Clause 23 - Inducements relating to union membership

Employment Relations Bill – in a Public Bill Committee at 10:30 am on 5th February 2004.

Alert me about debates like this

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

With this it will be convenient to discuss the following amendments:

No. 40, in

clause 23, page 20, line 28, leave out 'or main'.

No. 41, in

clause 23, page 20, line 40, at end insert—

'(6) It shall be a defence for the employer if the worker has asked for an inducement not to be a member of a trade union or to take part in its activities.'.

No. 43, in

clause 23, page 21, leave out lines 6 to 9.

No. 44, in

clause 23, page 21, line 17, leave out 'or main'.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

The clause concerns inducements and detriments in respect of membership of independent trade unions. Proposed new section 145A replaces section 145 of the 1992 Act. It states:

''A worker has the right not to have an offer made to him by his employer for the sole or main purpose of inducing the worker''.

I ask the Committee to focus on amendments Nos. 39, 40 and 44. They would leave out ''or main''. The reason for the amendments is that the phrase ''sole or main purpose'' could be ambiguous. It does not distinguish effect from purpose, and its consequences go significantly further than the Government's stated intention, published in the DTI's consultation document on the 1999 Act, of prohibiting inducements or bribes being made of trade union members. The consultation document noted that employers often enter contractual arrangements with individual employees that contain different terms from the provisions of a collective agreement.

Will the Minister say how the clause will enable an employment tribunal to decide whether an employer's offer of arrangement—an offer that contains different terms from the provisions of a collective agreement—could be considered to have as its main intended purpose an inducement for the employee to give up certain statutory rights? Is it not entirely a subjective decision? I point out that there has been much debate and discussion on how judgments of the European Court of Human Rights should be incorporated into United Kingdom law. The ambiguous wording does not offer clarity or reduce uncertainty.

Amendment No. 41 would insert a new subsection in proposed new section 145A. It states:

''It shall be a defence for the employer if the worker has asked for an inducement not to be a member of a trade union or to take part in its activities.''

That would give the employee the right to request arrangements that contain different terms from the provisions of a collective agreement. I do not see how anyone could disagree with such a provision.

It is easy to forget that flexibility in the labour force is good not only for employers; it is often sought by employees who need a more flexible way to work. Above all, often, employees want the freedom to decide their own working times and conditions. That is in line with what the Government are trying to achieve with the right to flexible contracts. We have heard much talk over the past few months about the work-life balance, with an emphasis on flexibility and on employees having more choice. I know that hon. Members on both sides of the House have been following that debate carefully. Indeed, there is general consensus on the subject.

Amendment No. 43 would leave out subsections (1) and (2) of proposed new section 145D, on consideration of complaints. Subsection (1) states:

''On a complaint under section 145A it shall be for the employer to show what was his sole or main purpose in making the offer.''

Subsection (2) states:

''On a complaint under section 145B it shall be for the employer to show what was his sole or main purpose in making the offers.''

Given the disagreement over the best way to incorporate the Wilson and Palmer judgment into UK law, the Opposition feel that making employers responsible for showing their sole or main purpose goes a long way beyond the ruling of the European Court of Human Rights. Making employers responsible for proving their innocence could be burdensome, particularly to smaller companies. As we saw from statistics given by officials on Tuesday, many companies with between 21 and 50, 75, 100 or 150 employees will find the extra demand somewhat burdensome.

It is a slightly complex grouping of amendments but, in a nutshell, amendments Nos. 39, 40 and 44 would remove ''or main''. I have also explained amendments Nos. 41 and 43.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

I recognise that the Bill goes a long way towards preventing employers from bribing staff out of union representation. I have plenty of anecdotal evidence in my constituency of employers who carry out such practices and offer different employees bonuses, dependent on their status in the company and whether they wish to join the trade union. The Bill goes a long way towards changing the law and reflects the judgment in the European Court of Human Rights. It offers union members a positive right to access the services offered by their union, but makes it clear that employers can still offer individualised contracts if they so wish as long as they do not require as a pre-condition the giving up of union representation.

