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Baroness Amos: My Lords, I beg to move that the House do now adjourn during pleasure until 8.50 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.40 to 8.50 p.m.]

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Employment Relations Bill

House again in Committee.

Clause 16 [Agreement to exclude dismissal rights]:

Lord Sainsbury of Turville moved Amendment No. 277:

Page 9, line 11, at end insert--
("(6) Section 197(1) of the Employment Rights Act 1996 does not prevent Part X of that Act from applying to a dismissal which is regarded as unfair by virtue of section 99 or 104 of that Act (pregnancy and childbirth, and assertion of statutory right).")

The noble Lord said: In moving Amendment No. 277 I should like to speak also to Amendments Nos. 300 and 301.

Clause 16 will ensure that employees on fixed-term contracts will no longer be able to sign away their rights to unfair dismissal protection at the end of the contract. Our Amendment No. 277 to the clause addresses an omission in the current provisions, and has an effect upon waiver clauses already agreed before the Act comes into force. The amendments to Schedule 8 (Amendments Nos. 300 and 301) are consequential on the abolition of dismissal waivers.

We shall deal with other transitional arrangements in the commencement order for the clause. We intend to ensure that waivers agreed prior to abolition do not extend beyond their originally envisaged term, or any extension of the term already entered into by the time the clause is brought into force. Some employees could otherwise be locked into waiver clauses, perhaps for many years after their abolition, by the repeated extension of a fixed-term contract containing a waiver entered into beforehand.

The Employment Rights Act 1996 provides that fixed-term employees who have waived their right to claim unfair dismissal are nevertheless protected, in the majority of cases, if they are dismissed for specified reasons which are regarded as automatically unfair. This is achieved either by disapplying the waiver provisions or by enabling employees to complain that they have suffered a detriment if they are dismissed for these reasons, although for other purposes detriment does not include dismissal.

However, there are no such arrangements in connection with two of the reasons for dismissal which are regarded as automatically unfair. These are the reasons set out in Sections 99 and 104 of the 1996 Act which protect employees against dismissal on grounds of pregnancy or maternity, or because they have asserted a statutory employment right. This is a defect in the legislation. The result is that employees who have entered into unfair dismissal waivers cannot seek redress if their fixed-term contracts are not renewed for these reasons. With the abolition of unfair dismissal waivers this will generally cease to matter, since in future employees will not be able to waive their rights, whatever the reason for their dismissal. However, employees who have already entered into waivers before the abolition is brought into force will remain at a potential disadvantage unless specific provision is made for them.

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The amendment to Clause 16, therefore, disapplies the waiver provisions as far as concerns the reasons set out in Sections 99 and 104 of the 1996 Act. It will ensure that employees who have entered into waivers before abolition will nevertheless be entitled, after that date, to bring a claim for unfair dismissal if their contracts are not renewed on grounds of pregnancy or maternity or because they have asserted a statutory employment right. It is clearly right that they should be protected in this way, and I urge the Committee to rectify the defect in current legislation by accepting these amendments. I beg to move.

The Earl of Mar and Kellie: Amendment No. 277A, which stands in my name, is part of this group of amendments. Its provenance is the Law Society of Scotland. The amendment removes any doubt about whether the effect of the clause is retrospective. Contracts entered into before the commencement of this Act would not be affected if this amendment were accepted. Parliament should not retrospectively alter contracts negotiated and entered into freely by two consenting parties. The amendment will ensure that the new provisions will apply only to new contracts negotiated after commencement. Only after commence- ment can negotiations take full account of the current law.

Lord Birkett: My Amendment No. 277B also falls within this group of amendments. It arises out of concerns that I expressed at Second Reading, which I shall not weary the Committee by repeating tonight. I simply remind noble Lords that they relate to the theatre, in particular long-running shows often, but by no means exclusively, in the West End. Musicals can, and happily often do, run for years. To ensure the freshness of those shows the management usually gives fixed-term contracts of a year or so. Those contracts contain precisely the waiver referred to a moment ago by the noble Lord, Lord Sainsbury. By that waiver the employee, the stage performer, agrees not to claim unfair dismissal in the event of his contract not being renewed for a further period. Sometimes those contracts are renewed but by no means exclusively.

This arrangement is entered into quite freely with the agreement of unions, management and the performers themselves, and it works very well. But the Bill as now drafted would make such a waiver clause impossible. At Second Reading the noble Lord, Lord McIntosh, gave it as his opinion that the mere failure of management to renew a contract at the end of a fixed-term contract could not of itself be construed as unfair dismissal. Although I absolutely agree with that opinion, which has the uncommon virtue of common sense, the noble Lord's words cannot be construed as having any legal force. In case anything should go wrong I have tabled this amendment which, stated simply, gives the Secretary of State power to alter the situation should he think it beneficial to do so.

