Mr Henry Bellingham (North West Norfolk, Conservative)

The essence of the clause is the case of Davis v Friction Dynamics. The clause introduces an additional element to the protections for striking employees that appear in section 238A of the 1992 Act by changing the scope of the eight-week period currently specified by providing for locked-out days

to be disregarded when determining the length of the period. We have looked at the clause in detail, and the Minister's Department has had to respond to the Friction Dynamics case. It has given a watertight response—a lot of work obviously went into it—and I congratulate the Department on drafting a form of words that meets the need. I hope that it will stand the test of time if it is again used in court.

Mr Albert Owen (Ynys Môn, Labour)

I, too, want to concentrate on the Friction Dynamics case, which involved the locking-out of employees taking protected industrial action. I welcome the clause as a positive step towards the prevention of a repeat of such injustice. The incident occurred in the constituency of the hon. Member for Caernarfon (Hywel Williams), but it affected my constituents, many of whom still work at Dynamex Friction, which now operates in that location. I pay tribute to the strikers and the union for taking the case the whole way, and I applaud the Government for listening to the arguments that were made by many Members of this House and by the TGWU.

I have concerns about the eight-week rule because anomalies in the 1992 Act were carried through into section 238 of the Employment Relations Act 1999. The eight-week rule is embedded in the provisions, but the protection falls subject to the employer who fails to take the procedural steps to solve the dispute. Friction Dynamics is cited as one case in which the eight-week rule failed. However, it is one case too many, and it has profound implications for industrial and trade union law.

The clause will give protection in future action because it addresses the issue of the lock-out period. I remind the Committee that, in April 2001, Dynamex Friction—the same company in all but name—sacked 86 official strikers who had returned to work after one week and found themselves locked out. They were given an ultimatum. The tribunal in October 2002 found that the company had no desire to settle the dispute within the procedures of the Act; it made no attempt to resolve the dispute by following the eight-week rule. The workers were unfairly dismissed and temporary labour was used in their place. The company appealed, purely to extend the period of the strike. It went to the eleventh hour and then pulled the appeal, knowing that it was falling foul of the law and owing £1.3 million in compensation to those workers in redundancy, holidays and arrears of pay. That company had received grants from the Welsh Development Agency. I know that that is not the issue with regard to the Bill, but it is important to put it on the record.

The clause extends beyond the basic 56 days the protected period during which official strikers are locked out. In theory, the new extended protected period—including the initial period of eight weeks, plus the period where they are locked out—relates to an indefinite strike period, such as in the case of Friction Dynamics. Good, genuine employers are not worried about eight weeks; if they really want to settle a dispute, they can settle a dispute. Only rogue employers such as Friction Dynamics have to worry

about time factors, and the company pushed it to the limit.

This measure will help and is a positive step. However, what direct action would be taken against an employer if it were to employ temporary labour during the lockout period? I understand the theory and provision of the Bill, but I believe, in the light of the Friction Dynamics dispute, that this hurdle may be a little too low. I ask my hon. Friend the Minister to respond by saying not only what action would be taken against the temporary labourers, but what action would be taken to prevent a company from doing exactly what Friction Dynamics did; that is, go through the motions of a tribunal and appeal and then go into liquidation? Also, will the clause be monitored over the period to prevent a similar injustice to that of Friction Dynamics' workers, which, in the 21st century, is an absolute disgrace?

Mr Hywel Williams (Spokesperson (Disability; Health; Social Security; Work and Pensions); Caernarfon, Plaid Cymru)

As has already been said, this clause arises in part from the short strike and very long lock-out in my constituency at Friction Dynamics. The clause is a tribute to the way the union and the workers conducted themselves, and to the courage and the persistence that they have shown over this lock-out.

The circumstances of the strike will be known to many hon. Members, and I do not wish to rehearse them here, except to say that the TGWU engaged in a long period of negotiation with the American employer who took over four or five years ago. These negotiations, about worker conditions and pay, were deadlocked. The workers went on strike for one week only and then were locked out. After eight weeks, under the law as it is, they were sacked. They continued to picket for two years and nine months until just before Christmas, one of the longest disputes in British industrial history. As the hon. Member for Ynys Môn (Albert Owen) said, they won their industrial tribunal but they are still awaiting compensation.