The only area that gives me some cause for concern is the phrase ''sole or main purpose''. I suggest that that is somewhat too strict a test to give workers the proper recognition and protection that they need. I urge the Minister to consider seriously taking out the words ''sole or main''.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

This is a new provision, unlike most of the provisions in the Bill. Therefore, it deserves to have a certain amount of time spent on it. Clause 23 would introduce new provisions to give workers the right not to have offers made to them where the employer's ''sole or main purpose'' is to induce the worker to do or not do certain things, such as become a member of a union or take part in its activities. If a worker feels that his rights under the clause have been breached, he can apply to an employment tribunal within three months of the alleged inducement. Fines for the company are involved.

The Bill is strictly drafted. In essence, the employer may have another legitimate reason for offering an inducement to the workers, such as to reward high performance or offer bonuses. Workers may deserve to be given bonuses for their hard efforts. The drafting could be interpreted in such a way that it, in effect, stopped a company from managing effectively and offering incentives to individuals, so that they do their best for themselves and for the company.

We suggest that the employer should be criticised only if their sole purpose is to induce the worker out of union membership or involvement and that the clause should not include the ''main purpose'' test. The clause could lead to hard-working, successful, innovative employees not having their contributions recognised.

In certain circumstances, companies would have to weigh up the extent to which they were inducing legally or illegally. The impact would be that companies said that they would not go down the route of offering incentives but deal only with the union. That may be the object as far as certain hon. Members are concerned—I do not know. However, it would be a negative move and a throwback to the way in which things were done years ago. It is not the modern way to do things and it would cut the ability to incentivise. It would also go directly against this Government's claim to be looking to increase productivity and enterprise in the economy.

Unless it is applied more directly, this measure will go against what it is intended to do. There are wider issues, to which my hon. Friend the Member for North-West Norfolk and I shall refer in the stand part debate.

I have just been speaking to amendments 39, 40 and 44. Amendment No. 41 inserts a defence for the employer if a worker has asked for an inducement not to be a member of a trade union, or to take part in its activities. If the Government are going to be insistent and to ignore what I have been saying in relation to the other three amendments, which I feel may be the case but we live in hope and wonder, amendment No. 41 becomes even more important. As things stand, the company and the worker could do a deal relating to the worker's pay and conditions. People are entitled to do such deals with their bosses.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I wonder whether the hon. Gentleman can explain why a worker who is a member of a union would go to an employer and ask for an inducement not to participate in union activities or to be a union member. Would it not be much simpler for that individual simply to withdraw from the union? We do

not have recognised closed shops any more. It is the right of someone to belong to a trade union or not to belong. Can the hon. Gentleman explain why that amendment is necessary?

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

It is necessary because the issue is not just straightforward membership or non-membership of a union but the services that a union provides. There is a series of issues concerning whether what the employee is doing with the company has a negative impact. It is not straightforward. My concern is that those complications will make a company less willing to deal directly with the worker and put in place, for example, a bonus package for workers who do a certain amount—

Mr. Tynan rose—

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

The hon. Gentleman is going to help me out, I see.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I hope that I can help the hon. Gentleman. Obviously, if a member of a union were acting in a detrimental fashion to the employer's business, I would expect the union to ensure that that ceased. Therefore, I cannot understand the hon. Gentleman's explanation. Can he try again to indicate why a trade union member would not simply resign from a union and the services it provides, and just act as an employee with the employer?

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

Yes, I think I have found the relevant provision. Proposed new section 145A states that the worker has the right not to have an offer made to him by his employer inducing him

''(a) not to be or seek to become a member of an independent trade union,

''(b) not to take part, at an appropriate time, in the activities of a independent trade union''—

so it could be a one-off—

''(c) not to make use, at an appropriate time, of trade union services''—

I am not entirely sure what that means, and I am sure the Minister is going to advise us when we come to stand part—and

''(d) to be or become a member of any trade union or a particular trade union'',

so there is a range of things. Frankly, I do not know what half of them mean.

The point is that the company will be dissuaded from incentivisation. That may play very nicely into the hon. Gentleman's agenda—[Interruption.] It may or may not, I do not know, but it is negative, and contrary to what the Government have said their policy is meant to be. However, I want to move on.

