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Amendments Of Transfer Of Undertakings Regulations

Volume 226: debated on Wednesday 16 June 1993

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Lords amendment: No. 32, in page 47, line 10, at end insert—

case. I hope that I have pronounced that correctly; I understood the Minister when he said that many a mickle makes a muckle, but my Greek is not quite up to his lowland Scots. [Interruption.] The Minister has just corrected my pronunciation, demonstrating that he has a grasp of Greek as well as lowland Scots. That is splendid. He had a proper Scottish education: if hon. Members are in any doubt about that, let me tell them that he attended Arbroath high school. That good start was followed by a retrograde step, in that the Minister then went to St. Andrews university; but those of us who went to superior Scottish universities appreciate that some folk who cannot get into them will end up at St. Andrews.

The Kastikas case demonstrated that, when an undertaking is transferred from one employer to another, no one employed by the transferor is obliged to have the contract transferred to the employee. That surprised me, and I gather that it surprised many other people. We had always assumed that, in the event of a transfer of engagement, all contracts of employment were transferred. Not so, said the European Court:

"If the Directive … allows an employee to remain in employment with a new employer on the same conditions as those agreed with the transferor"

this is important—

"it cannot be interpreted as obliging the employee to continue his employment relationship with the transferee.

Such an obligation would undermine the fundamental rights of the employee who must be free to choose his employer and cannot be obliged to work for an employer." That important first part of the Court's judgment established that the individual had a fundamental right not to be compelled to work for an employer and that the contract could therefore not be considered transferable under the directive.

The judgment stated that the provisions

"do not prevent an employee from objecting to the transfer of his contract of employment or of his employment relationship."

The court then dealt with what is effectively the crux of the dispute that we are having today:

"In such cases, it is for the Member States to determine the fate of the contract of employment or of the employment relationship."

The judgment has two essential parts. First, it states that the employee can object: he is under no obligation to transfer. However, what happens to the contract of employment is then a matter for the member state alone. No decision has been made about that, so it is up to the Government to table the necessary amendment. They were given the opportunity to clarify the law, but once again they have chosen not to side with the employee. Most people would have expected them to do so; after all, the employee is at a disadvantage. It is the employer who triggers the change in employment. The amendment, however, gives the advantage to the employer yet again. Whenever they are given the choice, the Government side with the employer.

The Government have said that the employee has the right to object, but if that happens, what was described in the other place as a depth charge or nuclear explosion will be brought into play: the employee will instantly be considered to have been dismissed.

What is at issue is this: if an employee decides not to transfer to the new employer, he is held to have resigned. The hon. Gentleman is arguing that he should be paid redundancy money. Is he really suggesting that, in the event of a transfer from the public to the private sector, the employee should be able to claim redundancy payment and then reapply for the job the following day? What protection would there be? Is that the evenhanded approach that the hon. Gentleman is advocating?

The Minister should have thought about that before tabling the amendment. That is the problem of tabling new amendments at short notice.

The amendment raises various issues. What rights should be available to employees? What redundancy rights should there be and what rights should employees have to go to an industrial tribunal? What rights should they have to payment in lieu of notice and should they have the right to be given due notice? We may wish to discuss those issues, but it is clear that none of those rights prevails under the Government's amendment.

Before a transfer is made, an employee has the right to notice of dismissal, payment in lieu of dismissal and all the other associated rights, but if he objects to the transfer all his rights are lost because, under the amendment,
"he shall not be treated, for any purpose, as having been dismissed".
Our amendment seeks to retain the rights that the employee had before the transfer. It would not give the employee the right to be employed for ever by the employer. We are not suggesting that, but simply that the employee should retain the rights that he had before the transfer. The employer can still dismiss the employee, but the employee will have the right to notice, to payment in lieu of notice, to redundancy, and the right to go to an industrial tribunal. The Minister may say that it would not be suitable to retain some of those rights, and we can discuss that, but it is clear that under the Government's amendment employees who do not transfer will have no rights whatsoever.

I do not want to disturb the hon. Gentleman's train of thought, but the employee does have rights. He has the right to retain his employment and move into employment with the new employer. The hon. Gentleman is suggesting that, if the employee decides not to transfer to the new employer and retain the rights that he has accrued, he should not be treated as if he had resigned and that he should be given redundancy payment. Given that the employee is not being required to lose his job, it is difficult to understand the hon. Gentleman's argument that that would be a legitimate position.

The Minister has failed to understand that the employee is no longer under any obligation. He should remember that it is the employer who triggers the necessity for the employee to choose whether or not to transfer. If the employer makes that decision—and the European Court recognised that the employee is under no obligation to transfer—what rights should be retained by an employee who chooses not to transfer? Under the Government's proposed amendment, the employee loses all rights; he retains the right not to transfer, but he then has no rights whatsoever. Our amendment seeks to retain some rights for that employee.

It is time to clear up this whole TUPE business, as the truth has not been told. Labour's proposal is ridiculous. The hon. Gentleman is suggesting that someone who is not redundant should be regarded as redundant, that someone who, through the generosity and good will of the European Community is guaranteed the same job with the same pay and the same working arrangements, working in the same place, should be treated as redundant. Surely the Labour party, which has a splendid record of fighting for working people, cannot regard as redundant someone who is not redundant at all.

I do not agree, although we may wish to discuss that issue. However, other rights apart from the right to redundancy payment are also involved. The right to notice of termination of employment and the right to payment in lieu of notice would also be lost. In other words, an employee would go from having certain rights to having absolutely none at all. We may wish to discuss what rights are available to that individual. Some rights may be inappropriate, but it is clear that, as a result of a change in the working relationship triggered by the employer, absolutely no rights are available to the employee and that cannot be acceptable. That is what we seek to amend.

Last night we discussed the fact that some employers were bribing workers not to be members of trade unions. If I were an employer and another company was buying out my company, I would not expect my staff to want to transfer because they would have to accept a reduction in pay. Many people would end up working for employers who were hostile to their fully held union beliefs and would not wish to work for such companies.

7.45 pm

I thank my hon. Friend, who made his point in his usual inimitable style.

is my hon. Friend aware that the situation that he describes appertains to the coal industry? If a colliery surface is privatised and sold to a new company, employees previously employed by the British Coal Corporation receive the opportunity of accepting redundancy. They are paid money in lieu of notice and then, it' they wish, they are taken on by the new employer.

These issues certainly merit further discussion. I understand that the Government introduced the measure to deal with the Kastikis case and therefore they probably had less time than usual. However, it raises a number of issues.

Our interpretation is that the amendment removes from the employee every right that he or she has. Perhaps the Minister, who shakes his head, can say whether or not an employee who refuses to transfer still has the right to notice of dismissal and payment in lieu of notice. Finally, when is it considered to he dismissal? Is it when the employee signs an undertaking saying that he does not wish to transfer, or is it when the engagements have been transferred?

Given the opportunity to confer rights on individuals, once again the Government have failed. I understand their hostility to TUPE. I well remember that, in Committee, the Minister used to speak through clenched teeth and explain to his Back Benchers who were up in arms that. no matter what his personal feelings were, he could not alter European law.

It was probably one of the saddest moments in the Minister's political career. It was the bottom, and he has had some pretty low points. For example, he accused the National Federation of Women's Institutes of being a Marxist organisation. These poor women in Stirling, Callender and Doune making jam and buttering scones on behalf of charities were all labelled Marxist subversives. They were shaking in their hoots in Callander.

Under the amendment, do employees lose all rights when they refuse to transfer and when are they considered to have made that refusal?

The Opposition's amendment is one of the most ridiculous that I have ever seen. The clear implication of the hard-fought-for right to compensation for redundancy was that someone made redundant was entitled to compensation. We are talking here about a situation in which a new employer takes over a service. If the new employer, through the generosity of the EC, is obliged to offer the same job, without any change in working conditions, even in the room in which he works, without any change in wages, without change in anything, there is no way in which that employee can be declared redundant. The Opposition's amendment is ridiculous because in it they are asking for a special category of redundancy to be given to people who are not redundant at all.

