Clause 31 - Non-completion of statutory procedure: adjustment of awards

Employment Bill – in a Public Bill Committee at 10:30 am on 18th December 2001.

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Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 10:30 am, 18th December 2001

I beg to move amendment No. 54, in page 36, line 34, leave out paragraph (d).

Photo of Joe Benton Joe Benton Labour, Bootle

With this it will be convenient to take amendment No. 55, in page 36, line 36, leave out paragraph (e).

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

Clause 31 deals with a penalty system for failure to comply with statutory procedures and a number of issues arise which I am sure Members on both sides will want to explore. That is probably best done on clause stand part.

I suspect that the amendments have been grouped for reasons of economy, not because there is a clear link between them. Amendment No. 54 seeks to leave out clause 31(5)(d), which says that the Secretary of State may by regulations

''make provision about circumstances in which a person is to be treated as not subject to, or as having complied with, such a requirement'',

that is, the requirement to undertake the statutory procedure. The amendment was tabled to probe the Minister as to the circumstances in which he intends to designate a person as being ''not subject to'' such a provision, or as ''having complied with'' it.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

A key part of the Bill is to ensure that procedures are used to try to resolve disputes. Clause 31 and the regulations made under it will encourage completion of the statutory procedures by enabling tribunals to vary an award if a party does not comply with the requirements of the procedure in question.

At the same time, we recognise that there will be occasions when it will not be appropriate or possible for a party to complete or even initiate procedures. One example would be where the applicant has suffered harassment and the person to whom she would have to complain has been implicated in the harassment claim. Another example would be where there was the threat of violence by either party. That issue was raised in an earlier debate. Serious illness could also make completion of the procedures impossible. Nor do we envisage that the statutory procedures should be used when the issue has been handled as a collective process.

When provisions are fleshed out in regulations, a balance will have to be struck between not allowing so many exemptions as to nullify the purpose of the clause and recognising that there will be circumstances in which it would be unreasonable or impractical to expect the procedures to be used or completed.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

The Minister has cited as one of the circumstances in which the provisions would not apply a situation in which collective procedures, rather than the statutory procedure, had been used. Is not the import of what we have just discussed in clause 30 that those collective procedures would be additional to and consistent with the statutory procedures? If so, it is not clear to me why he needs to exclude compliance with the statutory procedures. By implication, those would have been complied with because the broader and more extensive procedure that he has in mind had been complied with.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

Simply, if, for example, a grievance had been taken up by a trade union and represented collectively-whatever that grievance might be-it would be unfair on employers to expect each individual to go through the grievance procedure when the matter was being dealt with collectively with the employees. We do not want to duplicate the process and force employers to go through a procedure several times when the issue is collective.

A balance needs to be struck. We are determined to get it right, and we will consult on the regulations. I recognise that these are important issues, but I hope that I have given some flavour of what we expect from the provision to which amendment No. 54 refers.

Are we also debating amendment No. 55?

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

I am here courtesy of Nurofen this morning, but I will struggle through.

Amendment No. 55 attempts to remove the Government's ability to modify statutory procedures. However, I believe that the provision that it would delete is sensible and necessary. We have no intention of making wholesale modification of the procedures, but we need flexibility in case, when we come to make the regulations, we discover circumstances in which it would be sensible to adjust them.

Let me give the illustration for which the hon. Gentleman asked. We might want to allow for a delay in the disciplinary procedure should an employee under notice of dismissal make an application to a tribunal for interim relief while the procedure is taking place. In such circumstances, the outcome of the interim relief application would be crucial to the decision about the dismissal. That would require a modification to the procedure because under the procedure, the timing of the meetings is required to be reasonable. As hon. Members will know, interim relief is available where the tribunal thinks that the employer may have dismissed for certain reasons that are automatically unfair. Union membership is one example, as is the so-called whistleblower's act of making a disclosure in the public interest.

