Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Lord Razzall Excerpts

Monday 19th March 2012 Grand Committee

[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.

[Lord Young of Norwood Green]

My Lords, I thank the Minister for his introduction, even if I did not agree with most of it. It will be no surprise that we oppose the proposals both on unfair dismissal and on lay members. I could not help smiling when the noble Lord, Lord Razzall, suggested that there was some overegging of the pudding. It is true that I could not find the transportation clause in the impact assessment. However, that is not to say that the measure will not have a profound effect.

My premise for being so opposed to it is that if one wants to give small employers—the measure is focused on them—some help and assistance, is this really what one wants to focus on, rather than the quality of management? I could not help reflecting on that. The noble Lord, Lord Hodgson, spoke about waiting for the annual appraisal. With a new recruit, would that be the first time one gave any assessment? As a small employer, it would be one’s first problem if one waited until the end of the year. One would need to look at a new recruit a lot earlier than that.

My noble friend Lady Donaghy pointed out that a probation period can be extended and that therefore this is not the best bit of advice one could give a small or medium-sized employer. Where they make mistakes is in the quality of management. That is why so many employment tribunals are seen as almost a fait accompli because they know that they do not have a proper set of procedures. I have seen that on many occasions. We have even seen things like the failure to issue a contract of employment. I encountered many people who have complained about the terms of their employment, but when I asked them, “Where is your contract of employment?”, they said that they did not have one. When we have management failure on that basic level, saying that extending unfair dismissal will encourage them to hire more people means, to me, that the Government really cannot see the wood for the trees.