But it is not that which worries me so much as the Government's proposal and the Lords amendment, not because I object to it—it seems quite sensible, particularly the new paragraph (4B)—but because I am concerned about whether the Government are right.

The only point that I want to make, which I hope the Minister will think about, is that when we look back we see that two things have happened. First, the Government have been consistently wrong in their judgments or assessments of the law. Secondly, the most shameful cloak of secrecy has been thrown over the TUPE business. The Government have consistently sought to try to hide the iniquitous policies of the EC, the way in which our freedom is being taken away and the way in which industry, commerce and jobs are being undermined.

That is clear, as we see time and again. Perhaps most obvious is the fact that we are not allowed to table questions on the size of the piles of food in the EC. All kinds of things are being covered up, but on this issue I make two points. First, because of the Government's cloak of secrecy, there has been a deliberate attempt not to tell employers what is happening. Privatised employers feel most upset about the fact that the long infraction proceedings initiated by the European Commission were not made public by the Government. and employers and local authorities went ahead with arrangements, making contracts and offering out services, without being aware that all the time Jacques Delors and his friends were nibbling away at the matter, with serious results.

The second point on which I hope that the Minister will give me some guidance concerns what will happen to the local councils that privatised their services many years ago. Southend is an obvious example. We privatised services, we believe to the benefit of the ratepayers, although that is a question of judgment, and saved money. But whether we were clever or stupid, the Minister will he well aware of the judgment on the Eastbourne case, as a result of which it seems that backdated responsibility will be put on the councils or the employers to pay massive sums of money to the employees concerned. Not only will they have to make redundancy payments to workers who were made redundant at the time of privatisation, but they will have to compensate them for loss of earnings as well.

East bourne and Southend sacked all the workers, brought in a new employer who appointed new people, no doubt with better working conditions—in Southend the wages rose over a period—but there were far fewer people doing more work. Now, having done what the Government told them to do, they find that they are faced with horrendous liabilities. What we in Southend would like to know, what Eastbourne would like to know, is who will pay. We are not clear whether the employer or the council will have to pay. We understand that it will be the employer who has to pay, which will put many good employers out of business through no fault of their own. If that happens, it will be serious.

I should like the Minister to give advice, particularly to friends of mine who pop into the House of Commons from Scotland from time to time, on who will be responsible for that and what will happen. The Minister will be well aware from the activities of the clause 26 group—a group of private employers—that they feel let down. They did what was legal and what the Government told them to do. They did a good job and now they find that they are being clobbered retrospectively through no fault of their own.

It would be okay if the Government said, "Look, we are terribly sorry, but Jacques Delors has mucked all this up. We don't control the EC. They did it." But the fact is that for two years the Government were being pursued by the EC Commission. They knew it would probably go funny, they did not tell the employers, new contracts were made and a great loss was involved.

Secondly, what the blazes is the Government's advice now? I have seen the advice given by the Secretary of State for the Environment to local authorities. Let me read one sentence of the advice given to that splendid council in a place called Liverpool which sought the advice of the Conservative Government. It was told:
"Mr. Farrell of the TGWU is not incorrect in suggesting that the TUPE will require any future contractor to guarantee the existing wages and conditions of cleaners based at your school. It should not be assumed, however, that the Regulations will apply in this particular case."
What is the Liverpool council meant to do? What are councils throughout the land meant to do when not only arc they told that it may be correct but it may be wrong, but they also receive circular letters from the Secretary of State for the Environment with huge newsletters saying that, if they try to shove in TUPE, they could be taken to court under some strange regulation of local government legislation, and the council could be held personally responsible?

We have the crazy situation in which councils are looking for advice, they are given ambiguous replies and then they receive circulars from the Department of the Environment saying that, if they do not get it right, if they do not follow it through, the councillors could be taken to court for letting down the ratepayers.

Thirdly, and terribly importantly, will the Minister give some guidance on what will be the difference on 1 July 1993? On 1 July, which is not far away, something called the EC services directive will apply. The expert officials who follow such things with great delight will be well aware that that says that any contract over £142,000 will have substantial consequences for TUPE and the responsibilities of local authorities. My understanding is that the ambiguous advice given by the Department of the Environment will be overtaken on 1 July 1993 when the EC services directive comes into force. There is not much point sending out circulars when we arc getting it all wrong.

I simply make the point that the Government are saying, "Don't worry about this one. We have put it right and we will say that people who are not redundant should not be redundant because that is the way we have interpreted the European directive. We appreciate that the acquired rights directive was passed under a Labour Government, but it was a long time ago and the directive that was passed at that time is wildly different from the present law."

My final point—I hope that the Government will think about this—is that many private firms in Britain face disaster if they are to be sued retrospectively for doing what was legal at the time according to the British courts and the British Government, according to the advice that they had which was legal. They will face bankruptcy and ruin and many workers will be sacked. There is something very wrong in such a situation and something must be done. At the very least, our delightful new Secretary of State for Employment should say that he will meet those people and talk to them.

The whole problem has arisen because of the EC's obsessive desire to be involved in every aspect of law. I accept that the Labour party is delighted that some of the things that it wants—

Is the hon. Gentleman saying that people whose jobs were taken over have the right to have their existing wages and conditions transferred with them?

Previously they had no such right. If the service was transferred, there was no guarantee for anyone. The new employer could employ two people to do the jobs of 10. He could pay them half the wages. But, as the hon. Gentleman is well aware, that has all changed because of the delightful EC and the nice Mr. Delors. He said that everyone's job was okay, no one's conditions could be touched, and there must be meaningful consultation with the workers' representatives.

As hon. Members probably know, the EC made four demands of the Government, three of which they accepted without a fight; they simply caved in, which I find astonishing given that the Department of Employment was meant to be tough on the matter. The only issue on which they are having a battle with the EC is that the EC wants workers' representatives to be defined as workers' representatives. The Government say that the only workers' representatives that a Tory Government are willing to accept are registered trade unionists. That will probably lead to a great battle in the European Court.

Perhaps my hon. Friend the Minister will tell me why, when the EC makes four ridiculous demands, the Government accept three of them without a fight and include them in the Bill. The only one that they want to battle against is that which ensures that only registered trade unions will he entitled to discuss the issue on behalf of workers. That is terribly unfair. Will I have to rush up and down the Fenchurch Street line, which is to be privatised, and say to every rail worker. "For goodness sake, rejoin a trade union"?

8 pm

My hon. Friend the Minister may say that that is silly, because everyone will benefit from the discussions, but the fact remains that the people discussing it will he the registered trade unions. If I were an employee on the Fenchurch Street line, I would want to make sure that the organisation discussing it was one of which I am a member. We have ended up with an appalling situation.

I accept that the main responsibility lies with the EC, which has stretched the acquired rights directive well beyond the bounds intended. I acknowledge that private firms are suffering hugely because of the retrospective element that will arise from the Eastbourne case, and that many face ruin. I accept also that the Government, sadly, have tried to pull a cloak of secrecy over the whole business. Being pro-European, they are trying to push through, with the help of my delightful and hon. Friend the Member for Worcester (Mr. Lull), a Bill that will give even more power and responsibility to the EC, and want to hide the fact that businesses are being ruined and people are losing their jobs because of the acquired rights directive.

No Government like to say, "Give more power to this crowd," when jobs are being lost. [Laughter.] My hon.

Friend the Member for Worcester should not laugh at this. These are real problems. If his local authority has passed any contracts over to private firms, it will now face being chased retrospectively for lots of compensation for all those involved. It is not a laughing matter at all; it is a matter of jobs, cash and private industry.

Hardly anyone knows what is going on. Only the firms which will lose jobs and cash, and which will probably go out of business, know. I ask the Government to tell people what is happening. If the public do not know, how can they possibly prepare for the problems ahead? We appreciate that the Government can do nothing about EC measures other than fight them—and the Government do not want to do that.