I hope that those examples give the hon. Member enough substance to be able to withdraw what is, as he said himself, a probing amendment.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 10:45 am, 18th December 2001

I am grateful to the Minister. His comments were very useful. However, I have to probe him a little further on collective dealing. Does the Minister propose that where a recognised trade union is negotiating on behalf of its members in a workplace, other employees who are not represented by the union would be prevented from raising a similar matter through the grievance procedure? Is that what the Minister has in mind? Can he assure the Committee that the availability of a separate procedure for collectively represented workers will not in any way exclude the rights of unrepresented workers in a workplace where such a procedure is taking place.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

It would depend on the issue. If there were a collective issue about the absence of a proper catering facility and the union was addressing that collectively with the employer, it would be unfair, given that a recognised union exists to deal with collective issues, to insist that the employer should deal with complaints about the absence of facilities individually as well. That is an important point, because I would not want to take away the rights to pursue a grievance of individuals who are not trade union members. We shall consider the point when we come to the regulations, but I hope that the hon. Gentleman understands the gist of what we are trying to do.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I do indeed understand the purpose that the Minister outlined. I am grateful to him for recognising the potential difficulty if the Bill deprived an individual worker of what he would regard as his rights. That would place the worker in an adverse position simply because some of his colleagues were pursuing a collective route to solution of a similar grievance.

I am glad that we have had the opportunity to flag up that concern. I am grateful to the Minister for undertaking to consider it. I hope that we can return to the point later in the Bill's consideration to ensure that we do not inadvertently create a group of second-class employees who have fewer rights than colleagues in a non-unionised workplace, simply because some of their colleagues are unionised. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I beg to move amendment No. 56, in page 36, line 45, leave out paragraph (b).

Photo of Joe Benton Joe Benton Labour, Bootle

With this it will be convenient to take amendment No. 57 in page 36, line 48, leave out paragraph (c).

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

Again, I suspect the grouping of these amendments is more in the interests of economy than anything else. Amendment No. 56 is a probing amendment, to seek the Minister's clarification of just what jurisdictions he has in mind. A list of jurisdictions is contained in schedule 3, and subsection (6)(b) gives the Secretary of State the power to make provision, excluding the application of clause 31 to proceedings, relating to claims of any specified description in relation to any specified jurisdiction. That is very widely drafted, and we are being asked to scrutinise a Bill that contains very wide regulation-making powers. It is appropriate to ask the Minister to explain just what he has in mind and why he thinks he needs that very wide power.

Amendment No. 57 reverts to a familiar theme and a debate that I guess we have already had in relation to another part of the Bill. It is about the power that the Minister is giving himself to define someone who is not an employee as an employee for the purpose of clause 31, and, indeed, to define someone who is not an employer as an employer. Without wanting to go round the loop of the employee-worker debate, I maintain that the power is unnecessary because if at some future stage the Government are determined to extend the definition of employee in general employment protection legislation, a general application change would have to be made to the primary legislation, although I do not know exactly how that could be done. Nevertheless, such changes would affect a wider body of legislation than this Bill.

It is unclear why the Minister needs to take a specific order-making power to deal with something that would arise only as part of a broader decision to change the boundary between employee and worker or the definition of who is subject to or benefits from the Bill and similar legislation. I am unhappy that he is taking a power to do something that could not be done by order if it were to apply generally. If the power was of narrow application to the clause, it would sit oddly with the Secretary of State's confirmation on Second Reading that the question of the worker-employee distinction would be part of the Government's broader review of employment legislation, which will, if she believes it necessary, lead to legislation during the course of this Parliament. I would be pleased to hear the Minister's views on those two subjects and an explanation on my last point.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

On amendment No. 56, schedule 3 lists the jurisdictions to which clause 31 applies. The probing amendment is searching for an example of where we may need the power that the amendment seeks to exclude so that that example may be addressed in the regulations, which returns us to the collective versus individual argument. For example, although unfair dismissal is one jurisdiction listed in schedule 3, it is unlikely to be possible to apply the statutory procedures to unfair dismissals arising out of industrial action because they arise out of a collective dispute. This example relates to a jurisdiction already listed in schedule 3, but subsection (6)(a) enables new jurisdictions to be added to the list. When and if we consider making such additions, it may well become apparent that the statutory procedures are suitable for some descriptions of claims that can be brought under the jurisdiction but not others. It is therefore prudent to be able to exclude the procedures from applying to particular descriptions of claim within a jurisdiction that might be added in future.

