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

I beg to move, That the clause be read a Second time.

I welcome the hon. Member for Huntingdon (Mr. Djanogly) to his new and improved position on the Front Bench. I look forward to his contribution this morning.

On Second Reading, the Secretary of State for Trade and Industry announced that the Government would come forward with an amendment in Committee concerning protection for employees taking official lawfully organised industrial action. New clause 7 fulfils that commitment. The Employment Relations Act 1999 introduced major new protections in that area. As a result, dismissals are unfair if they occur in the first eight weeks of such protected industrial action, or if they occur after the end of that eight-week period but the action had ceased within it.

As the Committee will recall, clause 21 amends the law by discounting lock-out days when calculating the eight-week period. However, the protections under the 1999 Act have an important second leg, which is often overlooked. A dismissal is unfair at any time if the employer has not taken reasonable procedural steps to resolve the dispute that led to the taking of industrial action. New clause 7 concerns the protections under that second leg.

The current provisions relating to such protections are found in section 238A of the Trade Union and Labour Relations (Consolidation) Act 1992. The obligation on the employer to take reasonable procedural steps is contained in subsection (5)(c).

Subsection (6) of section 238A then lists a number of matters towards which regard must be had when determining whether reasonable steps have been taken. Those include the issue at subsection (6)(c) and (6)(d) of whether either the employer or the union had refused an offer to use the services of a conciliator or mediator.

Such provisions are in place to encourage parties to try to resolve the dispute. The effect of subsection (6) is to ensure that the actions of both the union and the employer can be taken into account when assessing whether the employer has done enough in procedural terms to resolve the dispute.

The review of the Employment Relations Act 1999 brought renewed attention to that area of the law. Many respondents referred to the Friction Dynamics case, where the employer was perceived to have used various tactics to undermine the intentions of the law. In particular, the employer agreed to go to conciliation but did little or nothing when conciliation meetings took place. Indeed, the main employer representative reportedly left a key conciliation meeting after 30 minutes or so to go shopping. In other words, the employer showed contempt for the process, paying lip service to what he thought were his legal obligations.

We do not want to see any repetition of such behaviour by another employer or, indeed, by a union. Therefore, we wish to set out in greater detail in statute what obligations follow when parties agree to use the services of a conciliator or a mediator. Conciliators and mediators perform similar functions, but there is an important distinction between their roles. Conciliators facilitate discussion between the parties. They do not make recommendations to resolve either the procedural or substantive issues in dispute. In contrast, mediators are entitled to make non-binding recommendations to the parties about the dispute. In the context of these provisions, the mediator might make recommendations about the further procedures that the parties could use to resolve the dispute.

New clause 7 works by inserting through new paragraph (e) of subsection (6) of section 238A new matters to which the tribunal is to have particular regard when the parties have accepted that the services of a conciliator or mediator will be used. Those matters are detailed in subsections (2) to (5) of new section 238B. Those subsections set out the essential actions that the parties should take to demonstrate that they have properly engaged in the process. I will go through them in turn.

The first, set out in subsection (2), is the issue of whether the person who attends conciliation or mediation meetings on behalf of the employer or employees is an appropriate person. Clearly, it would not be acceptable for employers to send along junior employees of no standing to be their representatives. However, we recognise that the most senior person may be unable to attend all meetings themselves, especially if the organisation is a large one.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Will the Minister explain when a junior employee becomes a senior employee?

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

I hope to. If not, I shall return to the subject.

An appropriate employer representative is defined in subsection (6) of new section 238B as a person who has the authority to settle the matter on behalf of the employer, or a person authorised by that person to make recommendations to him or her with regard to the settlement of the matter. That makes sense, and it ensures that the right people will be engaging in the conciliation or mediation process. On the union side, the appropriate person must be responsible for handling the matter subject to conciliation or mediation on behalf of the union.