The hon. Gentleman used the word "freedom". Does he agree that Labour's amendment would give the individual freedom to decide whether to transfer to his new employer or to accept redundancy and look elsewhere for work?

That freedom has never been challenged by anyone. It is surprising that the hon. Gentleman, as a Labour party member, should say, "Please treat as redundant someone who is not redundant."

Where is the money for redundancy payments to come from but from public and private funds? If someone is offered the same job, working conditions, and everything else, it is difficult to understand why a Labour party member should say, "We will regard that chap as redundant." If I do not like the new foreman of my shipyard, why should I not be allowed to do the same and to change him? Why should I not be able to do the same if the shareholding of my company changes? It is terribly wrong to introduce a new law that says that someone should be treated as redundant when he is not.

Will the Government please hold discussions with the private employers, who are concerned, worried and perplexed? Will they tell people what is happening, because they did not tell them in the past? If they do that, we may enjoy a bonus in a dreadful situation, which will inevitably grow worse with the determinations of the European Court.

Once again, the House finds itself discussing the Transfer of Undertakings (Protection of Employment) Regulations 1981, which have a convoluted history. The hon. Member for Southend, East (Sir T. Taylor) is correct when he says that there is considerable concern among private employers as to the implications for them of recent decisions of the European Court. That is common ground between right hon. and hon. Members on both sides of the House.

I differ from the hon. Gentleman in that I believe that those difficulties have more to do with the drafting of the regulations than with the interpretation that should be placed on the acquired rights directive. The history of the directive's jurisprudence makes it clear to me—and, I am sure, to other lawyers—that, although the directive itself is simple and transparent, the 1981 Conservative Government introduced the regulations from a position directly contrary to the directive's purpose and intent.

When a series of domestic regulations such as TUPE that supposedly implement the terms of a European directive are portrayed and presented from a different standpoint, sooner or later there will inevitably be conflict. The legal position is clear. In any case of conflict between a Community member state's domestic regulations and the terms of a directive, then—whether the hon. Member for Southend, East likes it or not; clearly he does not, and I respect his views—the directive must take precedence.

That confusion between the implications of the 1981 regulations and the clear intent and purpose of the acquired rights directive is a cause of genuine concern, but many of the difficulties to which the hon. Member for Southend, East referred are the fault and responsibility of the Government, in trying to implement the directive.

The hon. Gentleman mentioned a matter of particular concern in Southend, arising from the implications of privatising its public cleaning department, and the question whether the private contractor who took over that work will now face a serious legal liability. I understand that that might well be the case, but it is equally clear that the Government may have liability for the predicament in which many small employers now find themselves.

In the Frankovitch case at the beginning of the 1990s, it was established in the European Court that a legal liability can be enforced in member states' domestic tribunals, where a member state fails properly to implement the terms of a European directive. In Committee, I put that point to the Attorney-General. He made no attempt to respond, but there is a distinct possibility that the British Government may face substantial legal liability because of their botched attempts to implement the acquired rights directive.

The hon. Gentleman describes the British Government's attempts to implement the acquired rights directive as botched, but those attempts were made by the last Labour Government.

The Minister is being uncharacteristically disingenuous. Although the last Labour Government attempted to introduce the regulations in the House, they made no reference to the notion of a non-commercial venture, which is the source of the difficulties in which the Government now find themselves. That notion was a transparent design to exempt from the acquired rights directive the privatisation programme that was then beginning and the eventual competitive tendering process which left many casualties in its wake. The Minister is wrong to suggest that the difficulties surrounding TUPE 81 are the responsibility or fault of the last Labour Government. He must remember that they did not succeed in bringing any enforceable regulations into effect.

The hon. Gentleman is right, but the last Labour Government signed up to the acquired rights directive and, in the other place, gave an assurance to the House that the directive's provisions would not have the effect of including private contracting of the kind that concerns my hon. Friend the Member for Southend, East in respect of public sector services. That is firmly on record, as the hon. Gentleman knows from our previous, rather lengthy debates on the subject.

We certainly had lengthy debates about the issue, but it is clear from our exchanges tonight that we shall not be able to agree about the import or intent of the acquired rights directive, or about the efforts of the previous Labour Government to introduce them into British domestic law.

I repeat my central allegation against the Government: our predicament, to which the hon. Member for Southend, East drew our attention yet again—I think I am right in saying that he spoke to the regulations when they were introduced in 1981 and made similar points to those which he has made tonight about the implications for private sector contracting—lies exclusively at the door of the Government. They misled many private companies that were interested in tendering for public sector work by telling them they did not have to worry about the implications of the TUPE regulations on the tendering process. It is astonishing, and therefore, I suppose, wholly in character, for the Minister of State to repeat his bogus contention tonight.

We have probably spent enough time dealing with historical issues. I know that they are of concern to the House, but I now direct my attention specifically to Labour's amendment and to the Government amendment tabled in another place by Lord Ullswater only a few weeks ago.

As my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) said, the amendments are connected to the recent decision of the European Court of Justice in the Katsikas case. The Government's attempt to respond to that decision is typically extreme: employees will have no rights whatsoever if they choose not to permit their contract of employment to be transferred to the transferee, or the new employer.

The Minister of State and the hon. Member for Southend, East have made some play of the question, why should it be possible for an employee to have any statutory employment rights in those circumstances? The hon. Member for Southend, East described the situation as perverse. He said that it would not he a genuine redundancy so it would be unacceptable and inappropriate for workers in that position to have any employment protection.

However, I point out to both hon. Members that if one casts even a cursory glance at British redundancy law—for example, at section 84 of the Employment Protection (Consolidation) Act 1978—one finds that plenty of examples of what one can best describe as specific redundancy cases are already written into English law. They perhaps do not come within the commonsense definition of the term, but we are dealing with the law and, as any lawyer will tell you, Madam Deputy Speaker, law and common sense do not usually have much connection with each other.

Section 84 gives employees the right to claim a redundancy payment even though they have been offered suitable alternative employment by another employer. As long as an employee reasonably refuses that offer, he or she is entitled to a redundancy payment. There are other examples in British employment law of workers being given a right to claim a redundancy payment. I am thinking in particular of the provisions relating to time off during short-time working. If a worker is laid off or put on short-time working, even if his job still exists he is entitled to claim a redundancy payment from his employer. The precedents are not in favour of the argument made by the hon. Member for Southend, East.

Other discrepancies may be found in the law applying to redundancy, but we could find plenty of examples under British employment law where workers are entitled to claim a redundancy payment even though it appears that, at first glance, a job still exists. I do not think that there is anything illogical or improper in that. If we want confirmation of that, we must consider the purpose of the Katsikas judgment.

My hon. Friend the Member for Strathkelvin and Bearsden was correct to say that the Katsikas judgment came as something of a surprise. Most people assumed that employees had no option but to accept the transfer of their contract. With hindsight, and after looking after the terms of the judgment, I am glad that the European Court of Justice decided that that was not so.

The Katsikas judgment was designed specifically to protect employees. It was an attempt not to subvert the import of the acquired rights directive but to enhance it by making it clear that a worker was and should be entitled to decide whether he wants his contract to be transferred to the new employer. I hope that there will be no disagreement between us about that. What is objectionable about an employee having the option of saying that he does not want to work for the new employer? The issue is the right to choose for whom one works.

8.15 pm

In the past, the House abolished slavery and ended enforced, conscripted labour. I am sure that Conservative libertarians will accept that individual employees should have the option to decide whether to work for a particular employer. If they exercise that option for genuine reasons —they may, for example, have an aversion to the management style of an employer—and state that they do not wish their contract to be transferred, there is no reason why they should not also claim a number of the statutory employment rights. There is nothing illogical in that.

We could perhaps have a more structured argument about exactly what rights an employee should have in such a case, but our objection to the Government amendment is that the Government are yet again adopting a blunderbuss approach. In an attempt to resolve the so-called dilemma of the Katsikas case, the Government are trying to take away all employment rights from the employee who decides that he will not have his contract transferred to a new employer. Clearly, other options are open to the Government.