Prudence also drives us to oppose amendment No. 57. We have previously cantered round the worker-versus-employees course. It is sensible to retain the flexibility to widen the coverage of the clause beyond employees, should that be considered necessary in the light of next year's employment legislation review. The subsection that the amendment seeks to remove will give us the ability to implement the findings of the review if it recommends an extension of the clause to non-employees. The hon. Gentleman does not know how that could be done, and in that he is at one with me, but we should not pre-empt the outcome of the review. It may lead to changes in some areas, it may lead to no changes or it may lead to the type of blanket change to which he referred, which would have to be dealt with in other legislation.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

In my opening remarks, I should have asked the Minister to give a categorical assurance that he will not introduce an order under this subsection other than as a consequence of the comprehensive review about which the Secretary of State has spoken. He gave such an assurance the last time we discussed the worker-employee distinction, and if he can give us such an assurance now it would alleviate our concern.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

I am happy to give that assurance and hope that it enables the hon. Gentleman to withdraw the amendment.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

The purpose is served as regards amendment No. 57. We may have disagreements about the wisdom of putting such a provision in the Bill, but as long as the Minister uses it only in the context of the outcome of broader review, and as long as contentious issues will be debated and properly scrutinised following review, that is fair enough.

On amendment No. 56, the Minister has once again come up with a circumstance in which it may not be appropriate to apply statutory procedures, and I cannot disagree with him about the possibility of such a circumstance arising. However, it is unfortunate that a simple three-step procedure-some on the Labour Benches may argue that it is too simple-which will be implied and, I hope, spelled out in every contract of employment, will appear straightforward, understandable and comprehensive to an employee but may turn out to be full of all sorts of caveats and exclusions when he seeks recourse to it. Those will have been made by order and will not have been apparent from reading the Act.

I hope that the Minister agrees that that would be a reason for using regulation-making powers sparingly. Part of the attractiveness of having a simple procedure that applies to everyone in every case without exception is that it creates certainty and familiarity. I suspect that one thing that horrifies employers and makes employees reluctant or wary of pursuing their rights is the sheer complexity of wading through reams of statutes, regulations and orders to find out what applies to a case. I hope that the Minister will bear in mind that excessive use of the ability to exclude classes of cases or persons will undermine the purpose, which we broadly support, lying behind the introduction of a simplified procedure. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

In passing, I note that invitations from the Opposition to the Minister to set all aspects of Government regulations in aspic have so far been unsuccessful. I hope that he will tell the Committee that the review will now have to proceed apace so that we can unlock those aspects of the Bill.

The clause contains provisions to reduce, or increase, the value of an award depending on how statutory procedures have been complied with. In subsection (4) there is a duty to make a reduction or increase, but that is offset by

''exceptional circumstances which would make a reduction or increase of that percentage unjust or inequitable''.

I ask the Minister to reflect on the words ''exceptional circumstances'' and on whether the subsection would be better without the word exceptional. The turning point would then be the lack of justice or equity, rather than the exceptional nature of the circumstances. In some discrimination cases that appear before a tribunal, such as bullying cases, it is not necessarily reasonable to expect the person being bullied to pursue a complaint when the person making the judgment has been the source of the bullying. That applies where the bullying is of a fairly straightforward kind.

According to a survey by the Equal Opportunities Commission, in one third of sexual harassment cases the perpetrator is the line boss, and in a further third the perpetrator is a director or senior manager. In other words, those who sit in judgment at different points in the statutory process could be the perpetrators of such unacceptable behaviour. The clause need not be changed fundamentally, but the word ''exceptional'' is not appropriate, because although such a circumstance would certainly be ''unjust and inequitable'', it might not be exceptional.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 11:00 am, 18th December 2001

I shall want to say something about removing ''exceptional'' in a moment, but the hon. Gentleman's concern would surely be dealt with by exclusions that the Secretary of State is empowered to make under subsections (5) and (6). It would seem inappropriate to empower the Secretary of State to exclude cases such as those involving sexual harassment from a duty to comply with the procedure, and to overlay that power with the ability not to apply penalty provisions in a wide range of cases.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

I understand what the hon. Gentleman is saying. Of course, in any case he has persuaded the Minister to freeze the process for the time being. Therefore, even if the Secretary of State were minded to exclude sexual harassment from the provisions in the clause, the exclusion would not necessarily apply when the Bill is enacted.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

Let me make this point first, so that we can at least agree about what we differ on.

