement thereof. In crafting it, the noble Lord sought to be compromising and to move a less drastic amendment than the complete removal of the clause as was attempted in Committee. This is a different approach. It is perfectly open to the House to support the amendment. It is not constrained in that matter by the discussions that took place in Committee. For all these reasons, I want to test the opinion of the House.