Before the Government tabled the amendment, they should, as Lord Wedderburn suggested, at least have considered giving employees the right to claim notice or money in lieu of notice from their old employer. After all, in a transfer the old employer, or the transferor, brings the contract of employment to an end. That must be so, because he is ceasing to trade in a particular business. There is an end to or rupture in the employment relationship. In any other context, the employee would have the right to claim unfair dismissal, redundancy or at least the bare minimum contractual notice. Why do such rights not pertain in a transfer?

I am perfectly prepared to accept that we are dealing with a marginal case which will not involve many employees. If there was an endemic weakness in the regulations or the acquired rights directive, we would have found more examples of British workers saying that they did not want their contract to he transferred, but it has not happened. I may be wrong, but I cannot recall one case of a British worker arguing that before an industrial tribunal. Although the case may be marginal, it has a potential impact on the working prospects of many people. It is unnecessary and severe of the Government to say that employees in this position should have no rights.

There is a case in law for allowing workers to be able to claim at least some of the employment rights to which they would otherwise be entitled. It is regrettable that the Government have taken the opportunity once again to parade their rather dubious European credentials. I am a strong supporter of Britain's membership of the European Community. We should recognise the fact that our only progressive and socially liberal employment measures in the past 14 years have been due to that membership.

I oppose the Government amendments. It is regrettable that the Government have taken the blunderbuss approach to solving a small problem, but it typifies their objectionable attitude to employment protection.

I intend to speak for only a few minutes. The hon. Member for Southend, East (Sir T. Taylor) mentioned a letter. When compulsory competitive tendering was introduced in my area, porters, drivers and others lost £50 a week. We must remember that, although competitive tendering may suit the Government, it does not suit employees. Employees should have the right to decide who their employer should be.

I have worked for various companies. I sold my labour to them and when the employer changed, I had the right to move on. If I worked for a good employer, which I did, who decided to sell his company, he did not sell me along with it. He may have sold his business, but he did not sell Tommy Graham the engineer. Tommy Graham had the right to say that he had helped to make the business go well but he did not want to work for the new employer because he had a terrible record in engineering. I am saying that folk are not slaves that one can wheel and deal with.

I am obliged to see that the Minister is nodding his head in agreement, but some of our trade union legislation is the worst in Europe. It is beginning to look as if the Government wish to treat trade union members as slaves, and second-class people in Europe.

Surely a man or woman who has worked for a local authority or a similar organisation for 20 years has the right to say, "I do not want to go to that employer." That person may have good reasons, such as those that I have already mentioned. The new employer may have a bad industrial record with trade unions and a record of firing people that is second to none. The worker may say, "I would rather take the money and cut, and see if I can get a better job." Surely that is the right of all workers in this country.

I agree with the observations of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) on slavery. He is right to say that, if he were employed by someone and the company were sold, the employer had not sold him along with the company. Indeed, that seems to be the principal objection of my hon. Friend the Member for Southend, East (Sir T. Taylor) to the acquired rights directive, because where a business is transferred or sold, the employees are transferred, if they wish, and retain all the employment rights, including pay and conditions, whether or not the employer purchasing the company or the employer selling the company wishes that to be so. That is what the acquired rights directive has brought about, by means of the TUPE regulations.

The Minister must realise that if someone works for 20 years in a company as an ordinary engineer, plumber, baker, butcher or whatever, he accrues 20 years of redundancy money, and if he is older than 50 he get more. Someone in the situation described by the Minister would be throwing up 20 years' work, and 20 years' accrued redundancy money. Come on, Minister, it is not fair.

I am not sure whether the hon. Gentleman has completely grasped the idea. If there is a transfer to a new employer, the employee's rights transfer to the new employer. If he chooses not to transfer to the new employer, clearly he has no continuing rights with the old employer. I agree with my hon. Friend the Member for Southend, East, and I am surprised at the hon. Member for Renfrew, West and Inverclyde, who is usually fairly concerned about value for money. For the Labour party to argue that people should be paid redundancy money because they are not prepared to continue to do the same job on the same terms and conditions is absurd. I do not belief that the amendment can have been tabled with any serious belief that it would be accepted. Indeed, the Labour party put forward no such proposal, but made a rather more moderate proposal, in the other place.

The hon. Member for Barrow and Furness (Mr. Hutton) and I had an exchange in Committee when we were discussing the matter, but clearly I did not get my point across to him. He sought to blame the Government for some of the difficulties that have arisen on the transfer of undertakings regulations and said that we had not handled the implementation of the directive properly. He said that the complaints coming from contractors and others involved in local authority work—I understand the concern of my hon. Friend the Member for Southend, East about that matter—were entirely due to the Government's implementation of the directive.

I refer the hon. Gentleman to the debates in the other place on 10 December 1981. It is recorded in columns 1485–86 that the Labour spokesman, Lord McCarthy, said:
"The last Labour Government presented"—

Order. Perhaps the hon. Gentleman has not recollected that it is not in order to quote from the other place unless it be from a Minister's statement. I rather think that he was not quoting a Minister.

I am grateful to you, Madam Deputy Speaker. You are right that I should not quote, so if I may I will tell the hon. Member for Barrow and Furness broadly what Lord McCarthy said. He said, as I recall, that the Labour Government had presented the new Government with a draft regulation and that the approach in the 1978 draft by the Labour Government was different from that of the Conservative Government. The noble Lord said that one of the differences was that the Labour version spelled out clearly that charitable bodies, Government Departments and local authorities would be excluded from the scope of the regulations. My hon. Friend for Southend, East is concerned—

In a moment.

My hon. Friend the Member for Southend, East is concerned about the interpretation of the European Court, which has been taken up by the Commission, of the phrase:
"not in the nature of a commercial venture".
That was the phrase that the noble Lord criticised as not having explicitly excluded local authorities from the scope of the regulations.

I well remember the Minister giving us that explanation in Committee. He will also remember that I said that the Labour spokesman whom he has quoted from memory said those words because no Labour Government, and no Labour Member, could conceive of a situation in which a local authority would wish to contract out its services. That is why it was not necessary to apply the regulations to such a situation. On the same basis, the Shops Act 1950 did not apply to Scotland. It was considered that we were such a religious nation that we would never open our shops on Sundays. We were wrong on that, and the premise behind the Labour Government's belief that it was unnecessary for the regulations to apply to local authorities was wrong, too. We did not support the principle then, and we do not support it now.

That is a nice theory, but unfortunately it does not stand up. I also seem to recall—of course, I cannot quote exactly the words that the noble Lord used, but no doubt the hon. Gentleman will look up the reference—that Lord McCarthy went on to say that the original draft by the Labour Government would avoid endless arguments about what constituted a commercial venture. In that sense he was right, and prescient about things to come.

It does not matter what the Labour party said or thought in 1981, or what the Minister thought in 1981. Surely we accept that all that is irrelevant. The Europeans have told us what the facts are; what people think does not matter. The Europeans tell us and we have to accept it, right or wrong, whatever was said in 1981. Does the Minister not accept that it is rather silly to be concerned about what Labour said in 1981? That does not matter. Democracy is effectively dead, and Europe will tell us what the facts are.

On that basis, presumably we are all wasting our time. It matters what the hon. Member for Barrow and Furness said, because I have to reply to him. He was blaming a Conservative Government for having made a mess of the implementation, so it is entirely appropriate for me to explain what view the Labour Government took.

I was just about to deal with what my hon. Friend the Member for Southend, East said, because I thought that it mattered and that I ought to respond to it. Nevertheless, I shall give way to the hon. Gentleman.

I am grateful to the Minister for showing his usual courtesy in giving way. Does he not admit that, throughout the 1980s, Conservative Ministers in various Departments, especially the Department of the Environment and the Department of Employment, made a great fuss about the fact that the regulations would not apply to privatisations and competitive tendering, only to be told in the 1990s by the European Court of Justice that they had applied all along?