As things stand, although the company and the worker could do a deal, the company could then be taken to court and fined, even where it is the worker who does the inducing. I know the hon. Member for Hamilton, South wants a reason why the worker would want to do the inducing, but that is not for me to say—that is for the worker to decide at the appropriate time. If the worker did do that, the company would be liable.

Suppose that the union does a deal with the company, which involves recognition of several people getting bonuses as part of a wider pay settlement, and that deal falls away within the three-month claim period due to a fault of the union. Will the Minister clarify whether the clause would apply in that situation? Could the company be fined £2,500?

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister 10:45 am, 5th February 2004

A key issue in this matter is the European Court of Human Rights judgment on the grounds of freedom of association. It said that the law does not prevent the employer from offering inducements to employees in the group to persuade them to surrender their collective representations and instead have their terms settled by negotiations. Does my hon. Friend agree that there is a conflict between freedom of association and freedom of the individual? He has spoken a lot about the freedom of the individual to be incentivised to look at a bonus package. Under the European convention on human rights, there is an inherent conflict between that and the freedom of the individual to make whatever arrangements he or she sees fit.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

My hon. Friend makes a good point, which I was going to touch on in the stand part debate. I want to be sure that if the union does a deal with the company, part of which is the recognition of certain bonus arrangements, and in the following three-month period the worker decides that that was an inducement, that cannot be used against the company.

I move on to amendment No. 43, which would remove subsections 145D(1) and (2). They reverse the burden of proof, as the employer will now have to show that its sole or main purpose in making the offer was not to make an inducement. That is the reverse of what is normally the case. In such a situation, it would be the worker taking the employer to a tribunal. Should it not be for the worker to prove that he was induced to leave the union rather than for the company to show that it did not make an inducement? This measure turns the normal legal process on its head by reversing the burden of proof. I am interested to know why the Government took that point of view.

The measure again shows how the Government use the law to make employers out to be the bad guys. They must prove their innocence, although that is not normally the case. That principle is important because, regrettably, the measure sets the tone for the legislation.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I thank hon. Members for their contributions to this complex debate. I will do my best to explain the Government thinking in relation to the amendments proposed by the hon. Member for North-West Norfolk.

I will start by looking at amendments Nos. 39, 40 and 44, which seek to amend the key rights provided by clause 23. The clause stems from the 2002 judgment of the European Court of Human Rights in the Wilson and Palmer case, which held that aspects of our trade union law breached article 11 of the European convention on human rights on freedom of association. Among other things, clause 23 makes it

unlawful to offer union members a bribe to forego key union rights. It was precisely such behaviour that gave rise to the Wilson and Palmer case, in which workers were offered cash inducements to have their contractual terms determined outside the scope of a collective agreement.

In drafting the clause, we have sought to create a clear entitlement for union members to use the services of their union. No longer will it be possible for individuals to be punished by their employers for asking their union to make representations on their behalf. That is a major advance.

The clause is long and complicated. It inserts six new sections into the 1992 Act, which is the main Act concerning the rights to trade union membership. The amendments in the group directly affect three of those new sections, namely new sections 145A, 145B and 145D. I hope that it will be helpful if I explain what each of those new sections does.

Proposed new section 145A deals with bribes to workers to relinquish their individual rights to union membership and to take part in union activities. It creates a new right for workers not to be offered bribes by their employer for the sole or main purpose of inducing them either to leave or not to join a union. I shall return to the points that my hon. Friend the Member for West Renfrewshire raised earlier.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I have noticed the Minister's repeated use of the word ''bribe'', which is not mentioned in the legislation at all.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Order. It is interesting that great minds think alike. I have just asked the Clerk the same question. I do not see the word ''bribe'' in the provisions. I am not qualified to say whether a bribe is an inducement, but can we please stick to the wording of the clause?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Let me respond, Mr. Stevenson. I agree and I shall try to stick to the word ''inducement'', although ''bribe'' was not a Freudian slip.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I think that that sets out where the Government and Labour Members are coming from. The cat is out of the bag.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Order. The point has been rightly made: the word ''bribe'' does not occur either in the amendment or in the clause. Can we stick to the words in the clause please?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I shall do my best. I do not think that I need to respond to the hon. Member for Huntingdon.