Regardless of how the Committee views the amendment itself, I should like to make two tiny points before sitting down. In many industries, including the

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theatre, it is very sensible in complicated and small matters of this kind for the profession concerned to make very clear its policies, procedures and practices for the benefit of employers, employees and unions. It is very important that those matters are set out more clearly than they have been in the past.

The second matter which I believe will be very important after the passing of this Bill is that wherever there are conciliation procedures already in place within an industry it is very important that those, as it were, domestic procedures should be followed through before cases come to official tribunals. Both those matters will help the situation in the future considerably.

9 p.m.

Lord Meston: I support the noble Lord, Lord Birkett, in what I suppose he might call "The Mousetrap" amendment or the "Les Miserables" amendment. The existing provisions of Section 197, which the Bill will remove, have been described as an uneasy compromise between the need to prevent abuse of the fixed-term contract to avoid legislative protection and the legitimate need for short-term employment and flexibility.

The trouble is that our law does not distinguish between those situations in which the employer has a genuine and good reason for offering short-term contracts and those who may wish to exploit the potential for abuse by keeping a workforce without statutory protection through repeated extensions of short-term contracts with waiver clauses. That is the potential abuse which the Court of Appeal has identified and which the Government are alive to and wish to remove.

In fact there are two real mischiefs. First, the employer and the employee contract out of the protection which Parliament intended most employees to have. Secondly, where in reality the employment relationship will be continued by renewal at the end of the fixed period, the ability to contract out of statutory rights by waiver and to offer a new contract to the same person gives that employer a lever which can be unfairly used and which can create stressful uncertainty in the mind of the employee. Those are the two mischiefs and I fully understand why the Government wish to deal with them.

I agree with the noble Lord, Lord Birkett, that there may be cases where the genuine fixed-term arrangement is justified. That is certainly recognised in continental jurisdictions. Therefore, it may be that something along the lines of the noble Lord's amendment should be considered. Most of the case law in this area has been generated for some reason by the BBC. We do not know why, but it appears that the BBC favours that particular contractual arrangement and then--dare I say it?--gets it wrong and ends up in court. There are also academic bodies and even, I believe, government departments which in the past favoured these arrangements, and possibly for perfectly good reasons.

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While I entirely support the general thrust of getting rid of Section 197 as it stands, there may be an argument for preserving some sort of discretion to allow it in entirely appropriate situations such as the noble Lord, Lord Birkett, suggests.

Lord Sainsbury of Turville: I shall deal first of all with Amendment No. 277A. We intend to ensure, in the commencement order for Clause 16, that it does not apply to waivers entered into before commencement. This is the effect sought by the noble Earl's amendment. Therefore, I invite him to withdraw it.

Amendment No. 277B would introduce powers to specify classes of employment in respect of which unfair dismissal waivers could be agreed. As my noble friend Lord McIntosh explained at Second Reading, the abolition of unfair dismissal waivers will restore a fundamental right to fixed-term employees. I firmly believe that all such employees are entitled to that right. The amendment suggests that waivers can be of mutual benefit to employers and employees. That is not my view. I do not believe it is ever of benefit to employees to be asked to give up the right to seek redress if they are treated unfairly. I see no case for allowing waivers to continue in any field and the power sought by the amendment is therefore unnecessary.

Of course, the Government have no wish to harm the theatre industry. On the contrary, we want to see it continue its great success and the enormous contribution it makes to the economy and to the national culture. But we do not consider that there is any danger of that from Clause 16. We do not consider that there would be any harm. Theatrical employees clearly have just as much right not to be dismissed unfairly as employees in other fields. If their employers are concerned that they may find themselves in difficulties if they decide to dismiss them when their fixed-term contracts expire, the remedy is in their own hands. The abolition of waivers will not prevent them from not renewing the fixed contracts of employees. It will simply mean that they must be carried out for a fair reason and in a fair manner. On that basis I see no reason why "The Mousetrap" should not continue indefinitely and give pleasure to our grandchildren in the future and be renewed constantly with new people. That process simply has to be done in a fair and reasoned manner. I believe that policies and procedures could be developed to make certain that that is done properly and, therefore, employment tribunals will not have to be significantly involved.

That is something which the law requires of all employers. If one begins to make exceptions many more exceptions could be made for similar kinds of arguments which ultimately do not stand up. I am sure that the noble Lord does not wish to suggest that theatrical employers should be free to act less fairly than others. I urge him to withdraw his amendment.

On Question, amendment agreed to.

[Amendments Nos. 277A and 277B not moved.]

Clause 16, as amended, agreed to.

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Clause 17 [Part-time work: discrimination]:

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