No, I do not agree at all. I am surprised that the hon. Gentleman should say that, because he said that he had read the speech that my hon. Friend the Member for Southend, East made in 1981. I do not have that in front of me, so I cannot quote it, but I shall rely on my memory. I think that the Minister at the Dispatch Box at that time was my right hon. and now noble Friend Lord Waddington, and that in response to my hon. Friend's speech he made it clear that the TUPE regulations as such would apply to local authorities. My hon. Friend asked the specific question whether privatisation would be within the scope of the regulations, and my right hon. and noble Friend made it clear that it would. The hon. Member for Barrow and Furness looks puzzled. I realise that this explodes his argument, but he can go to the Library and look up the words, by which, no doubt, he will be persuaded.

My hon. Friend the Member for Southend, East asked a number of questions, most of which did not fall within my area of responsibility.

It has never stopped the Minister in the past.

8.30 pm

The hon. Gentleman may say that, but I become more conservative and more cautious as I grow older.

My hon. Friend the Member for Southend, East expressed some serious concerns that I know are held outside and inside the House. I will ensure that my right hon. Friend the Secretary of State for the Environment notes those points and that my hon. Friend receives a proper reply, especially about local authority competitive tendering and the case in Eastbourne.

My hon. Friend expressed concern about the way in which the law has been changed beyond what was originally intended by a series of judgments by the European Court. I agree that there has been a significant change in the meaning of the law. The Government believe that the acquired rights directive should be amended and we will continue to argue that, because it cannot be in the interest of value for money to restrain the ability to carry out competitive tendering fairly in the interests of the taxpayer.

If the Government are so anxious to fight the battle and to change the directive, why, when they had the infraction proceedings against them, did they cave in on three of the four demands without a battle? It seems astonishing that they had two years of secret discussions and caved in on three of the four demands. I cannot understand why they are fighting the fourth demand at all.

It is unfair to describe the Government's approach as having been to cave in without a battle. We must consider the infraction proceedings that are being brought and, on the basis of legal advice, take a judgment on the best way forward. My hon. Friend is right to point out that, in one respect, we are continuing to fight our corner, but for obvious reasons I am not going to comment further.

My hon. Friend the Member for Southend, East knows perfectly well that it is not within the power of the House to alter the terms of the acquired rights directive or to pass legislation in conflict with it, without incurring those same infraction proceedings. If he is anxious about the effect of that directive and the extension of the effect of TUPE, I can understand and sympathise, but the way forward is to seek to amend the directive. That is the Government's position, for which we will continue to fight.

My hon. Friend should be in no doubt about our commitment to achieving change or our understanding of the problems that are being caused across the length and breadth of Britain, of which, I am sure, he will continue to remind us.

I promise that I shall not interrupt my hon. Friend again—[Interruption.] I would not do this if it were not serious. On privatisation, is it the view of the Government that retrospective claims against local authorities will be met by local authorities, by the company or, in terms of Frankovitch, by the Government? Local authorities must know, because millions of pounds and lots of jobs with private firms are at stake. Surely the Minister should give some guidance on retrospective cases. Will councils, employers or the Government pay?

Ministers are expected to do many things, but they are not expected to give instant legal advice on cases where the facts are not before them. I cannot respond in the way that my hon. Friend would wish. The guidance that has been given by my right hon. and learned Friend the Attorney-General has made it clear that each case under TUPE must be considered on its own merits. I am sure that no one's case would be helped if Ministers or anyone else were to make casual off-the-cuff remarks about the implications of the legislation.

Lords amendment No. 32 was tabled and agreed on Report in another place and is concerned with an employee who does not wish to transfer to a new employer when the undertaking in which he works is transferred. It was tabled to make the position clear following speculation about the effects in the United Kingdom of what is known as the Katsikas case. I am amazed that the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), having had such a good Scottish education, is not a classical Greek scholar. Mr. Katsikas was a Greek chef in a German restaurant. He refused to continue as a chef when the restaurant was franchised.

I am delighted that, on this occasion, the hon. Gentleman has a clear grasp of the detail.

The chef argued that he did not want to continue in the same job and the European Court considered whether he had a right not to transfer. The court held that he had that right. It has been suggested that, under existing United Kingdom law, the contract of an individual who refused to transfer to a new employer would remain in force with the old employer, whether the old employer wished that or not. If the old employer declined to maintain the contract of employment, it was suggested that he would be found to have dismissed the employee, who would then be entitled to redundancy or compensation for unfair dismissal.

I am delighted that the Labour party obviously agrees with the Government's assessment that that would not be so, which is why it tabled its rather misguided amendment, which would seek to provide that those who do not wish to transfer to the same job should be paid redundancy money. I do not know whether there is some kind of sabotage programme against competitive tendering in the public sector or some hidden agenda, but I cannot believe that the Labour party tabled this rather absurd amendment on an idle afternoon. Labour Members would like public sector employees whose operations are privatised or transferred to be able to get redundancy payments for refusing to transfer and the following day be re-employed in the same post, with all their conditions maintained. That clearly would be an abuse. It would be indefensible and I urge the House to reject the Labour amendment for that reason.

I hasten to add that the Government do not share the view that the contract of an individual who refused to transfer would remain in force. The advice that we have received is that an individual who refused to have his contract of employment transferred to an employer in this way would have no continuing rights against the old employer.

Nevertheless, because we are a careful and cautious Government, it was apparent that the Katsikas judgment had given some scope for uncertainty about the position of individuals who make use of their right to object to the transfer of their employment contracts, and the Government amendment was made on Report in another place not to change the existing law but simply to put the position beyond doubt. Having listened to my hon. Friend the Member for Southend, East, I am even more convinced that we were right to do so. Had the position not been placed beyond doubt, I am sure that, at a future date, some other unfortunate Minister would be berated for not having acted swiftly and decisively. I look forward to receiving my hon. Friend's support—along with that of the rest of my hon. Friends—in the Division Lobby. I trust that my hon. Friends will reject amendment (a) and vote for the Government amendment.

Question put, That the amendment to the Lords amendment be made:—

The House divided: Ayes 230, Noes 306.

Division No. 300]

[8.39 pm

AYES

Abbott, Ms DianeBermingham, Gerald
Adams, Mrs IreneBerry, Dr. Roger
Ainger, NickBlair, Tony
Ainsworth, Robert (Cov'try NE)Blunkett, David
Allen, GrahamBoateng, Paul
Anderson, Donald (Swansea E)Boyce, Jimmy
Anderson, Ms Janet (Ros'dale)Boyes, Roland
Armstrong, HilaryBradley, Keith
Ashton, JoeBray, Dr Jeremy
Austin-Walker, JohnBrown, Gordon (Dunfermline E)
Banks, Tony (Newham NW)Brown, N. (N'c'tle upon Tyne E)
Barnes, HarryBurden, Richard
Barron, KevinByers, Stephen
Battle, JohnCaborn, Richard
Bayley, HughCallaghan, Jim
Beckett, Rt Hon MargaretCampbell, Mrs Anne (C'bridge)
Bell, StuartCampbell, Ronnie (Blyth V)
Bennett, Andrew F.Campbell-Savours, D. N.
Benton, JoeCanavan, Dennis