The second matter, set out at subsection (3), is whether the employer or union co-operates with the conciliator or mediator to make arrangements to set up meetings. That will ensure that employers and unions cannot use delaying tactics to put off such meetings. In other words, the law would make it clear that both parties must treat approaches by the conciliator or mediator as a priority, and they must treat them seriously and constructively.

The third matter, set out at subsection (4), is whether the employer or union carries out the actions agreed with the conciliator or mediator. The additional requirements of subsection (7) are designed to ensure that these actions are carried out in a timely manner.

The fourth matter, which is set out at subsection (5), is whether, at meetings with all parties present, the employer or union should answer reasonable questions. That formulation recognises that there will be occasions when either party should be entitled to refuse to give a response to a question. For example, neither party should be required to divulge confidential information about individuals, or about the bottom line in its negotiating strategy. All those provisions are sensible. They map out the basic procedural features of conciliation or mediation.

Subsections (8) and (9) of new section 238B concern the evidence that conciliators or mediators may give to tribunals. We recognise that they may be required to give evidence. After all, no other person is as well placed to know what went on. Moreover, the conciliator or mediator has no vested interest. Their evidence must, therefore, carry particular weight. However, the work of conciliators and mediators is based on trust. Respect for their impartiality and professionalism is essential. Most are either ACAS officials or, in the case of mediators, individuals appointed by ACAS. In order that trust be maintained, the parties must know before they enter the process that confidential information passed to the service provider will not be revealed. Further, it is not appropriate that the service provider should give a subjective opinion, however professionally derived, on the behaviour or reasonableness of either party. We need to place some limits on the evidence that conciliators or mediators must provide.

Subsection (8) therefore ensures that case notes taken by service providers will not be admissible in evidence. The service providers are also required not to give evidence on anything without the consent of the party who communicated it that in their judgment would mean divulging either commercially sensitive information, or information as to the position of the party on the matter subject to the conciliation or mediation. Nor can they be required to offer an opinion as to the reasonableness of the questions that any party was asked at a meeting.

The net effect is to limit the evidential role of the conciliator or mediator to the provision of the essential factual information relating to a case. It will be for the tribunal to assess the reasonableness of the parties' behaviour, based on that factual information and the arguments advanced. If we did not make such a provision, the vital work of ACAS might be undermined. Parties might become reluctant to use those key services.

New clause 7 will improve the operation of the law. It makes it clear that parties must engage in the conciliation or mediation process once they have chosen to go down that path. They should not be allowed to sit out meetings or pay lip service to the process. The new clause will help the mediator and conciliator in their work, while preserving essential safeguards. It will give them the best opportunity, often in difficult situations, to help the parties to find a settlement to their disputes. I therefore commend the new clause to the Committee.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Good morning, Mr. Forth. Although we welcome the Government's intention to bring forward an amendment on intimidation, it is unfortunate that it will not happen until Report, not least because it may involve some sensitive areas that all sides will want to consider carefully. However, I hope that the Government will publish their proposals as soon as possible rather than immediately before Report.

The Minister sent a letter on new clause 7 and the other new clauses that we shall be considering to my hon. Friend the Member for North-West Norfolk on 25 February, with a note saying that he had copied the letter to other members of the Committee. Unfortunately, I did not see a copy until yesterday. It is particularly unfortunate in view of the complicated nature of the new clauses. Other interested parties such as companies, the CBI and trade unions will not have had a chance to see the new clauses and to comment on them. A review of the new clauses will take place following the Bill's Committee stage.

New clause 7 amends section 238A of the Trade Union and Labour Relations (Consolidation) Act 1992 relating to unfair dismissal claims in cases where the employer was conducting a lock-out, or the employee was taking part in industrial action. According to the section as it currently stands, an employee can claim unfair dismissal if the reason for the dismissal is that he took protected industrial action within the period of eight weeks. An employee can further claim unfair dismissal in cases where the dismissal took place after the end of that period if he

had not stopped taking protected industrial action before the end the eight-week period and if the employer had not taken such procedural steps as would have been reasonable for the purposes of resolving the dispute.