We are dealing with inducements to workers to relinquish their individual rights to union membership and to take part in union activities. Proposed new section 145A creates a new right for workers not to be offered bribes by their employer for the sole or main purpose of inducing them either to leave or not to join a union. It also creates similar rights not to be induced to forgo participation in union activities or the use of union services at an appropriate time. Proposed new

section 145A(2) provides a definition of ''an appropriate time'' that is already used by the 1992 Act in a similar context. In view of the existing law relating to rights not to belong to a union, the new section also contains similar provisions on inducements to be or become a union member.

Proposed new section 145B deals with inducements to forgo collective union entitlements. It creates a right for members of recognised unions not to be offered inducements by their employers with the sole or main purpose of ensuring that any or all their terms of employment will no longer be determined by collective agreement. The new section deals with the circumstances that gave rise to the Wilson and Palmer cases, in which Mr. Wilson and others employed by Associated Newspapers were offered £1,000 to enter individualised contracts that could not be negotiated by their union.

Proposed new section 145D deals with how the employment tribunal should consider evidence about the employer's sole or main purpose if a complaint arises. New section 145D(4) sets out two factors that the tribunal must take into account when determining the employer's purpose. The first factor concerns whether there is any evidence that the employer has recently taken steps to marginalise the union by downgrading the status of collective bargaining. Plenty of such evidence was available in the cases of Wilson and Palmer in the 1980s to suggest what their employers were really trying to achieve. The second factor relates to evidence that offers have been made to particular workers only to retain or reward their services. The provisions therefore cover evidence that the employer's actions concern key workers, who by definition are likely to be a minority of those covered by collective agreements. The employment tribunal must take such evidence into account.

Each of the proposed new sections that the group of amendments deals with refers to the sole or main purpose of the employer in making such offers. Each of the amendments removes the words ''or main''. The effect of that would be to ensure that inducements would be unlawful only where the employer had one purpose in offering them and where that purpose was prohibited. That would be a major weakening of the new rights.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

I know that the issue has already been raised, but can the Minister explain the purpose of including ''sole or main'' in the definition? If the clause referred simply to the employer's purpose in making the offer, it would clarify the situation beyond reasonable doubt, without restricting what the tribunal could consider.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Again, I hear what my hon. Friend says, but I hope that he will bear with me while I try to explain the issues.

The amendments would weaken the new rights that we are giving.

Photo of Michael Jabez Foster Michael Jabez Foster Labour, Hastings and Rye

Would they not do more than that? Would they not negate the reference to the employer's

purpose entirely, because it would be almost impossible to prove a sole purpose? There will usually be another explanation for an offer or inducement, so anything absolute would negate the entire clause.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Again, I have some sympathy with what my hon. Friend says. I am sure that further discussions can take place if he remains unconvinced by what I say.

Employers are likely to be motivated by several purposes when they offer inducements, and business decisions in the complex world of employment relations rarely boil down to one issue alone. It will therefore be simple for employers to show that at least one other factor was at work. Even if that factor was of minor significance and the employer's decision was basically driven by the desire to oust the union, the employer's actions would still be lawful under the amendments, and that cannot be right.

The amendments would drive the proverbial coach and horses through the new rights that we are creating, because bad employers would be able easily to breach those rights. In effect, in the light of the European Court judgment, we would be creating rights that were not compatible with the European convention.

The amendments would make it far too simple for the employer to interfere in the all-important relationship between a union member and his union. Our approach is to be preferred, because it makes it unlawful to offer inducements where the sole or main purpose is a prohibited one. That means that where the employer had only one, lawful purpose, the inducement would be lawful. Equally, where two or more purposes lay behind the employer's action, the employer would be acting lawfully where none of them was prohibited, or where the main purpose—say, to reward and retain key staff—was not prohibited. That approach provides the protections that we need. It also gives employers some necessary flexibility, which was a concern of the hon. Member for North-West Norfolk.