Cann, JamieJones, Ieuan Wyn (Ynys Môn)
Chisholm, MalcolmJones, Jon Owen (Cardiff C)
Clapham, MichaelJones, Lynne (B'ham S O)
Clark, Dr David (South Shields)Jowell, Tessa
Clarke, Eric (Midlothian)Kaufman, Rt Hon Gerald
Clarke, Tom (Monklands W)Keen, Alan
Clelland, DavidKennedy, Jane (Lpool Brdgn)
Clwyd, Mrs AnnKhabra, Piara S.
Coffey, AnnKilfoyle, Peter
Connarty, MichaelKinnock, Rt Hon Neil (Islwyn)
Cook, Robin (Livingston)Leighton, Ron
Corbett, RobinLewis, Terry
Corbyn, JeremyLitherland, Robert
Cousins, JimLivingstone, Ken
Cryer, BobLloyd, Tony (Stretford)
Cunningham, Jim (Covy SE)Llwyd, Elfyn
Dafis, CynogLoyden, Eddie
Darling, AlistairMcAllion, John
Davidson, IanMcAvoy, Thomas
Davies, Bryan (Oldham C'tral)McCartney, Ian
Davies, Rt Hon Denzil (Llanelli)Macdonald, Calum
Davies, Ron (Caerphilly)McKelvey, William
Denham, JohnMackinlay, Andrew
Dewar, DonaldMcLeish, Henry
Dixon, DonMcMaster, Gordon
Dobson, FrankMcNamara, Kevin
Donohoe, Brian H.McWilliam, John
Dowd, JimMadden, Max
Dunwoody, Mrs GwynethMahon, Alice
Eagle, Ms AngelaMandelson, Peter
Eastham, KenMarshall, David (Shettleston)
Enright, DerekMartin, Michael J. (Springburn)
Etherington, BillMartlew, Eric
Evans, John (St Helens N)Maxton, John
Fatchett, DerekMichael, Alun
Faulds, AndrewMichie, Bill (Sheffield Heeley)
Fisher, MarkMilburn, Alan
Flynn, PaulMiller, Andrew
Foster, Rt Hon DerekMitchell, Austin (Gt Grimsby)
Foulkes, GeorgeMoonie, Dr Lewis
Fraser, JohnMorgan, Rhodri
Fyfe, MariaMorris, Rt Hon A. (Wy'nshawe)
Galbraith, SamMorris, Estelle (B'ham Yardley)
Gapes, MikeMorris, Rt Hon J. (Aberavon)
Garrett, JohnMowlam, Marjorie
George, BruceMudie, George
Gerrard, NeilMullin, Chris
Gilbert, Rt Hon Dr JohnMurphy, Paul
Godsiff, RogerOakes, Rt Hon Gordon
Golding, Mrs LlinO'Brien, Michael (N W'kshire)
Gordon, MildredO'Brien, William (Normanton)
Gould, BryanO'Hara, Edward
Graham, ThomasOlner, William
Grant, Bernie (Tottenham)O'Neill, Martin
Griffiths, Nigel (Edinburgh S)Orme, Rt Hon Stanley
Griffiths, Win (Bridgend)Patchett, Terry
Grocott, BrucePike, Peter L.
Gunnell, JohnPope, Greg
Hain, PeterPowell, Ray (Ogmore)
Hall, MikePrentice, Ms Bridget (Lew'm E)
Henderson, DougPrentice, Gordon (Pendle)
Heppell, JohnPrescott, John
Hill, Keith (Streatham)Primarolo, Dawn
Hoey, KatePurchase, Ken
Home Robertson, JohnQuin, Ms Joyce
Hood, JimmyRadice, Giles
Hoon, GeoffreyRandall, Stuart
Howarth, George (Knowsley N)Raynsford, Nick
Howells, Dr. Kim (Pontypridd)Reid, Dr John
Hoyle, DougRobertson, George (Hamilton)
Hughes, Kevin (Doncaster N)Roche, Mrs. Barbara
Hughes, Robert (Aberdeen N)Rogers, Allan
Hughes, Roy (Newport E)Rooker, Jeff
Hutton, JohnRooney, Terry
Ingram, AdamRowlands, Ted
Jackson, Glenda (H'stead)Ruddock, Joan
Jackson, Helen (Shef'ld, H)Sedgemore, Brian
Jamieson, DavidSheerman, Barry
Janner, GrevilleSheldon, Rt Hon Robert
Jones, Barry (Alyn and D'side)Shore, Rt Hon Peter

Short, ClareWalker, Rt Hon Sir Harold
Simpson, AlanWalley, Joan
Skinner, DennisWardell, Gareth (Gower)
Smith, Andrew (Oxford E)Wareing, Robert N
Smith, C. (Isl'ton S & F'sbury)Welsh, Andrew
Smith, Rt Hon John (M'kl'ds E)Wicks, Malcolm
Smith, Llew (Blaenau Gwent)Williams, Rt Hon Alan (Sw'n W)
Snape, PeterWilliams, Alan W (Carmarthen)
Soley, CliveWilson, Brian
Spearing, NigelWinnick, David
Spellar, JohnWise, Audrey
Steinberg, GerryWorthington, Tony
Stevenson, GeorgeWray, Jimmy
Strang, Dr. GavinYoung, David (Bolton SE)
Taylor, Mrs Ann (Dewsbury)
Tipping, Paddy

Tellers for the Ayes:

Turner, Dennis

Mr. James Arbuthnot and

Vaz, Keith

Mr. Alan Meale.

NOES

Ainsworth, Peter (East Surrey)Colvin, Michael
Aitken, JonathanCongdon, David
Alexander, RichardConway, Derek
Alison, Rt Hon Michael (Selby)Coombs, Anthony (Wyre For'st)
Allason, Rupert (Torbay)Coombs, Simon (Swindon)
Alton, DavidCope, Rt Hon Sir John
Amess, DavidCormack, Patrick
Arnold, Jacques (Gravesham)Couchman, James
Arnold, Sir Thomas (Hazel Grv)Cran, James
Ashby, DavidCurrie, Mrs Edwina (S D'by'ire)
Aspinwall, JackCurry, David (Skipton & Ripon)
Atkinson, Peter (Hexham)Davies, Quentin (Stamford)
Baker, Rt Hon K. (Mole Valley)Davis, David (Boothferry)
Baker, Nicholas (Dorset North)Day, Stephen
Baldry, TonyDeva, Nirj Joseph
Banks, Matthew (Southport)Devlin, Tim
Banks, Robert (Harrogate)Dickens, Geoffrey
Bates, MichaelDicks, Terry
Batiste, SpencerDorrell, Stephen
Beggs, RoyDouglas-Hamilton, Lord James
Bellingham, HenryDover, Den
Bendall, VivianDuncan, Alan
Beresford, Sir PaulDuncan-Smith, Iain
Biffen, Rt Hon JohnDunn, Bob
Blackburn, Dr John G.Durant, Sir Anthony
Body, Sir RichardDykes, Hugh
Bonsor, Sir NicholasEggar, Tim
Booth, HartleyElletson, Harold
Boswell, TimEvans, David (Welwyn Hatfield)
Bottomley, Peter (Eltham)Evans, Jonathan (Brecon)
Bottomley, Rt Hon VirginiaEvans, Nigel (Ribble Valley)
Bowis, JohnEvans, Roger (Monmouth)
Boyson, Rt Hon Sir RhodesEvennett, David
Brandreth, GylesFaber, David
Brazier, JulianFabricant, Michael
Bright, GrahamField, Barry (Isle of Wight)
Brown, M. (Brigg & Cl'thorpes)Fishburn, Dudley
Browning, Mrs. AngelaForman, Nigel
Bruce, Ian (S Dorset)Forsyth, Michael (Stirling)
Budgen, NicholasForsythe, Clifford (Antrim S)
Burns, SimonForth, Eric
Burt, AlistairFoster, Don (Bath)
Butcher, JohnFowler, Rt Hon Sir Norman
Butler, PeterFox, Dr Liam (Woodspring)
Butterfill, JohnFox, Sir Marcus (Shipley)
Campbell, Menzies (Fife NE)Freeman, Rt Hon Roger
Carlile, Alexander (Montgomry)French, Douglas
Carlisle, John (Luton North)Gale, Roger
Carlisle, Kenneth (Lincoln)Gallie, Phil
Carrington, MatthewGardiner, Sir George
Carttiss, MichaelGarel-Jones, Rt Hon Tristan
Cash, WilliamGarnier, Edward
Channon, Rt Hon PaulGillan, Cheryl
Chapman, SydneyGoodlad, Rt Hon Alastair
Churchill, MrGoodson-Wickes, Dr Charles
Clappison, JamesGorman, Mrs Teresa
Clark, Dr Michael (Rochford)Gorst, John
Clarke, Rt Hon Kenneth (Ruclif)Grant, Sir Anthony (Cambs SW)
Clifton-Brown, GeoffreyGreenway, Harry (Ealing N)
Coe, SebastianGreenway, John (Ryedale)

