Select Committee on Delegated Powers and Deregulation Nineteenth Report



EMPLOYMENT RELATIONS BILL - PROPOSED NEW CLAUSE ON TRANSFER OF UNDERTAKINGS

11.  We reported on this Bill in our 13th report of this session, and we have since received a helpful Government response to that report from Lord Simon of Highbury. When we reported we had not had the opportunity of seeing the new Clause on transfer of undertakings which the Government proposed to insert after Clause 32 at Committee stage.

12.  The new clause on transfer of undertakings extends the power to make regulations under section 2(2) of the European Communities Act 1972, which relates to the general implementation of the Community Treaties. That exceptionally important power was conferred in the widest terms, allowing (subject to exceptions set out in Schedule 2 to the Act) any provision "as might be made by Act of Parliament", because it was to be used to give effect to obligations which would result from the UK's membership of the Community. So far as the Committee is aware it has not been extended in subsequent legislation to circumstances where the regulations are not needed to implement existing obligations. The fact that there is no precedent of this kind in itself emphasises the special nature of section 2(2). There is, indeed, a convention that the power to make regulations under section 2(2) is only used in the absence of powers in more specific primary legislation.

13.  Had the new Clause been in the bill as introduced in the Lords we would have wished to comment on it. At the Chairman's suggestion, the Minister did not move the amendment at Committee stage on 16 June, in order to allow this Committee time to consider the amendment. The Committee is grateful for the Government's courtesy in acceding to the Chairman's request, and to the Department of Trade and Industry for producing, within 24 hours, a note (annexed to this Report) setting out the Government's reasons for seeking to take the power.

14.  The Government agrees with the Committee that "so far as we know, … this is an unprecedented extension of Article 2(2) (apart from the European Economic Area Act 1993 section 2(4), which provides for levelling up to any higher standard voluntarily provided for EC persons)." The Department's note goes on, however, to state that "it is not at all uncommon for there to be power to go beyond Directive obligations." This - a practice described by some as "gold-plating" - has undoubtedly been widespread in the past - and is an issue we discussed in general terms earlier this year with Dr Jack Cunningham MP, Minister for the Cabinet Office. Dr Cunningham, speaking on behalf of the Government, assured us that "we are not only not interested in gold-plating, we want to prevent unnecessary gilding of these European lilies wherever possible."[1]

15.  It is pointed out that the draft clause makes plain that the power is limited to making similar provision to that contained in the Directive. The Department anticipate that in practice it is likely to be identical and that the Regulation will simply apply in the wider area. The intent is apparently to bring within the coverage of the regulations individuals who are not covered by the Directive. This may differ from the form of "gold plating" which increases or adds obligations to those within the Directive. But it is nonetheless "tacking on" regulations which could not be made under section 2(2).

16.  The Department of Trade and Industry's justification for the amendment is that "the Government wants to create a seamless link between what the Directive may or may not require and what we are doing voluntarily". We understand that aim, but the House will no doubt wish to consider whether the proposal is an example of gold-plating or whether it is the result of a simultaneous need to implement a directive and to give effect to related improvements in UK law.

17.  We note, however, that in this case, "the use of the power will … depend on the outcome of consultation", and that "it is apparent from the discussions which the Government has already had with business and other interests that existing powers under section 2(2) of the European Communities Act would be insufficient to achieve some of the changes they may ultimately wish the Government to make." We understand the Government's objective in seeking this order-making power, the subject matter of which is entirely reasonable, and, moreover, is one which could properly be exercised by the negative resolution procedure. But we see it as a point of principle that section 2(2) should not be used for matters which are not the subject of an European obligation. We therefore suggest that the House may wish to consider whether the amendment should be re-drafted to create a new power to make appropriate regulations. We appreciate that this will require two sets of regulations, but consider it important that the convention regarding the restriction of the use of the regulation-making power under section 2(2) of the European Communities Act should be upheld.

RECOMMENDATION

18.  We wish to draw this amendment to the attention of the House, should the Government seek to re-table it for Report stage.


1  The full text of our discussion with Dr Cunningham is printed in our 14th report of this session, Proposed Extension of the Deregulation and Contracting Out Act 1994, HL Paper 55. The specific questions on the subject of gold-plating are QQ 26-31. This report discusses a number of aspects of the regulatory process, and may therefore be of interest to members of the House more generally, not simply in the context of the Government's proposals to widen considerably the use of the Deregulation and Contracting Out Act 1994. Back

 
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