In determining whether an employer has taken those steps, regard has to be had to various matters, including whether the employer—or a union—has unreasonably refused the use of conciliation and mediation services. The Minister went into that in some detail. New clause 7 adds further requirements that an employer must fulfil in relation to conciliation and mediation services if he wants to escape an unfair dismissal claim from his employees. That is yet another example of the ratchet effect throughout the Bill. It is invariably against the interests of the employer.

A tribunal has to have regard to certain issues such as whether employers and unions were represented by an appropriate person, whoever he or she may be. I am not entirely sure that the Minister addressed that, so I would appreciate it if he returned to that point. It must also have regard to whether they co-operated fully; whether they fulfilled any commitments given; whether they answered all reasonable questions; whether they kept to the timetable and so on.

Why was the new clause brought forward so late in the proceedings? It does not seem to me to have the political complexities of the new clauses that we will discuss later. The new clauses are procedural but they are the sort of provision on which it would have been helpful to have had input from outside parties. How often are the conciliation and mediation services used in section 238A-relevant unfair dismissal proceedings? Who would request those? What is their success rate? Has the Minister considered that there should be equivalent obligations for employees to participate in a reasonable manner with conciliation and mediation services? If they do not do so, should there not be some penalty such as them losing their right to claim unfair dismissal, or a reduction in compensation? As drafted, the new clause seems a bit one-way and against the interests of the company.

New section 238B(8)(b) states:

''the service provider must refuse to give evidence as to anything communicated to him in connection with the performance of his functions as a conciliator or mediator if, in his opinion, to give the evidence would involve his making a damaging disclosure''.

I have a problem with the phrase ''in his opinion''. Whether it would be damaging to disclose the information may be blatant—it may be blatantly commercially sensitive, for instance—but things may be more complicated than that, or the mediator may not know the reasons for the commercial sensitivity, in which case his opinion about whether that information is commercially sensitive will be irrelevant, because he will not realise the damaging effect that the release of that information could have.

As the Minister knows, I always try to be helpful in these situations. Why cannot there be some private pre-hearing in the tribunal in which the evidence and information that the mediator is likely to produce is

set out before all the parties in private? The employer would then have the chance to argue that the information that will be released in public is sensitive and the tribunal would be able to take an early decision on the status of that information.

It is not the role of a mediator to decide who is right and who is wrong, or to state which party to the proceedings has a case that is over the top. The mediator's role is not to decide things, but to mediate between the parties. That creates a problem with regard to the mediator giving evidence. The new clause tries to deal with that problem, but it does not do so adequately. A union might make ludicrous claims such as that mediation would be a useless procedure.

Let us take as an example the position of Mr. Scargill in the miners' strike. He refused to talk to management and made it obvious that he was using the strike as a socialist manifesto for direct action that went further than miners' pay scales. In such a situation, the employer could fairly say that mediation would have no purpose and that to go through with it because the legislation states that they must do so would be simply to go through with a game for no purpose. I am concerned that an employer in such a situation would still be victimised by the law. That is patently unfair. Can the Minister give his views on what the situation would be in such circumstances?

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

The hon. Gentleman is consistent in his views. It is worth while to talk about what we are trying to achieve, given the debate on clause 21. However, I will start by apologising to him if he has not received his letter. I will look into the matter. The letter should have got to him yesterday, as all the letters went out at an appropriate time.

The hon. Gentleman made a point about the lateness of the new clause. As he knows, Governments consult people. We have done that all the way through our consideration of the Bill. Copies of draft proposals are sent to bodies such as the CBI, the TUC and the Engineering Employers Federation so that they can comment on the issues that the Government are considering. That is appropriate.