When the hon. Gentleman explained amendment No. 41, I had some difficulty understanding its purpose. It refers to matters dealt with in new section 145A, but it actually applies to new section 145B, which relates to matters not mentioned in the amendment. Regardless of whether the amendment is intended to relate to new sections 145A or 145B, my answer, in principle, will be the same.

It might help the Committee, however, if I briefly explain the different matters with which the two new sections deal.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

The Minister essentially asked for clarification of what the amendment relates to, and it relates to new section 145B(5).

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am grateful for that clarification.

As has been mentioned, new section 145A deals with inducements to forgo certain individual rights to union membership. Those rights fall into four categories, which are listed in new section 145A(1). They include rights to use union services, and rights not to belong to a trade union.

As I said, I am not sure that the hon. Member for North-West Norfolk was right about the amendment, but if it does apply to new section 145A, it is partial in its effect, so I suspect that it is defective. There is also an issue about the complex drafting.

New section 145B relates to the different matter of giving inducements for the purpose of inducing workers to give up collective bargaining, but it does not deal with behaviour in the real world. I know of no cases in which workers have approached employers asking for money to leave a union or not to engage in trade union activities, such as attending union meetings in their own time.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham 11:00 am, 5th February 2004

If the amendment were passed, we would see an awful lot of people doing precisely that, which is why it is a recipe for carnage in industry and why it goes against the principles of partnership that the Bill establishes.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

My hon. Friend makes the point well. I do not think that Opposition Members have thought this through. If people want to leave a union, they will simply do so. They are free to do that under the law and they need not involve the employer. In the unlikely event of a request, the employer will just say no. It is odd to include a provision in legislation suggesting that union members are likely to ask their employers for money in return for giving up their union membership. I am unconvinced that that extra defence is needed.

The amendment would make it easier for bad employers who initiated a campaign to ask the union to forego its rights. It is poorly worded and unnecessary, and will create scope for bad employers to abuse and undermine the entitlements that we seek to create in line with the spirit of the Bill.

Amendment No. 43 deals with how, should a complaint arise, the employer's sole or main purpose is to be ascertained by the employment tribunal—the point made by the hon. Member for North-West Norfolk. The section places on the employer the burden of demonstrating to the tribunal what its purpose was. That makes sense; nobody else can explain the employer's motivation.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

The Minister brushes aside the well-established principle of British law that if one takes somebody to court, one has to prove one's case, as though it is an irrelevance.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I do not see that it is relevant in the context of the spirit of the clause. Subsection (4) of new section 145D sets out two of the factors that a tribunal must take into account when determining an employer's purpose. The first is whether there is any evidence that the employer has recently taken steps to marginalise the union by downgrading the status of collective bargaining. The second relates to evidence that the offers were made to particular workers only to retain or reward their services. Of course, the tribunal may on occasion need to make difficult judgments about what was the employer's main purpose; we cannot get away from that. However, tribunals are well practised in making such judgments based on

their experience of employment relations. The guidance given by new section 145D steers the tribunal towards the type of evidence that is important in determining an employer's purpose. I am confident that the system that we have devised is workable.

Amendment 43 seeks to remove the burden of proof from the employer in cases in which there is a complaint under section 145B—the offering of an inducement relating to collective bargaining. That is in order to relax the responsibilities of the employer in that key regard.

It is obvious that employers know what their purpose is when they offer an inducement. It is only reasonable, therefore, to place the burden of proof on an employer to show what that purpose was. We have set out logical tests for how his purpose is to be decided. They ensure that where the purpose is other than one of the prohibited ones it will not be difficult for the employer to demonstrate that. I would add that a number of other statutory employment rights place the burden of proof initially on the employer. The most obvious is unfair dismissal, where the employer is required to show his reason for dismissing the employee and that he acted reasonably in dismissing the employee for that reason. The reasons for taking this approach are plain. In principle they are the same as those that make it sensible to place the burden on the employer in new section 145D. Only the employer knows what his full reasons for the dismissal were.