The law allowed the employer to lock the workers out and then sack them. Clause 21 is a welcome partial remedy to the situation of lock-outs, but as and when procedures allow we will be able to return to what is, for me, the fundamental issue; the eight-week rule itself. Under clause 21, in a case such as Friction Dynamics where workers are locked out in week one, the protection would be extended to 15 weeks, and I thank the Minister for his letter to me confirming that after Second Reading. However, one of the weaknesses of this provision is that it will still be possible for the employer in such a case to sack the workers after the end of the 15-week extension period.

The vast majority of employers and unions will be very keen to settle industrial disputes well within the eight-week period without resorting to sackings, lock-outs and the unfortunate circumstances in Caernarfon, and I would want that to be normal in industrial relations. Those of us who sat through many weeks discussing the Employment Act 2002 will remember its intention. I welcome clause 21, but my reservation is that it does not address the eight-week rule in itself. I

welcome the clause, but I cannot accept that a legal strike can be protected for 56 days, but that everything changes on the 57th day. I hope that the Government will reconsider in due course and look at the eight-week rule again.

Mr John Lyons (Strathkelvin & Bearsden, Labour)

We have spent considerable time this morning discussing the preparation and avoidance of industrial disputes, the supply of figures and names and the ballot process. I support the clause because it is a great improvement. We are starting to learn some of the lessons from Friction Dynamics and elsewhere.

When a person takes part in a ballot, they are asked to participate in and accept the law of the land. People must be balloted and make their decision for strike action, or, more probably, against it. People who take a positive decision to strike against their employer should be fully protected in that period. No one should be dismissed because they are on strike or in a dispute. There should be full legal protection during that period. What is the point of asking people to participate in a ballot, follow the law of the land and take a positive decision, but then to say that it is okay for the employer to dismiss them? The TUC is absolutely right. There should be protection from day one until the end of the dispute.

I hope that my hon. Friend the Minister will think about that. Equally, I welcome the clause, because it is major progress. We should continue in that direction, but we should bear in mind that rogue employers will still take action against people outwith the provisions in the clause. That is to be regretted and we should condemn it every time it happens.

Mr Jonathan Djanogly (Huntingdon, Conservative)

At the risk of sounding like a voice in the wilderness, I shall set out an alternative position. Essentially, there is no moral difference between a lock-out and a strike. There might be strikes for good reasons or for bad reasons and there might lock-outs for good reasons or for bad reasons.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

Will the hon. Gentleman give an example of what he would regard as a reasonable lock-out?

Mr Jonathan Djanogly (Huntingdon, Conservative)

When is it reasonable for workers to kill a company by walking out?

Mr George Stevenson (Stoke-on-Trent South, Labour)

Order. I am a little worried that we are getting into legal questions as to what is reasonable and what is not. It is perfectly understandable that we should discuss that in the context of the clause, but let us keep the conversation at the level at which it has been so far.

Mr Jonathan Djanogly (Huntingdon, Conservative)

I fully agree. I simply make the point that there will be good and bad situations, as and when. I fully accept the points that hon. Members have made about Friction Dynamics, where the workers had a strong case. I do not have any special knowledge of the case, although I have read the notes and I accept what hon. Members have said.

I agree with the hon. Member for Ynys Môn that the clause will have to monitored, although not for quite the same reasons. There will have to be monitoring because the clause in some ways assumes that lock-outs will be for the wrong reasons. In other words, the eight-week period would be extended

automatically even if a lock-out were due to the union's intransigence or the fact that workers had destroyed company property during the strike. If workers were locked out for that reason, the eight-week period would continue to run.

Mr Albert Owen (Ynys Môn, Labour)

The hon. Gentleman's example of damage to property is covered in the 1992 and the 1999 Acts. Will he give an example of a legal dispute in which the employees wished to return to negotiate but were locked out by the employer? Would he consider that reasonable?

Mr Jonathan Djanogly (Huntingdon, Conservative)

It would depend entirely on the circumstances. If, during the strike, there were violence and destruction of company property to which the company reacted by locking out employees, such action would be quite justified. More to the point, it is quite wrong that those lock-out days should mean a continuation of the eight-week period. The clause does not provide for the relevant circumstances; rather, it automatically extends the eight-week period, which is intrinsically wrong. For that reason, it must be monitored.

At this time of increased militancy—there is a rise in both official and unofficial strikes—strikers might be tempted to think that they can get away with anything during a strike because it will not impact on the eight-week period. I do not refer to all strikers or to all circumstances, but it is a matter of concern.