The new clause is about resolving disputes. People's minds were focused by the Friction Dynamics case and issues about how the employer operated. The hon. Gentleman should remember that. As for taking reasonable steps, that option was always available under the 1999 Act. It got overlooked on many occasions as a way of resolving disputes. New clause 7 tries to set out clearly the obligations on both the employer and the trade union to act reasonably.

The figures show that 93 per cent. of strikes end within eight weeks, and it is worth noting that in the current industrial relations climate the figures for stoppages are the lowest since records began in the 1920s. I would therefore say that the employment relations environment is pretty good at present.

The hon. Gentleman asked me about the appropriate person, and I explained that, on the union side, the appropriate person is the official who is dealing with the dispute on behalf of the union and

who has authorisation from the union to handle negotiations. From the employer's side, the appropriate person is someone who carries the responsibility and the authorisation from senior colleagues to deal with the issues in the dispute. In the Friction Dynamics case, that did not happen, and the person in the meeting who left to go shopping was a junior person.

Mr Jonathan Djanogly (Huntingdon, Conservative)

It is not relevant whether the appropriate person is senior or junior. The question is whether that person is authorised.

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

Both sides must know that the person carries the weight of responsibility and authorisation during the negotiations. As I said, the provision existed under the 1999 Act and it aimed to ensure that people tried to resolve disputes, because no one benefits if disputes continue for any length of time. If disputes continue for a long time, there is a lot of heartache, and relationships are damaged even when those disputes are finally resolved. In my view, the role of the mediator and conciliator is vital, as is the independence of ACAS and ACAS-appointed mediators. That is why the clause aims to involve such mediators, but to retain their impartiality when they have to give evidence about the issues.

On the question of commercial sensitivity, the clause clearly spells out the roles of the mediator and conciliator. However, the hon. Gentleman makes a fair point about whether an individual mediator or conciliator has experience, and I will examine that issue, because it might be relevant if the tribunal stage is reached. I will get back to him on that matter. It is important that the conciliator or mediator examines the factual position and does not take a view either way. He seems to think that the weight is in favour of the employers rather than the trade unions, but that is not the case; both sides have responsibilities and obligations. Provisions are in place to ensure that both the employer and the employee are protected.

I also thank my hon. Friend the Member for Eccles (Ian Stewart) for his support.

Mr Jim Sheridan (West Renfrewshire, Labour)

Does my hon. Friend agree that mediation is the best and most practical way to proceed, rather than the current system, in which employees are told that they must return to work or be sacked? I am sure that a number of Labour Members will have tangible experience of that happening either to them personally or to people whom they know.

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

I agree entirely with my hon. Friend. He makes the point that I was trying to make: mediation is the sensible route to take, and it is in the spirit of what we are trying to achieve throughout the Bill. We want to promote the idea of consensus rather than an adversarial situation, and to try to bring people round the table. He makes an important point.

I believe that I have responded to most of the points made by the hon. Member for Huntingdon. If I have not done so, I am sure that he will tell me so, as he is prone to do. I accepted the point that he made about commercial sensitivity and will consider it further.

I have been informed that the letters went out to hon. Members in the Members' Lobby on 25 February: that may help the hon. Gentleman. I recommend that the new clause be included in the Bill.

Mr Jonathan Djanogly (Huntingdon, Conservative)

Briefly, Friction Dynamics may have been the reason for the introduction of the new clause, but I do not agree with the Minister that that is a reason for it to be included in the Bill, because it will affect other companies and other situations.

I hear what the Minister says about the provision of the letter, but I remind him that, even as it is, that letter does not contain any explanatory notes. I do not believe that any explanatory notes on the new clause have been provided, so there is a need for further review. Generally, I agree that mediation is the preferred option when sorting out industrial and many other disputes. However, the basis of mediation is the consent of the parties involved. Mediation without consent and a willingness to see it through will always fail. The problem with the new clause is that it forces parties into a situation that works best when there is consent.

Question put and agreed to.

Clause read a Second time, and added to the Bill.