Clause 5

Employment Bill [Lords] – in a Public Bill Committee at 11:45 am on 14 October 2008.

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Conciliation before bringing of proceedings

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

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Clause 5 brings us on to the duties and powers of ACAS. At present, ACAS has a duty—I stress that word, “duty”—in certain circumstances to conciliate in cases where no claim has been presented. The effect of the clause will be to change that duty to a power.

It may be helpful to explain the context of this change, which is an important underpinning element of our package of changes to the dispute resolution system. As we have heard throughout this morning, ACAS has a good record of achieving settlement in the period after a claim is made to an employment tribunal but before the process of the tribunal hearing. Currently, it also has a duty to offer conciliation in certain cases that are capable of becoming the subject of an employment tribunal claim where both parties request it, or where one party makes a request and the conciliation officer judges that there is a good prospect of success.

This duty is not new; it has been on the statute book since the 1970s. However, during the 1980s in particular ACAS found that some employers were using this pre-claim conciliation duty simply to obtain an ACAS settlement, as the basis for a legally-binding agreement to underpin severance arrangements that had already been agreed without the involvement of ACAS. Also, the nature of the duty on ACAS to provide conciliation was such that it could lead to ACAS being asked to assist with cases that were never likely to become the subject of an employment tribunal claim, at the taxpayer’s expense. That was not the intention of the duty.

In response, the ACAS council decided that conciliators should interpret the duty strictly in the spirit that was intended, so that the pre-claim conciliation service would  be focused on cases that were otherwise more or less certain to become the subject of a tribunal claim. In turn, that had the consequence that ACAS steered away from actively promoting this service, even though it could be valuable. The number of pre-claim conciliations carried out since has been small; it has run at around 1,000 a year in recent years, making up less than 2 per cent. of the conciliation activity of ACAS.

The Government see clear benefits in making the conciliation services of ACAS more widely available in disputes that have not yet reached the stage of a tribunal claim but are likely to do so; making that change is an integral part of these reforms. If a dispute can be resolved before the parties set out their positions in a formal and legal way, that can save considerable time and costs for all concerned. A total of 85 per cent. of respondents to the consultation following the Gibbons review supported the proposal that ACAS should be given additional resources to provide such services.

I have already referred to the additional resources that the Government are making available to ACAS in order to achieve that aim. Those resources are considerable. However, we also think that it is appropriate to give ACAS the power to target properly pre-claim conciliation on those cases where it thinks that it can make the most difference and be the most valuable. That is really the purpose of the clause.

It will then be open to the parties in such cases to decide whether to use the service. Regardless of whether the parties take advantage of this pre-claim conciliation, if the dispute subsequently turns into a tribunal claim they will still have access to ACAS conciliation services in the post-claim period, in the usual way.

In short, we are trying to ensure that ACAS is able to manage effectively the new case load that we wish it to take on, without having to restrict the use of its services unduly and without having to transfer resources from other parts of its operation into an area where it has a duty to respond to every request. So we want more pre-claim conciliation; we have given ACAS more resources to achieve that, and we also want to give ACAS the power to use its discretion to apply those resources where they would be best used. That is the purpose of the clause.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

The clause deals with encouraging conciliation. I am happy to say that we agree with the thrust of these proposals. In the other place, there was significant debate on the relative merits of conciliation and mediation. Perhaps that was because many mediators were involved in that debate. I am not a mediator. I have since heard in a roundabout way that ACAS is generally not keen on mediation as a form of dispute resolution. There are certainly some circumstances in which mediation is a better way of moving forward than conciliation. Does the Minister agree with the claim that I have heard that ACAS steers clear of mediation when it should sometimes go in that direction? What is the Government’s attitude to mediation? If he thinks that there are situations where mediation would be more appropriate, how does he intend to promote it?

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Mediation is a perfectly fair and appropriate part of the armoury. I have not heard under the wire or on the grapevine that ACAS is somehow  reluctant to engage in mediation or is hostile to it. The question that has been in ACAS’s mind is the one that I raised in my opening remarks on the clause. It has a duty to carry out pre-claim conciliation, but it has no capacity to target that where it can be most effective. Therefore, that service and duty are not promoted. That situation ends up where we do not want to be, which is with less pre-claim conciliation than we would like to see.

The clause will free up ACAS and, at the same time, give it more resources. In clauses 1 to 7 we are attempting to create a system that provides the maximum chance for disputes to be resolved before they get to the door of the tribunal.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

Accepting what the Minister says, there is the facility to encourage people to follow the code of practice and adhere to proposals from conciliation. People must try to reach an agreement and will find themselves in a procedural anomaly if they fail to adhere to that agreement. Therefore, there will be the 25 per cent. penalty. Is that the Government’s intention?

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The Government’s intention is to encourage people to settle disputes outside the workplace. The code offers certain help in doing that by setting out procedures to be followed. As the introduction to the code says, dealing with these things informally can often help. That is a direction that we want to go in. Of course, we always have to balance that with the right of access to a tribunal. That touches on some of the amendments that we will discuss later.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley

I made a blunder in my question to the Minister. Would the Government consider saying in the code of conduct that if the conciliator suggests a figure and the employer or employee does not adhere to it, but does not get substantially more or less, there will be a procedural penalty? That is often the case with other judicial proceedings, although there are obviously no cost issues here. However, if the conciliator says that something is worth £10,000 and the employment tribunal then says that it is worth only £9,000, could there be a procedural penalty for the employer or employee?

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

I am not sure whether that would constitute a procedural penalty. I do not want to place myself in the shoes of the tribunal chair. I have no doubt that tribunal chairs will look at such matters, take into account efforts or proposals that have been made at the conciliation phase and consider everything in the round. With this clause, we want to maximise ACAS’s effectiveness by giving it the discretionary power to target its resources on the conciliation cases where it can have most effect with the increased budget that has been provided by the Government.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.