The amendments are unnecessary and go against the spirit of what we are trying to achieve. I understand where my hon. Friends are coming from with regard to ''sole or main purpose'', and we should be able to return to the definition. For now, I would ask the hon. Member for North-West Norfolk to withdraw the amendments.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I am disappointed in some ways with what the Minister has said. He has been hard on amendments Nos. 39, 40 and 44 and we are not happy about shifting the burden of proof. In the light of what he has said, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I beg to move amendment No. 42, in

clause 23, page 20, line 44, leave out 'three months' and insert '30 days'.

New section 145C, on which I hope the Minister will touch in a moment, concerns the time limit for proceedings. It states that

''An employment tribunal shall not consider a complaint under section 145A or 145B unless it is presented . . . before the end of the period of three months beginning with the date when the offer was made''.

That is a long time. The last thing that one wants is vexatious claims or unnecessary recourse to employment tribunals. There is little in the Bill or in the explanatory notes to explain the origin of the three months. Why is the period so long? Rather than three months, surely it would be better to think in terms of one month. The Minister talks of wanting the

legislation to be focused, clear and fair to all parties. In my submission, 30 days is perfectly reasonable.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I support amendment No. 42. It would decrease from three months to 30 days the time within which actions should be brought. The Bill provides that the tribunal can extend the time limit as it sees fit. With such adaptability, we believe that the initial period should be shorter. It is easy to say that there are similarities with unfair dismissal claims—they, too, have a three-month limit—but I do not think that such a similarity exists.

There is a big difference between someone being unfairly dismissed or sacked and someone being given an inducement, or what the Minister would like to call a bribe. With respect, Mr. Stevenson, I would not call it a bribe. There is a big conceptual difference, because in the latter case there is an ongoing relationship. In other words, the employee will continue working. It is in the best interests of all parties to deal with the situation as quickly as possible, so that people can move on. That cannot be compared with unfair dismissal, as a dismissed employee would need longer to prepare a case.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am grateful to Opposition Members for the spirit in which they have spoken to the amendments. I apologise yet again for not being able to accept them. I shall explain why.

The amendment seeks to reduce from three months to 30 days the time in which an individual may make a claim to an employment tribunal under the new jurisdiction. The hon. Member for Huntingdon hit the nail on the head when he spoke of the time scale allowed for unfair dismissal; it applies also to flexible working and the right to be accompanied. The limit for all is three months, and we think it entirely reasonable.

Another reason for preferring a three-month period is that it allows a reasonable time for individuals to consider their complaint. During that period, they can decide whether their complaint is fair and sound and, if so, to undertake the preparation work needed to bring a claim. It allows time also for another critical action—to raise the issue with the employer in the hope of reaching an amicable settlement and thus avoid the need for a tribunal claim altogether. It is not in anyone's interest to curtail such a period.

Photo of Mr John Lyons Mr John Lyons Labour, Strathkelvin and Bearsden

It is important that the Minister points out the danger that tribunal work would increase if the time were reduced to 30 days. People would have to decide very quickly whether to make a complaint, and three months would give them that opportunity. He was right to say earlier that three months is a standard time limit in the complaints system. For convenience, it is important to keep it.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I entirely agree with my hon. Friend. He makes the point clearly. I would ask the hon. Member for North-West Norfolk to consider what has been said. I hope that he will accept that the amendment does not help and I ask him to withdraw it.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

It was a probing amendment. I heard what the Minister had to say. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I beg to move amendment No. 45, in

clause 23, page 21, line 35, after 'be', insert

'up to a maximum of'.

We could be knocking on an open door; at least, we live in hope. The Opposition are pro-union, not anti-union. My hon. Friend the Member for Huntingdon is pro-trade union in his heart of hearts. New section 143E states that

''the award shall be £2,500 (subject to any adjustment of the award that may fall to be made under Part 3 of the Employment Act 2002).''

I want to make the figure more flexible. Will the Minister explain how the figure of £2,500 was arrived at, as there is little in the notes to enlighten us? The amendment would give the employment tribunal the flexibility and freedom to decide the level of award according to the circumstances of the case. After all, some cases will be more serious than others. In some cases, it will be perfectly obvious that the employer has breached the terms of the Act and behaved unreasonably, even aggressively, and in a discriminatory way. Surely, however, there will be other cases in which the employer's behaviour has in no way been as serious as another employer's, and in which a lesser award would be more appropriate? The amendment would give the employment tribunal some flexibility.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

One employer may lean towards inducement more than others, so if we want the clause to be flexible, would it not be beneficial to increase the £2,500 to something like £10,000?

