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Employment Rights: Compromise Agreements

– in the House of Lords at 2:48 pm on 30th April 2002.

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Photo of Lord McCarthy Lord McCarthy Labour 2:48 pm, 30th April 2002

asked Her Majesty's Government:

To what extent conciliation officers of the Advisory, Conciliation and Arbitration Service have facilitated the negotiation of compromise agreements as a result of which employees have agreed to waive their future employment rights against their employer in exchange for stated improvements in existing or offered contract terms.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, conciliation officers do not facilitate the negotiation of compromise agreements referred to in Section 203(2)(f) of the Employment Rights Act 1996. However, if we extend the noble Lord's use of the term "compromise agreement" to refer to any "general release" agreements, then conciliation officers do facilitate the negotiation of conciliated settlements of proceedings under Section 203(2)(e) of that Act.

But ACAS policy is not to facilitate settlements under which the employee would be waiving his future employment rights. We are not aware that any such conciliated settlement has ever been facilitated. Indeed, the Government's view is that such an agreement would not fall within Section 203(2)(e) and would therefore be void and unenforceable.

Photo of Lord McCarthy Lord McCarthy Labour

My Lords, I thank the Minister for his reply. However, it does not help in relation to the concerns about Clause 39. If it wanted, ACAS could make such agreements. It may be all right for ACAS to make them, but it will not be all right for employers and workers to make them on their own. The Government said in Grand Committee that they do not want such a situation, so why not make it illegal on the face of the Bill?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, I can perhaps bring my noble friend some good news. I know that he has some concerns about the scope of the compromise agreements and particularly about Clause 39 of the Employment Bill. In the debates in Grand Committee I promised to consider the points that were raised, as I have done. I can now announce that the Government have decided to bring forward an amendment at Report stage of the Bill to delete Clause 39 on compromise agreements.

Our reasons for doing so are twofold. First, although we continue to believe that any agreement that tends to compromise away an employee's future rights would not be a valid agreement, we recognise that there is some degree of uncertainty and recent case law has done nothing to remove that uncertainty.

Secondly, and more importantly, we recognise the risk that although such an agreement would, in our view, be invalid, an employer may none the less attempt to persuade his employee to sign such an agreement. If that happened the fact that its legal validity was highly questionable would not alter the fact that having signed the agreement, the employee may then be deterred from going to the tribunal in the future in the belief that he no longer had a right to do so.

That concern was raised in Grand Committee by my noble friends Lord Gladwin of Clee and Lord Davies of Coity. As I made clear during that debate, the Government are determined that no employee shall be deterred in that way. Therefore, we have concluded that we cannot risk Clause 39 of the Employment Bill being so misused and we shall delete it from the Bill.

Photo of Baroness Miller of Hendon Baroness Miller of Hendon Conservative

My Lords, does the Minister recall that in the White Paper, Fairness at Work, the Government said that individuals will continue to have the right, if they so wish, to make agreements with their employers. That right was enshrined in Section 17(4) of the Employment Relations Bill 1999, which was the result of an amendment that I moved and eventually it was accepted by the Government.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, there is no doubt that employees will continue to have the right to compromise agreements. This matter concerns whether the compromise agreement can be extended to cover other acts that have taken place previously.

Photo of Lord Razzall Lord Razzall Liberal Democrat

My Lords, I welcome the undertaking given by the Minister to withdraw Clause 39 from the Employment Bill at Report stage. For the benefit of those Members of your Lordships' House who did not have the pleasure of attending 10 days in Grand Committee on the Bill, as the Minister did, I ask whether he is now prepared to give any indication as to other representations that he has reconsidered? Perhaps I can add a cheeky supplement: is there any particular reason why he does not give the noble Lords, Lord McCarthy and Lord Wedderburn, credit in relation to Clause 39?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, I am happy to say that the noble Lords, Lord Wedderburn and Lord McCarthy, raised the issue. While we do not agree with the particular legal interpretation that they put on the matter, they were the people who raised it. However, the point raised by the noble Lords, Lord Gladwin of Clee and Lord Davies of Coity, was most important, because they drew attention to how the clause could be misused, even if it was not legally valid and that persuaded us. I shall not give any other points of information on the Bill.

Photo of Lord Davies of Coity Lord Davies of Coity Labour

My Lords, I welcome the statement made by the Minister that Clause 39 is no longer to be contained within the Bill. That is a sensible approach, given that we have worked hard over a long number of years—going back to the times of the Truck Acts—in order to secure employment rights for people whether in relation to unfair dismissal, discrimination, unfair selection for redundancy, or unlawful deduction of wages, all of which could have gone because employees would not have been entitled to take those problems to an employment tribunal. Does my noble friend agree that, if the clause had remained in the Bill, compromise agreement would have been inappropriate and surrender agreement would have been more appropriate?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, I should repeat that our legal interpretation is that even the recent case of BCCI v. Ali does not affect this essential point. While it was a COT3 agreement, it was also a common law claim. The Law Lords did not address this particular situation, which is the ability of a compromise agreement to compromise future claims arising from a breach after the signing of an agreement. That was not relevant and that is where the concern arises mostly. Nevertheless, as the noble Lord made clear in Grand Committee, it could be abused, which would be intolerable if people's future rights were in any way barred due to compromise agreements.

Photo of Lord Tebbit Lord Tebbit Conservative

My Lords, can the Minister say why he considers that it is the business of the Government to prohibit a free, working man from selling an asset that he possesses to his employer for his own gain? Why is that the Government's business?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, it is absolutely fundamental, as these rights are in statute, that employees should not be subject to any kind of bullying or pressure from employers that would lead to compromise agreements which would mean that those rights were surrendered. They are rights that are conferred on individuals by Parliament and they should not be sold; nor should employees be brought under pressure in that way.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, does my noble friend agree that the length of time spent in Committee on this Bill in your Lordships' House has been well worth while and that had my noble friends not drawn the Government's attention to Clause 39, problems could have arisen?

Photo of Lord Geddes Lord Geddes Conservative

My Lords, has it now become government policy to use Question Time in your Lordships' House to announce decisions about a particular Bill that is still in the course of discussion and consideration by this House? Is that not an abuse of Question Time?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, as my noble friend had raised his Question, it was appropriate and in the interests of the House that I should say what the government action would be on Report. I was not in any way saying what this House would decide when it came to Report stage; merely that that was the Government's action. If I had concealed that fact when such a question was asked, I could have been attacked for not being frank with the House.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, will this welcome concession include any further attempt to deter employers from persuading employees to waive their rights to statutory sick pay by threat of dismissal, thereby forcing them to come to work when unfit to do so, to the considerable and unnecessary cost of the National Health Service?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation)

My Lords, my Answer was about Clause 39 and specifically about this particular kind of compromise agreement. It concerns a rather modest part of the Bill and it was right to take it out. I spoke solely about that.

Photo of Lord McCarthy Lord McCarthy Labour

My Lords, I want to thank the Government for this—

Noble Lords:

Order, order!

Photo of Lord McCarthy Lord McCarthy Labour

My Lords, one can have credit or influence and if one has influence one does not need credit.