Mr Bill Tynan (Hamilton South, Labour)

I welcome the changes to the eight-week rule. I understand that Friction Dynamics was able to mount a challenge at a tribunal only because of a technicality. In a previous life, I had experience of a company that had to go through the process of an industrial ballot. Anybody who has been involved in one and who has had to give information under the 1992 Act will know how difficult it is to ensure that the information is correct. In that case, a bad manager had been put in charge of the work force. The workers were forced to take industrial action, not because they wanted to—many of the workers had given 35 years of their lives to the plant—but because of a decline in conditions and a reduction in wages. In those circumstances they took the ultimate decision to go on strike. No group of workers takes that decision lightly.

It is unfortunate to hear Opposition Members speaking about killing a company. What is a company? It is made up of the people who work in it. They create a relationship that means profitable opportunities for the employer and better wages and conditions for the employee. It is essential to remember that in this type of debate, in order to nail the lie that workers are simply out to destroy companies. Legislation such as this is needed only because there can be bad employers. No right-minded person would condone the destruction of company property. In fact, there are laws to deal with it. Violence should be viewed in the same way.

Mr Brian Cotter (Shadow Minister (Trade & Industry), Trade & Industry; Weston-Super-Mare, Liberal Democrat)

The Bill's objective is to create an atmosphere within companies that does not foster the ''killing off'' attitude. I speak as one who took over as managing director of a

company that had a ''them and us'' attitude before I arrived. That sort of thing is to be deplored, and we are trying to set standards that will prevent it from persisting.

Mr George Stevenson (Stoke-on-Trent South, Labour)

Order. If the hon. Gentleman wishes to make a speech, he should catch my eye. Interventions should be short and to the point.

Mr Bill Tynan (Hamilton South, Labour)

I thank the hon. Gentleman for his intervention and I wish him well in developing the sort of relationship that is required to make a success of a company. I endorse what he says.

My point was about the eight-week rule. I spoke of the tortuous route that unions have to go down in order to deliver a strike ballot. They do not like and do not want strike action. Given that they are legally obliged to follow that kind of procedure in order to arrive at a strike ballot, I ask the Government to look seriously at the eight-week rule. If there is a strike, dismissal should not be an option for an employer at any time.

Mr Jon Cruddas (Dagenham, Labour)

Briefly, I welcome the way in which the clause deals with lock-outs. However, like some of my colleagues, I urge the Minister to remain vigilant and not to close the door on the issue. Another Friction Dynamics could occur, and we could end up in an invidious position. Whatever the figure—be it eight, 10 or 12 weeks—an employer might swerve around the protections and people in legitimate, bona fide industrial disputes might then not have protection against unfair dismissal, even though the dispute met all the legal criteria needed for it to be considered legitimate.

This may be a bit off the Government's radar at the moment, but they should not close the door on the issue and should actively consider the possibility of a positive right to strike, rather than negative protections, in the form of tortious liability, for unions and individuals who are on strike for eight, 10, 11 or 12 weeks. Whatever the limit, those involved in legitimate trade disputes could be legitimately dismissed, despite the fact that every protection applied and every duty had been followed according to the precise legal framework. At some stage, the Government should reconsider the unique nature of British labour law, which is partly the product of the timing and sequence of Britain's industrialisation. They should not discount the possibility of having positive rights rather than negative immunities.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

This has been a useful and helpful debate. It has also been quite poignant given the references to Friction Dynamics, and I shall return to that issue in a moment.

Having been on strike myself, I agree with my hon. Friend the Member for Hamilton, South (Mr. Tynan) that no one willingly goes on strike. It is the last resort and it constitutes a failure; the failure to resolve issues through negotiation. No one goes on strike lightly and standing on a picket line outside a company in which one has spent most of one's working life is a cold, lonely experience. One has to deal with difficult relationships when one goes back after the strike has ended. In that sense, a strike is a failure.

It might be useful to explain why we are where we are with the clause. I shall deal in detail with Friction Dynamics and the contributions by my hon. Friend the Member for Ynys Môn and the hon. Member for Caernarfon later.

Before the 1999 Act, there was limited protection against dismissal for employees taking industrial action. Sacked employees could claim unfair dismissal only where they had been selectively dismissed, or where the employer had offered to re-engage only some of them within three months after dismissing them all.