Griffiths, Peter (Portsmouth, N)Mitchell, Andrew (Gedling)
Grylls, Sir MichaelMoate, Sir Roger
Gummer, Rt Hon John SelwynMontgomery, Sir Fergus
Hague, WilliamMoss, Malcolm
Hamilton, Rt Hon Archie (Epsom)Needham, Richard
Hampson, Dr KeithNelson, Anthony
Hannam, Sir JohnNeubert, Sir Michael
Hargreaves, AndrewNewton, Rt Hon Tony
Harris, DavidNicholls, Patrick
Haselhurst, AlanNicholson, David (Taunton)
Hawkins, NickNicholson, Emma (Devon West)
Hawksley, WarrenNorris, Steve
Hayes, JerryOnslow, Rt Hon Sir Cranley
Heald, OliverOppenheim, Phillip
Heathcoat-Amory, DavidOttaway, Richard
Heseltine, Rt Hon MichaelPage, Richard
Higgins, Rt Hon Sir Terence L.Paice, James
Hill, James (Southampton Test)Patten, Rt Hon John
Hogg, Rt Hon Douglas (G'tham)Pattie, Rt Hon Sir Geoffrey
Horam, JohnPawsey, James
Hordern, Rt Hon Sir PeterPeacock, Mrs Elizabeth
Howard, Rt Hon MichaelPickles, Eric
Howarth, Alan (Strat'rd-on-A)Porter, Barry (Wirral S)
Howell, Rt Hon David (G'dford)Porter, David (Waveney)
Howell, Sir Ralph (NorthPowell, William (Corby)

Norfolk)

Redwood, Rt Hon John
Hughes Robert G. (Harrow W)Rendel, David
Hunt, Rt Hon David (Wirral W)Richards, Rod
Hunter, AndrewRiddick, Graham
Jack, MichaelRobathan, Andrew
Jackson, Robert (Wantage)Roberts, Rt Hon Sir Wyn
Jenkin, BernardRobertson, Raymond (Ab'd'n S)
Johnson Smith, Sir GeoffreyRobinson, Mark (Somerton)
Jones, Gwilym (Cardiff N)Roe, Mrs Marion (Broxbourne)
Jones, Nigel (Cheltenham)Rowe, Andrew (Mid Kent)
Jones, Robert B. (W Hertfdshr)Rumbold, Rt Hon Dame Angela
Jopling, Rt Hon MichaelRyder, Rt Hon Richard
Kennedy, Charles (Ross,C&S)Sackville, Tom
Key, RobertScott, Rt Hon Nicholas
Kilfedder, Sir JamesShaw, David (Dover)
Kirkhope, TimothyShaw, Sir Giles (Pudsey)
Kirkwood, ArchyShephard, Rt Hon Gillian
Knapman, RogerShepherd, Colin (Hereford)
Knight, Mrs Angela (Erewash)Shepherd, Richard (Aldridge)
Knight, Greg (Derby N)Shersby, Michael
Knight, Dame Jill (Bir'm E'st'n)Sims, Roger
Kynoch, George (Kincardine)Skeet, Sir Trevor
Lait, Mrs JacquiSmith, Tim (Beaconsfield)
Lang, Rt Hon IanSmyth, Rev Martin (Belfast S)
Lawrence, Sir IvanSoames, Nicholas
Legg, BarrySpencer, Sir Derek
Leigh, EdwardSpicer, Sir James (W Dorset)
Lennox-Boyd, MarkSpicer, Michael (S Worcs)
Lidington, DavidSpink, Dr Robert
Lightbown, DavidSpring, Richard
Lilley, Rt Hon PeterSproat, Iain
Lloyd, Peter (Fareham)Squire, Robin (Hornchurch)
Lord, MichaelStanley, Rt Hon Sir John
Luff, PeterSteen, Anthony
Lyell, Rt Hon Sir NicholasStephen, Michael
Lynne, Ms LizStern, Michael
MacGregor, Rt Hon JohnStewart, Allan
MacKay, AndrewStreeter, Gary
Maclean, DavidSumberg, David
McNair-Wilson, Sir PatrickSweeney, Walter
Madel, DavidSykes, John
Maitland, Lady OlgaTapsell, Sir Peter
Malone, GeraldTaylor, Ian (Esher)
Mans, KeithTaylor, John M. (Solihull)
Marlow, TonyTaylor, Matthew (Truro)
Marshall, John (Hendon S)Taylor, Sir Teddy (Southend, E)
Marshall, Sir Michael (Arundel)Temple-Morris, Peter
Martin, David (Portsmouth S)Thomason, Roy
Mates, MichaelThompson, Patrick (Norwich N)
Mawhinney, Dr BrianThornton, Sir Malcolm
Mellor, Rt Hon DavidThurnham, Peter
Merchant, PiersTownend, John (Bridlington)
Michie, Mrs Ray (Argyll Bute)Townsend, Cyril D. (Bexl'yh'th)
Milligan, StephenTracey, Richard
Mills, IainTredinnick, David

Trend, MichaelWhitney, Ray
Trimble, DavidWhittingdale, John
Trotter, NevilleWiddecombe, Ann
Twinn, Dr IanWilletts, David
Tyler, PaulWilshire, David
Vaughan, Sir GerardWinterton, Mrs Ann (Congleton)
Viggers, PeterWinterton, Nicholas (Macc'f'ld)
Waldegrave, Rt Hon WilliamWolfson, Mark
Walden, GeorgeWood, Timothy
Wallace, JamesYeo, Tim
Waller, GaryYoung, Rt Hon Sir George
Wardle, Charles (Bexhill)
Waterson, Nigel

Tellers for the Noes:

Watts, John

Mr. James Arbuthnot and

Wells, Bowen

Mr. Irvine Patrick.

Wheeler, Rt Hon Sir John

Question accordinly negatived.

Lords amendment No. 32 agreed to.

Lords amendment: No. 33, after clause 34, insert the following new clause— Agreements not to take proceedings before industrial tribunal

(".—(1) In section 140 of the 1978 Act (restrictions on contracting out)—

  • (a) in subsection (2) (exceptions), after the paragraph (fa) inserted by paragraph 21 of Schedule 7 to this Act, there shall be inserted—
    • "(fb) to any agreement to refrain from instituting or continuing any proceedings specified in section 133(1) (except (c)) or 134(1) before an industrial tribunal if the conditions regulating compromise agreements under this Act are satisfied in relation to the agreement;";
  • (b) after subsection (2), there shall be inserted—
  • "(3) The conditions regulating compromise agreements under this Act are that—

  • (a) the agreement must be in writing;
  • (b) the agreement must relate to the particular complaint;
  • (c) the employee must have received independent legal advice from a qualified lawyer as to the terms and effect of the proposed agreement and in particular its effect on his ability to pursue his rights before an industrial tribunal;
  • (d) there must be in force, when the adviser gives the advice, a policy of insurance covering the risk of a claim by the employee in respect of loss arising in consequence of the advice;
  • (e) the agreement must identify the adviser; and
  • (f) the agreement must state that the conditions regulating compromise agreements under this Act are satisfied.
  • (4) In subsection (3)—

    • "independent", in relation to legal advice to the employee, means that it is given by a lawyer who is not acting in the matter for the employer or an associated employer; and
    • "qualified lawyer" means—
  • (a) as respects proceedings in England and Wales—
  • (i) a barrister, whether in practice as such or employed to give legal advice, or
  • (ii) a solicitor of the Supreme Court who holds a practising certificate;
  • (b) as respects proceedings in Scotland—
  • (i) an advocate, whether in practice as such or employed to give legal advice, or
  • (ii) a solicitor who holds a practising certificate.
  • (2) Schedule (Compromise contracts) to this Act shall have effect for making corresponding amendments in the Sex Discrimination Act 1975, the Race Relations Act 1976, the Wages Act 1986 and the Trade Union and Labour Relations (Consolidation) Act 1992.")

