Employment Bill

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Mr. Hammond: I think that we are being invited to believe that in response to the consultation document, someone sent the Government a calculator—or an abacus—and they did their sums again and found out that they got them wrong. The Minister mentioned those who would be exempt from charges. He addressed that point when he said that at least a quarter of all tribunal applications that come from those who are on benefits or in genuine need will be exempt from any charges, and that those people will still have access to justice.

The Minister asked about the announcement. It is slightly disingenuous of him to deny with a straight face that there was a Government announcement, and to say that, a few days before the TUC conference, The Guardian merely reported well-placed sources. The Minister is not denying that by 5 September, a decision to abandon charging had been taken. The fact that an announcement was not made says more about how the Government operate than about the decisions.

John Edmonds, the general secretary of the General, Municipal, Boilermakers and Allied Trades Union, said on 5 September:

    ''If this U-turn is true it is something we would warmly welcome. But again you have to question why the government is using smoke and mirrors. If they are going to drop the idea of charging why on earth don't they have the courage to come out and say it?''

Even now, the Minister seeks to obfuscate the point at which the decision was taken and to hide behind the fact that the method of announcement—as is so often the case—was a leak to the friendly media, rather than an announcement to Parliament.

Rob Marris rose—

Mr. Hammond: If the hon. Gentleman will forgive me, I am approaching my conclusion.

We will not find common ground, and I will have to press the matter to a Division. I urge my hon. Friends to support the amendment. It would give the Government additional powers, providing an additional weapon. Otherwise, the Bill's good objectives will not achieved because of a substantive U-turn by the Government in the face of pressure from their trade union paymasters.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 12.

Division No. 1]

Hammond, Mr. Philip Hendry, Mr. Charles Osborne, Mr. George
Prisk, Mr. Mark Simmonds, Mr. Mark

Healey, John Hughes, Mr. Kevin Humble, Mrs. Joan Johnson, Alan Jones, Helen Lamb, Norman
Mallaber, Judy Marris, Rob Pearson, Mr. Ian Smith, Geraldine Williams, Mrs. Betty Williams, Hywel

Question accordingly negatived.

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

5.15 pm

Mr. Hammond: My notes, rather optimistically, start: ''The clause, as amended''. As it turns out, the clause, as unamended, together with what the Minister has said, set out the Government's intentions. I have certainly learned quite a bit about precisely how the Government intend to take matters forward but I do not know whether anything will happen that will make a real difference.

We have heard from various hon. Members and from the Minister about the award of costs. In the past year, around 250 awards of costs were made from 218,000 cases. Unless the Government intend, through the regulations, to ensure that the measures in clause 22 have considerably wider bite than their predecessor measures in section 13 of the Employment Tribunals Act 1996, they will have no meaningful impact on the system.

Two important are principles at stake. First, access to justice must not be denied to people. I recognise and respect the points that various hon. Members have made, particularly in relation to the charging regime and the fear of being subject to a costs order. That must be balanced by the principle of responsibility: no one can enjoy access to the justice system without responsibility for their own conduct. The system cannot be a free ticket lottery that one enters with the hope of a big win and no downside. Fear that that concept is creeping into the national psyche probably lies at the heart of some of the Minister's concerns about the way that the system is working. The no win, no fee culture in which if anything happens one can always get compensation from someone is generally unhelpful and unproductive. I am sure that the Minister would seek to discourage that.

We shall discuss later amendments on that matter, but the point is germane to clause 22. Will the introduction of the conciliation process in clause 24 change the geometry and create a set of different ground rules by changing the concept of what is reasonable behaviour when a case comes out of the conciliation process? Will the advice of a conciliation officer be critical in determining whether behaviour is subsequently deemed to be reasonable or unreasonable? Whether the clause will work and whether it will be widely seen as reasonable and effective will depend largely on that question and how the regulations deal with it. Before we agree that the clause stand part of the Bill, will the Minister tell the Committee what percentage of cases he anticipates will receive an award of costs? Will the percentage go up, or will it stay the same? What amounts of money are likely to be involved? What assumption have the Government made in their regulatory impact assessment? Without those figures, it is difficult to understand what the Government expect to happen once the regulations are published.

I have another question for the Minister, which I have not framed in an amendment but would like to float past him. I do not claim authorship: an external group that has provided me with some briefing suggested it. Would it be sensible to require tribunals to give their reasons for awarding or not awarding costs in individual cases, so that minds would focus on the process required to decide whether a particular case merited an award of costs? Does the Minister expect such an award against a representative, or disallowance of a representative's costs, to be a rare or regular occurrence? What percentage of cases has the Government's impact assessment assumed will be subject to such a procedure? How often does the Minister expect compensation for preparation time to be awarded? I ask the Minister those questions now, because once we see the regulations, we will want to put them in the context of what he has told us that he expects to achieve.

What will be the likely impact of the Leggatt review of tribunal procedure on the tribunal system in general, and on the legal aspects of the assessment and award of costs in particular? Does he anticipate that we will have to revisit the issue, and is it possible that we will have to unravel the procedures once the conclusions of the Leggatt review have been fully digested?