The Act extended that protection in two major ways to those taking official, lawfully organised action. First, dismissal for taking part in the first eight weeks of such action, or at any time if the action lasted less than eight weeks, became automatically unfair. Virtually all industrial action—93 per cent., in fact—is shorter than eight weeks. Secondly, the Act made it unfair to dismiss people for taking part in the industrial action after the eight-week period if the employer had not taken all reasonable procedural steps to resolve the dispute. It is a pity that that aspect of the protections receives less attention than the eight-week period, because the second leg of the protections are important and were intended to stimulate the resolution of disputes.

As is well known, and as hon. Members have mentioned, an employment tribunal has decided only one case so far under the present jurisdiction; Davies v. Friction Dynamics. It found that the employer had acted unlawfully, whichever count applied. The case highlighted a range of potential behaviours to which bad employers might resort to avoid the statutory protections. We have studied the tribunal's decision closely, and the clause is partly based on our assessment of the employer's actions. However, it is not based only on them, and I shall return to that later.

The clause deals with the treatment of lock-outs when calculating the eight-week period. It will ensure that lock-out days do not count towards the eight-week period. That means that there must be at least 56 days on which no lock-out took place before the period of automatic protection ends. Therefore, if the employer locks out the work force for 10 days immediately after the start of the industrial action, the period of automatic protection will last 66 days.

That arrangement ensures that employers cannot try to sit out the eight-week period by locking out their employees for most or all of the period. Lock-outs usually ratchet up the tension in disputes and may make it more difficult to resolve the underlying issues. One effect of our proposal is that the period of protection cannot end as long as a lock-out continues, so employees will be protected as long as they remain locked out. This makes it less likely that the settlement process will be complicated by the existence of a lock-out. That should greatly help to resolve difficult disputes and, in most cases, will avoid dismissals altogether. Let me emphasise that the proposals are designed to minimise the risk that parties will simply

go through the motions instead of trying to resolve a dispute.

I feel for the workers of Friction Dynamics and the people of Caernarfon, and I pay tribute to the work that hon. Members on both sides of the House have done to support the TGWU, which has acted reasonably and rightly. The situation is a disgrace. My right hon. Friend the Secretary of State for Trade and Industry met the workers of Friction Dynamics, who expressed their opinions about all the issues that led to the dismissals. Those workers have still not had the compensation to which they are entitled. I hope that they will receive it when the award hearing delivers the appropriate judgment. The administrators still have to report on Friction Dynamics, which does not allow me to go into detail about the conduct of the directors. Rest assured, however, that we await the report and will see what happens.

The TUC line is that people should have day one rights so that they can go through the admittedly tortuous process of ballots and ensuring that the legal steps have been taken. The eight-week period came about through negotiations under the Employment Relations Act 1999, which I will not discuss as I risk embarrassing certain members of the Committee. I am keen on the reasonable steps to resolve the dispute so that we can get away from the ''us and them'' culture described by the hon. Member for Weston-super-Mare (Brian Cotter) and have positive and dynamic industrial relations to meet future challenges. That is where we should be heading, and where we are heading.

There is no return to militancy. Throughout our deliberations, the hon. Member for Huntingdon has had a consistent attitude to trade unions and the relationship between employers and employees. He is wrong, however, and the figures show that he is wrong. He only has to consider the number of disputes and—

Mr Henry Bellingham (North West Norfolk, Conservative)

Working days lost.

Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)

I thank the hon. Gentleman for reminding me where I was. The culture has changed tremendously.

My hon. Friend the Member for Ynys Môn asked me about temporary workers, and employers' ability to use them. That would not be unacceptable. The code of practice relating to employment agencies means that people could not be supplied to take the place of workers in that situation. I accept what he says about needing to monitor the clause in light of the experience of one case so far, Friction Dynamics. There are, however, issues of principle. I give the undertaking that we will monitor and review the situation as it progresses, and the Bill is the result of that commitment. The workers at Friction Dynamics were unfairly treated. The way in which the company acted was a disgrace. My right hon. Friend the Secretary of State's remarks about Friction Dynamics are on the record.

The clause moves us in the right direction. It creates the opportunity to ensure that employers and employees have to try to resolve the dispute. I hope that members of the Committee, albeit with reservations, will support the clause.

Question put and agreed to.

Clause 21 ordered to stand part of the Bill.

Clause 22 ordered to stand part of the Bill.