    I beg to move, That this House doth agree with the Lords in the said amendment.

    With this it will be convenient to discuss Lords amendments Nos. 43, 61 and 62.

    It gives me great pleasure to put to the House Lords amendment No. 33. My hon. Friend the Member for Elmet (Mr. Batiste) drew our attention in Committee to employers' concerns in this matter. Therefore, I hope that he, and indeed all hon. Members, will welcome the new provisions. I hope that after the previous unsuccessful skirmish there will be peace among the Opposition, at least in respect of this provision.

    Amendments Nos. 33 and 61 offer a new, alternative means by which the parties to a particular dispute may reach a speedy and effective agreement between them which settles the dispute, without needing to refer it to an industrial tribunal. It will, however, be possible to do that only if a number of important conditions included for the express purpose of safeguarding the interests of the individual are met.

    Under the proposed new provisions, if an agreement settling a dispute includes a term which precludes an individual's right to bring or to continue proceedings before an industrial tribunal in respect of that dispute, that term will be enforceable provided that all the relevant conditions are satisfied.

    At present, under the 1978 Act, any term in an agreement which precludes the employee's right to bring proceedings before an industrial tribunal is generally invalid. It cannot prevent the employee from bringing a subsequent tribunal case, the main exception being where an Advisory, Conciliation and Arbitration Service conciliation officer has taken action under section 133 or section 134 of the 1978 Act to assist the settlement. Similar provisions are contained in the Sex Discrimination Act 1975, and the Race Relations Act 1976, the Wages Act 1986 and the 1992 consolidation Act. Amendment No. 61 would amend those Acts in the same way as we propose to amend the 1978 Act.

    If the parties to a dispute have already reached an agreement between themselves, ACAS takes the view that it has no statutory role to become involved. In such a case there is no dispute outstanding and therefore, by definition, nothing to conciliate. In this it is supported by legal advice. The practice of validating, or "rubber-stamping", privately reached agreements represented a considerable drain on ACAS resources until it ceased after receipt of that advice in 1990. In 1989, the last year before that service was withdrawn, ACAS dealt with well over 17,000 such cases, representing 36 per cent. of the total number of cases received.

    Representations seeking a change to the current situation have been made by a number of employer associations. We have therefore consulted interested parties on the proposals set out in the amendments, and the response has revealed that they would indeed be welcomed.

    The proposed means of settling disputes will, of course, be optional. No one can be forced into signing such an agreement; people will always be able to choose to take their claim to an industrial tribunal instead. However, it is obvious that any legislation which allows individuals to agree not to bring or to continue with tribunal proceedings, even if doing so is optional, must be very tightly drawn for the protection of the individual. The amendments therefore include a number of important conditions which must be met if the term of the agreement which precludes the employee's right subsequently to bring a tribunal claim is to be binding. That is to ensure that no one is misled or coerced.

    First, the new provisions can be used only in respect of a dispute which has already arisen between the parties and is outstanding. Concerns have reached us from some quarters that the new provisions could be used to encourage individuals to agree not to bring any tribunal claims should disputes arise in the future. I can reassure hon. Members that it would not be possible to use the provisions to do that. It is a condition that the agreement should relate to a specific dispute that has already arisen, and, if that condition is not met, the term of the agreement which precludes a tribunal claim will not be enforceable.

    Secondly, the amendments require that the individual must have received advice from a qualified solicitor or barrister or, in Scotland, an advocate satisfying the conditions set out in the amendments.

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    The adviser, who must be named in the agreement, must also be independent of the other party or parties to the dispute. The adviser must advise the individual about the terms and effect of the agreement, especially its effect on his or her right to pursue a tribunal claim with regard to the dispute to be settled by the agreement. The advice must be covered by insurance so that, in the event of the individual suffering loss as a result of negligent advice, he or she will be adequately protected. Finally, the agreement must be in writing, and must state that the relevant conditions are satisfied.

    I hope that hon. Members will agree that those conditions will adequately safeguard the interests of individuals, while at the same time offering a simple and effective means of settling individual disputes without adding unnecessarily to the already considerable work load of our industrial tribunals.

    Amendment No. 62 will amend schedule 13 of the 1978 Act, which deals with the rules governing the calculation of an individual's period of continuous employment. At present, schedule 13 allows for regulations to be made to preserve continuity of employment when an individual is reinstated or re-engaged as a consequence of the presentation of a claim of unfair dismissal under the 1978 Act, and when he is re-employed as a consequence of an agreement reached with the help of an ACAS conciliation officer when he claims action has been taken where he could present a claim of unfair dismissal.

    The amendment extends the order-making power so. that regulations can be made to ensure that, when individuals are re-employed as a consequence of an agreement reached under the proposed new provisions in the 1978 Act for settling a complaint relating to unfair dismissal, or the new provisions in the Sex Discrimination Act 1975 or the Race Relations Act 1976, continuity of employment will be preserved in exactly the same way.

    It also extends the order-making power to cover re-employment as a consequence of the presentation of a complaint of dismissal under the Sex Discrimination Act or the Race Relations Act, and re-employment after conciliation by an ACAS officer with regard to such a claim, but before such a claim has been presented. That closes a lacuna in the existing provisions.

    I hope, therefore, to have the support of hon. Members on both sides of the House in moving that we agree with the House of Lords amendments.

    As my hon. Friend the Minister said, this amendment arises out of a clause that I submitted to the Committee to address what is and has been since 1970—and, indeed, for a period before that—a real problem in industrial relations. It cannot be right that, when two sides to a dispute voluntarily reach an acceptable agreement, there is no mechanism for making that agreement enforceable.

    I accept that there were some defects in the clause that

    I submitted and I withdrew it on the undertaking that the Government would produce a clause in another place. The Government have produced such a clause and I wholeheartedly endorse it. I congratulate them on striking a sensible balance between the need to provide a relatively simple and easy method of resolving disputes and the need to protect the rights of individuals.

    When I first read this clause, I thought that there might be a slight problem in that it would require employers to rely on a declaration by a solicitor or by a barrister representing the employee that various conditions had been met which they might be unable to verify. However, after examining it in practical terms, the likelihood of that presenting a problem would be limited. The professional bodies of both barristers and solicitors would deal heavily with any member of the profession who signed a false declaration.

    On that basis, there should be no obstacle to agreeing to the clause. It will be widely welcomed by industry at large as a way of bringing peace and certainty to an area of industrial relations which has caused significant problems since ACAS withdrew from performing this service.

    I assure the Under-Secretary of State for Employment that hostilities on this Bill have probably come to an end. I cannot absolutely rule out a knee in the groin as we depart from the battlefield, but we can probably say that there is peace in our time.

    This clause has resulted from the efforts of the hon. Member for Elmet (Mr. Batiste) and he must be congratulated on that. The Government have introduced a reasonable and simple clause that has the important aspect of guaranteeing the rights of individuals. I am impressed by the conditions that are laid out—the employee must have received independent legal advice from a qualified lawyer and the agreement must be in writing. Those matters are of supreme importance.

    The hon. Gentleman is correct not to worry about the question of false declarations. I understand that the legal profession is bound by an ethical code, as are most professions. One of the great sins of any profession is to make a false declaration. In the medical profession, doctors do not get struck off for killing anyone. But if they indulge in alcohol, adultery, advertising or false declaration, they can lose their livelihood. I presume that the position in the legal profession is similar. Alcohol is probably excluded from the list that applies to the legal profession.

    The clause is simple and straightforward and it deals with an important issue. I am grateful to the Government for introducing it in such a splendid manner. It is such a good clause that I almost thought that I must have written it.

    Question put and agreed to.