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

That is a matter of opinion. The hon. Gentleman can table an amendment if he so wishes. I am saying that some employers may deserve the full fine, but others will have slipped up on a technicality and do not deserve such a fine. The clause is too rigid. We need a little flexibility and I hope that the Minister will accept the amendment. He is looking fairly sympathetic and I live in hope.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham

I am against the amendment, because it seeks to build in downwards flexibility and to reduce the award from £2,500, rather than to make a more flexible remedy available above £2,500. I refer to the Dave Wilson part of the Wilson-Palmer judgment in the Associated Newspapers Daily Mail case, which related to inducements made in 1989. At that time, the scale of the inducement was 4.5 per cent. of salary, which amounted to about £1,300 a year. In other words, after two years, without the addition of a pay rise, the £2,500 would be exceeded by the amount of inducement. If we want flexibility, we should not accept the amendment, but the Minister should closely examine the flexibility in the system whereby 15 years later, £2,500 would be less than two years' inducement received by Mr. Palmer in 1989. Opposition Members are approaching the issue from entirely the wrong side. The amendment should be withdrawn, and the Minister should consider the matter much more

carefully and not close the door on it. The remedy is entirely at odds with the inducements that could be offered at today's prices.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

I support the amendment. Conceptually, the fixed amount of £2,500 is wrong. The clause states that the award can be

''subject to any adjustment . . . under Part 3 of the Employment Act 2002''.

I am not entirely sure to what that relates. Am I right that that legislation has not yet come into force? Will the Minister explain to what it will relate and when it is likely to come into force? It is just stuck into the clause and it complicates the issue. There may be a situation where the inducement is a blatant bribe. The legislation provides for that. In such a circumstance, I can understand the tribunal awarding the full amount. However, as my hon. Friend said, the inducement could be marginal. Based on the Minister's own proposed wording of the main reason test, it may just tip over the balance. In that situation, it would not be fair for that employer to be charged the same amount as an employer who is being charged for blatant reasons. The clause does not provide for any flexibility; I think that it should.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 11:15 am, 5th February 2004

The hon. Member for North-West Norfolk said that I would be sympathetic towards his case. I am not. There are a lot of reasons for the way that I look, but being sympathetic was not one of them.

New section 145E, inserted by clause 23, specifies the remedies that tribunals can give when an employer breaches the rights contained in new sections 145A and 145B. Amendment No. 45 seeks to change those remedies significantly. Let me start by explaining the remedies that new section 145E establishes, which are various.

First, the tribunal must make a declaration stating that a breach has occurred. That puts the issue on the record and can be used by the union to discourage other members from accepting similar inducements.

Secondly, the tribunal must make a set award of £2,500. In effect, that is a fine. There was no precedent to use as a yardstick, but £2,500 is about half of the amount awarded by the European Court of Human Rights in the Wilson and Palmer case as compensation to the individuals for non-pecuniary damages. That is how we arrived at the figure of £2,500, although my hon. Friend the Member for Dagenham clearly makes the case for why that should be more significant. We believe that the fine would act as a significant deterrent to employers, especially in circumstances where many workers are offered inducements and could potentially make a claim. We also provide that any unlawful inducements received by the complainant do not need to be returned. Therefore, the total cost to the employer of his unlawful behaviour could mount up, which again adds to the deterrent effect of the system of remedies.

Thirdly, the £2,500 award will not be offset against any awards of compensation made under section 146 of the 1992 Act, which relates to detriment of trade

union-related rights. That arrangement ensures that a union member who refused an offer could receive the full £2,500 under the new jurisdictions and compensation under section 146 equal to the value of the inducement taken by others. It also ensures that the law treats those who refused the bribe and those who accepted it equally.

Fourthly, the remedies ensure that employers cannot enforce an agreement to make a contractual change where an unlawful inducement was offered. The amendment changes the set award of £2,500 to a variable one to be set by the tribunal up to a maximum of £2,500. The tribunal can therefore award anything it thinks fit between nothing and that maximum. The amendment does not state what factors the tribunal should take into account when setting the award. I suspect that that is a defect in the wording of the amendment.