I am arguing not that sexual harassment should be excluded from the clause-in certain circumstances, its inclusion could be appropriate-but that a clear message needs to be sent about cases such sexual harassment and bullying. The hon. Member for Runnymede and Weybridge may be right to say that they could be dealt with under subsection (5), but the phrase ''exceptional circumstances'' has a ring that might not be appropriate, given what we know about the norm in such cases. Two thirds of the perpetrators of sexual harassment are line managers or more senior figures, and it could be argued that it would not be exceptional for certain individuals to want to fall outside the scope of the provisions.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

The hon. Gentleman seems to have interpreted the Minister's concession to me rather more widely than I did. In my view, the Minister has simply undertaken not to use subsection (6)(c) ahead of the Secretary of State's wider review. He offered no commitment not to use other regulation-making powers in the clause ahead of that review.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

I am sure that the Minister will be grateful for that interpretation.

Photo of George Osborne George Osborne Conservative, Tatton

The hon. Member for Manchester, Central (Mr. Lloyd) is absolutely right: according to Equal Opportunities Commission statistics, sexual harassment cases that do not involve the line manager or the ultimate boss are the exception. I am not sure whether the Minister said that he would exclude all sexual harassment cases from the relevant procedures, or only those involving line managers, bosses and so on. In any event, the majority of the latter will be excluded, as the hon. Gentleman says.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

The simple point that I am trying to make is that the Minister should perhaps reconsider using ''exceptional''. It is unnecessary because the driving force behind the subsection is the phrase ''unjust and inequitable''. Tribunals would be able to interpret cases, whether exceptional or not, in a common-sense way that is consistent with the intention behind the clause.

The point that I am trying to make is fairly simple. I hope that the Minister will consider it, although I do not expect him to offer a commitment now. It is important that we get such matters right, and it is also important that he re-emphasise a view that I know he holds, which is that the purpose of the clause is not to make life more difficult for the victims of bullying or sexual harassment.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I disagree with the hon. Member for Manchester, Central, in that removing the word ''exceptional'' would change the nature and operation of the clause. The intention behind it is to introduce an automatic penalty for failing to comply with the statutory procedure, and matters such as those to which he has referred by way of illustration could easily be dealt with through an exclusion from the requirement to use that procedure. The point of defining the area to which the statutory procedure must apply is to make it absolutely clear that an automatic non-discretionary penalty will be imposed on a party who fails to comply with that procedure.

I have no difficulty in understanding the hon. Gentleman's argument. In effect, he is suggesting that we sweep away the automatic penalty procedure and operate on a case by case basis in the light of justice and equity. That is a perfectly logical suggestion, but it constitutes not a minor change to the clause but a fundamental unravelling of the intention behind it. On balance, I should be very concerned if abandonment of the automatic surcharge principle and a resort to an inquiry into the justice and equity of charging various amounts were to become a more widespread procedure. Such a change would involve not merely the removal of a partially redundant word, as the hon. Gentleman seemed to suggest; but would be fundamental and would require in-depth debate.

Photo of Tony Lloyd Tony Lloyd Labour, Manchester Central

In any case, a tribunal would have a duty under subsection (4) to examine the equity and justice underpinning a waiver. I assume, however, that in normal circumstances the clause would kick in and the tribunal would exercise the right to increase or decrease the penalty as appropriate, subject to the test of equity and justice. My problem with the word ''exceptional'' is that it prescribes something over and above the question of equity and justice. The point is a narrow one, and time and experience will tell, but I hope that the hon. Gentleman and the Minister will consider carefully whether use of the word ''exceptional'' is necessary.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I am not sure whether we disagree-I think that we probably agree. I am not a lawyer, but I suspect that use of ''exceptional'' will prove significant in terms of the way in which the clause is interpreted. As the hon. Gentleman has suggested, a tribunal will not routinely look at the equity and justice of a surcharge that it is about to impose. As I understand it, it will be empowered to inquire into the equity or justice of making such a surcharge only in exceptional circumstances. I do not want to initiate a debate now about whether it would be better to have a system based on equity and justice rather than a standard tariff system, except in exceptional circumstances. I think it important, however, that the hon. Gentleman should recognise that what he proposes is not tidying-up or tinkering at the edges but a fundamental re-writing of the way in which the clause would work in practice.

