New Clause 2

Employment Bill [Lords] – in a Public Bill Committee at 2:45 pm on 16 October 2008.

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Enforcement of unpaid Employment Tribunal awards

‘(1) The Secretary of State shall by order make regulations to enforce the recovery, on behalf of the claimant, of any Employment Tribunal monetary award not fully paid by the respondent within forty-two days of the date on which judgment was sent to the parties, and for the recovery of all associated enforcement costs from the respondent.

(2) Regulations made under subsection (1) shall—

(a) identify organisations responsible for the recovery of awards under subsection (1),

(b) provide powers enabling organisations identified under paragraph (a) to recover awards and associated costs as set out in subsection (1),

(c) provide for the regulation of organisations operating under this section.

(3) Regulations under subsection (1) shall be made by statutory instrument.

(4) No regulations may be made under subsection (1) unless a draft of the instrument containing the regulations has been laid before and approved by a resolution of, each House of Parliament.’.—[John Hemming.]

Brought up, and read the First time.

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

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

Unless we get a more substantive response from the Government, the new clause is a key issue that will require a Division of the Committee.

In essence, the new clause looks at what would happen if someone did not pay the employment tribunal award. As it stands, there would then be a civil enforcement process. We will come to the fact that equality of arms is the key issue. A lot of the people who are trying to get money that has not been paid to them are in a challenging position, having to go to a civil court and go through that process. The new clause would put a duty on the Government to produce secondary legislation. We are not trying to specify in minute detail how that should be done—I would not be surprised if this proposal had been drafted by Citizens Advice, but I am not 100 per cent. certain, not having been involved at that stage.

People should recognise that there is a real problem here. The Government need to act. This is the right vehicle to create regulations enabling the enforcement process to be handled, so I would like to press new clause 2 to a vote, unless the Government pull some legislative rabbit out of the hat.

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

I put my name to the new clause on a probing basis, because important questions raised in the other place have not yet been answered. The Government say that they recognise that there is a need to address the recovery of awards, but they do not believe that direct enforcement is the way to deal with such claims. Will the Minister tell us what form enforcement should take instead?

The new clause deals with a problem that is often faced by those at the poorer end of the employment spectrum. It was originally tabled in the other place by Baroness Turner at the request of Citizens Advice, with the aim of dealing with the problem of non-payment of employment tribunal awards by rogue employers.

The current system is long and complex, and sometimes prohibitively expensive for those who have not been paid their award. There are, on average, some 15,000 employment tribunal awards made in favour of claimants each year, but Citizens Advice estimates that more than one in 10 does not receive their award. Citizens advice bureaux dealt with more than 1,000 cases last year alone, and Citizens Advice research also highlights the fact that nearly half those unpaid awards were for less than £2,000 and almost a quarter were for less than £1,000.

For those vulnerable workers affected, navigating the county court or High Court enforcement process can be a daunting challenge that involves a lot of time, stress and cost relative to the value of the award. Citizens Advice notes that many of those affected simply do not take their claims forward, that the impact on them can be devastating and that the total loss involved may be as much as £7 million per year. Rogue employers’ knowledge of the complexity of enforcement provisions means that they could see it as a commercial decision to avoid paying out, because, on balance, they might save more than they would be forced to pay out in the longer term.

The Government have said that they commissioned their own inquiry on this area, on the back of Citizens Advice. Will the Minister tell us what format the inquiry has taken and what results it has produced to date, bearing it in mind that the inquiry has been running at least from May?

There is a wrong here that needs to be recognised. I am interested to hear the Minister’s reaction to the question whether the new clause is the right way to go about that.

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

I would like to know what the problem is. At present, this is a straightforward issue of the judgment—the award—being registered in the county court and then enforced. There are problems with county court enforcements: often the employer does not have the money; it is a matter of the resources not being there. I cannot see how a new system—a new bureaucracy of enforcement—would help.