We think that £2,500 is a reasonable deterrent; that is why we set that figure. It gives a clear signal in the law that such abuses are unacceptable. A variable award would send entirely the wrong message. Indeed, if an award were set simply at a level to compensate pecuniary loss, it might be very small indeed. The deterrent effect on employer behaviour would be minimal.

On the point made by the hon. Member for Huntingdon, the October 2004 regulations have been laid and they deal with the application of the statutory procedures. The Commons will be debating those shortly.

I ask the hon. Member for North-West Norfolk to reflect on his amendment and to withdraw it.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I beg to move amendment No. 46, in

clause 23, page 22, line 2, at end insert—

'(5A) Employers shall have the right to appeal against any decision by an employment tribunal to the employment appeals tribunal.'.

Amendment No. 46 simply inserts a new subsection into proposed new section 145E. Presumably, employers have that right of appeal in any event. Can the Minister clarify that? If they do not, they should. Can the Minister explain what rights of appeal the employer has if he cannot go to the appeals tribunal?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I cannot quarrel with the hon. Gentleman's intention to ensure an appeal right in respect of the important new rights that the Government seek to introduce under the clause. After all, when we come to clause 28, we shall see that it is possible for appeal rights to be overlooked when legislating. I offer him the reassurance that he seeks by pointing out that existing legislation already provides for a right of appeal to the Employment Appeal Tribunal on clause 23 rights. That is not in the Bill, but the effect of inserting the relevant rights into the 1992 Act is to apply a right of appeal automatically. Under section 21(1) of the

Employment Tribunals Act 1996, an appeal lies to the EAT on any question of law arising from the decision of a tribunal under the 1992 Act.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

Will the Minister clarify that the right of appeal would be either way?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

The appeal right applies both to individual claimants and to employers, entirely as it should. Like other rights of appeal to the EAT under employment legislation, that right provides for appeals only on a point of law. It is not for the EAT to establish the facts of a case, which is what employment tribunals do. The EAT's role is rather different—to consider whether a tribunal has correctly applied the law.

I quarrel with the nature of the appeal right that the amendment seeks to introduce. For one thing, it applies only to employers, which may undermine the ability of workers or employees to appeal. I am not sure that that was a deliberate intention. In addition, the amendment would give a wider role to the ETA than exists elsewhere in employment legislation, which is not desirable. Those points are technical, but I hope that the hon. Member for North-West Norfolk will accept the spirit of what we are trying to achieve and therefore withdraw the amendment.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

I am grateful to the Minister. Being told that the Bill does what one is trying to achieve anyway is as good as having one's amendment accepted, so 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 Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Before we start the debate, may I ask hon. Members to assist the Chair in not rehearsing the arguments that we had in our quite general debate on the first group of amendments? Clearly, the clause is important.

Photo of Henry Bellingham Henry Bellingham Shadow Minister (Business, Innovation and Skills), Shadow Minister

It is obvious that the Government had to address the Wilson and Palmer cases. However, as the Committee has seen from our amendments, there are some real concerns. I ask the Government to go back, not to the drawing board, but to have another go at drafting the Bill, because we do not feel that they have got it right. There are serious concerns about the reversal of the burden of proof, as well as about other issues, which is why we shall divide on the clause. The Government have certainly tried to address Wilson and Palmer, but they have not done so in entirely the right way. They should have another go.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham

Briefly, I will not cover the points that I made earlier about the remedies. As hon. Members have said, the issues are complex. I should like to raise some points about the Wilson and Palmer cases. In the Palmer case—the docks case—the employer's response was that what had been done was not an inducement against the union and had nothing to do with union membership but was an inducement to fashion flexibility at work. The ''sole or main'' provisions could still allow a certain flexibility of interpretation that undermined the rational objective of the entirety of the proposals. I welcome the fact that the Minister will keep the provision under constant scrutiny to ensure that the objective is not undermined by a particular interpretation of ''sole or main purpose''.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.