I hope that the Minister will not say that he will consider what his hon. Friend proposes because the Bill, as has been said many times, is a delicately balanced package. Were the Minister to move in the direction in which his hon. Friend the Member for Manchester, Central seeks to persuade him, I suspect that it would change the balance of that package. As the hon. Gentleman has sprung his suggestion on the Committee, I have not considered it in great depth, but, intuitively, I would not want to concede on it readily without examining it in some detail. I hope that the Minister will give a robust defence of the wording in the Bill and will not be tempted to tell his hon. Friend that he will go away and think about his suggestion with a view to possibly taking it on board.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

I hope that I can reassure my hon. Friend the Member for Manchester, Central. The correct interpretation of the assurance that I gave to the hon. Member for Runnymede and Weybridge (Mr. Hammond) came from the hon. Gentleman himself. We seek to introduce a system of mitigation of between 10 and 50 per cent. for employers and employees who do not follow the system. That is not meant to deal with cases of bullying, violence and sexual harassment. The regulations themselves will make exceptions in those cases. To take the point that the hon. Member for Tatton (Mr. Osborne) made, those cases will be where, to follow the procedures, the employer or the employee-depending on the circumstances-would have to come into face-to-face contact with the person who had assaulted or bullied them.

We seek to deal with those cases in regulations, not through the ''exceptional circumstances'' subsection. That subsection provides for a tribunal to vary the mitigation below 10 per cent. if there are exceptional circumstances, and it will be a matter for the tribunal to decide on. The subsection covers all jurisdictions, but let us take unfair dismissal as an example. When we come to later clauses, we will find that if an employer fails in any way to implement the statutory minimum procedure, dismissal is automatically unfair and there will be a minimum of four weeks' pay in compensation to the individual concerned. The 10 per cent. mitigation comes on top of that.

However, in some, very rare, circumstances, the tribunal may decide that that amount is disproportionate. It might want to go below 10 per cent. because to apply 10 per cent. would be disproportionate for a small employer who had breached a minor part of the procedure. We think that that will be rare. The tribunal will not have discretion in this regard over bullying and harassment cases because procedures for those will be set out in a separate regulation.

My hon. Friend the Member for Manchester, Central raised an important point about the review, and he has raised that point before. I repeat the assurance that my right hon. Friend the Secretary of State gave on Second Reading that that review will commence early next year. With those comments, I hope that the Committee can agree that clause 31 stand part of the Bill.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I may have missed this technical point earlier, in which case I hope that the Committee will forgive me. Are the boosted awards-if I may use that shorthand phrase-intended to apply to the employment appeal tribunal as well as to the employment tribunal? I cannot see that the Bill says that. For example, could they apply if an appeal tribunal reversed a decision of an employment tribunal and brought in an award?

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

Perhaps I will dwell on that for a while and give my hon. Friend the answer later. His point about the employment appeal tribunal is a point of law. We are trying to deal with the statutory procedure for the majority of cases, but he raises a point about which I shall remain clueless for the moment, until I have another Nurofen. I will respond later.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 11:15 am, 18th December 2001

That is why I referred to, for example, an employment appeal tribunal overturning a decision of an employment tribunal. I am aware that employment appeal tribunals usually examine questions of law rather than questions of fact. Does that assist him at all?

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

It gives me no assistance whatsoever, but assistance will come from somewhere. I hope that my hon. Friend will agree that the clause stand part of the Bill; I will respond to his question later this morning.

Question put and agreed to.

Clause 31 ordered to stand part of the Bill.

Schedule 3 agreed to.