Will the Minister tell us more about the financing of the tribunal system? What subvention from the taxpayer is expected on commencement, and can we expect additional funding to support the tribunal and conciliation services?

It is important to see clause 22 in context, because it is only part of a system that has good and bad points for all participants. We undermine that balance at our peril because, although there is substantial consensus on the clause, that consensus critically depends on the balance being maintained. In my discussions with employer representatives and organisations, it was not generally appreciated, as the Minister said before lunch, that awards of costs or expenses under the new regime would be limited to the few cases deemed vexatious or unreasonable. Unless the regulations broaden the concept of what is unreasonable to take account of the conciliation process so that costs are awardable in significantly more cases, many people who supported the proposals will find that they have misunderstood the Government's intentions.

During our break this afternoon, I re-read some of the briefing material that I received from employer organisations. It was apparent that they welcomed some of the new provisions, but only because they anticipated broader use of the power to award costs than the Minister has described today. Already, what appeared to be consensus on the provisions is being eroded.

Alan Johnson: We have had a good debate. The misunderstanding between the hon. Member for Runnymede and Weybridge and me has not extended to the organisations that he mentioned. The Government have been clear that cost awards will be made on the same basis as they are now. We have not attempted to interfere with that, and it would have been difficult to do so with such wide-ranging cost awards. The judiciary said that the term ''frivolous behaviour'' should be replaced by ''misconceived'', and we did that in July. We increased the penalty that an employment tribunal can impose, from £500 to £10,000, and the deposit that must be put down. All that was aimed at preventing vexatious, misconceived cases.

Mr. Hammond: I understand the Minister's comments, but in referring to the power to award costs, the Engineering Employers Federation, which is much beloved by the hon. Member for Wolverhampton, South-West, said:

    ''For example, increased powers to award costs may not be exercised . . . How will the Government persuade the Employment Tribunals to take a more active role and use their more extensive powers?''

The Minister is telling us that there will not be more extensive powers or an increased power to award costs. Clearly, that employers' organisation based its response to the Bill on a misconception of the Government's proposals.

Alan Johnson: The EEF is a marvellous organisation. I had dinner with its representatives only the other night, and we discussed all the issues. It accepted, as the Committee has so far with the amendments that we have debated, that it is right to make cost awards against representatives who act unreasonably and that they should not be able to take the money from their clients. We have accepted that people should be awarded costs for preparation of a case, even if they have not taken legal representation into an employment tribunal.

Those are sensible measures that, with the increase in the deposit and the £10,000 penalty limit, will deter weak and vexatious cases. We have no desire to extend the definition. Indeed, during our consultation, no one argued that we should, for the reasons given by the hon. Member for Runnymede and Weybridge. He is a decent man—[Hon. Members: ''Hear, hear.''] That's about as good as it gets. He said, rightly, that we must strike a balance. The potential costs should not deter people who believe that they have a justified case or grievance from going to employment tribunals.

There are many other measures. We are talking about striking out weak cases at pre-hearings, which we shall discuss under other aspects of the Bill. Taken together, all those are sound, sensible and practical ways to proceed.

5.30 pm

The hon. Gentleman asks what difference they will make. That is difficult to calculate. We say in the regulatory impact assessment that the measures in clause 22 will probably prevent up to 500 such cases from being brought. That is quite significant compared with the number of vexatious cases. The clause has not been designed to make employers feel that employees with relevant and arguable cases will not bother bringing them because they are so concerned about the cost award that may be made against them. We are not in that ball game, as we have emphasised repeatedly.

Hon. Members have raised interesting and helpful points about the provisions, and I am grateful for their contributions. When we draw up regulations, we shall see what can be learned from the experience of civil courts, where such procedures exist. I hope that Members are reassured that neither the intention nor the effect of the clause is to deter workers from using the employment tribunals system to seek redress if their rights have been infringed.

The Government have a responsibility to ensure that rights are enforceable and that the justice system is accessible and fair to all parties. We must minimise the potential for abuse and ensure that wronged parties are properly compensated for their loss if the system has been abused. That last point is particularly relevant to the clause At the same time, we have a responsibility to the taxpayer to provide an efficient employment tribunals system. Along with other measures, the clause will help to achieve that end.

The hon. Gentleman asked about funding mechanisms. They are an important element of the matters being considered by the employment tribunal system taskforce under the chairmanship of Janet Gaymer. Judge Prophet, the president of employment tribunals in England and Wales, and Colin Milne, the president of the employment tribunals service in Scotland, are also members of that august body.

The hon. Gentleman asked what difference the Leggatt review would make. It did not warn against changes to the cost rules. Leggatt considered full cost recovery and the loser paying the winner's costs. The review is of the whole tribunal system, not just employment tribunals. We do not think that anything that emerges from Leggatt will necessitate any speedy changes to the regulations that will be produced in due course; we think that these measures stand alone. For all those reasons and others, I commend the clause to the Committee.

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.

Clause 23

Employment Appeal Tribunal

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Prepared 11 December 2001