I want to discover how this new organisation would operate under the new clause. How would it differ from the current, relatively simple process of attaching an affidavit to the award and registering it in the county court? That is all that happens at the moment. Then there is the enforcement problem to consider. Is it being suggested that the rules under the new clause should be enforced in respect of criminal proceedings, such as an award in a magistrates court? What is the logic behind  the new clause that would make its new methods of enforcement different from those now available in the county court?

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 grateful to my hon. Friend for raising that important and valid issue. It has been raised a number of times with me by Citizens Advice, which has campaigned long and hard on it, and is campaigning for proper enforcement of tribunal awards. This is about not an extension of the law, but its enforcement.

In July, I met representatives of Citizens Advice with the Under-Secretary of State for Justice, my hon. Friend the Member for Lewisham, East (Bridget Prentice), to discuss the matter. I put on record my thanks to my hon. Friend for taking the matter so seriously, particularly in recent months as we have been discussing it with Citizens Advice.

As the hon. Member for Huntingdon said, the new clause follows on from a similar one tabled in the other place during earlier stages of consideration of the Bill. It would allow the Secretary of State to provide by regulation for an organisation or organisations to enforce employment tribunal decisions that remained unpaid on the due date, which is normally 42 days after judgment on behalf of the claimant.

As Lord Bach said in the other place, the Government recognise the need to do more. He laid out some steps that are being taken by the Ministry of Justice, which has responsibility for the issue. I will recap those briefly. First, there are measures in the Tribunals, Courts and Enforcement Act 2007 that, when implemented in the secondary legislation to which the hon. Member for Birmingham, Yardley referred, will allow unpaid awards and legally binding agreements brokered by ACAS to be automatically registered as country court orders so that the full range of enforcement options can be pursued.

Importantly, unpaid awards will be included on the register of judgments, orders and fines, which is often consulted by banks and credit companies when considering applications for credit. The Ministry of Justice is working to introduce those measures by April next year, which is the same date as the implementation date for the changes to the dispute resolution system which we have been discussing.

Secondly, the Ministry of Justice is undertaking research to explore the extent of non-payment. I appreciate that there has been research by Citizens Advice, which has been referred to, but the Government are carrying out research on the issue. The hon. Member for Huntingdon asked about the dates for that research. It started on 8 September and will report by 26 November. Citizens Advice has helpfully published its own research, which will contribute to that work. Taken together, the two studies will provide detailed evidence of the extent to which employment tribunal awards remain unpaid. That will give the Ministry of Justice a firm basis for considering what further steps are appropriate, bearing in mind the changes in the 2007 Act.

I have met Citizens Advice to discuss the issue and I understand the difficulty for vulnerable workers. It is important that the Committee is aware that there is an exemption from court fees for claimants in receipt of income support and the other key means-tested benefits, and for those whose annual income is below a certain  threshold. That includes fees for enforcement directly through the county courts, but not for enforcement by High Court enforcement officers.

I am pleased to say that the Ministry of Justice is committed to continuing to work with Citizens Advice to review and approve where possible the process for the enforcement of awards. One option that will be discussed is the Citizens Advice proposal for High Court enforcement officers in this area. Ministry of Justice officials are already in touch with Citizens Advice on the matter.

In summary, I believe that this is a valid issue to raise. We all want people who win their case at tribunal to get the award to which they are entitled. I take this matter seriously. I assure the Committee that the Ministry of Justice also takes it seriously. We will maintain a dialogue with Citizens Advice on it. I do not think we can say at this stage whether the method proposed in the new clause is the right one. However, I accept the validity of the issue and guarantee that we will maintain a dialogue with Citizens Advice.

Photo of John Hemming John Hemming Liberal Democrat, Birmingham, Yardley 3:00, 16 October 2008

I understand from the Minister’s response that there is automatic registration of judgments for ACAS agreements but not for tribunal agreements. One would presume that the objective is to ensure the automatic registration of judgments from the tribunal in the county court. That could be done by the employment tribunal service itself.

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 think I am right in saying that that does include the automatic registration of tribunal judgments. When I mentioned ACAS-brokered agreements, I did not mean that only those were registered and not employment tribunal judgments.

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

On that basis, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.