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Employment Bill [HL]

Volume 699: debated on Monday 25 February 2008

(Second Day)

Good afternoon and welcome to the second day of Committee. As noble Lords know, the rules and regulations state that during Divisions they must act as if they were in the Chamber. If there is a Division in the Chamber while we are sitting, the Committee will adjourn. As soon as the Division Bell rings the Committee will rise and resume after 10 minutes.

The noble Lord, Lord Wedderburn, wishes to make a statement.

With leave, I wish to make a personal statement of apology to the Committee about the way in which the noble Baroness, Lady Turner, and I left our position on Clause 4 on 4 February. On reading Hansard, we realised that we had left a false impression, which should be put right before Report. My noble friend and I believe that Clause 4 is not compatible with Article 6 of the European convention, which accords to everyone the right to a fair and public hearing before an independent tribunal, which pronounces judgment publicly. That is made worse by the fact that the European Court of Human Rights, in a judgment given by 13 judges against five dissentients on 13 November 2007, in the case of DH v Czech Republic, restated the court’s interpretation of the law—especially in respect of waiver of convention rights. We intend to take that position further on Report. I have already written to the Minister. I apologise again for our failure to make that clear to the Committee in our earlier proceedings.

Clause 5 [Conciliation before bringing of proceedings]:

17: Clause 5, page 4, line 21, at end insert—

“( ) In subsection (2), for paragraphs (a) and (b) there are substituted the words “in all cases”.”

( ) After subsection (2) there is inserted—

“(2ZA) No proceedings to which this section relates shall be heard by the tribunal until the conciliation officer has certified in writing that—

(a) he has endeavoured to promote a settlement of the proceedings in accordance with subsection (2);(b) the parties to the dispute have, in his opinion, cooperated with the conciliation procedure or have each confirmed that they have participated in an independent mediation or conciliation procedure; and(c) no settlement has been reached.””

The noble Lord said: I should declare an interest not only as a partner in the national commercial law firm Beachcroft LLP, but—like my noble friend Lord Henley, as he mentioned at the previous sitting—as a fully accredited CEDR mediator. Therefore, not only do I practise mediation but I am a very strong believer in the whole process.

CEDR—the Centre for Effective Dispute Resolution—is widely recognised as the leader in Europe in the field of mediation and alternative dispute resolution. Its mission is quite simple—to encourage, develop and implement mediation and other cost-effective dispute resolution and similar prevention techniques in commercial or public sector disputes and civil litigation. Its networks and strong track record of excellence and innovation in this field enable it often to be a practical and thought leader in the ADR field.

I came to mediation with a number of serious drawbacks to qualifying and passing the relevant examinations. First, I was a lawyer. As one swiftly recognises in mediation, it is very important not to reach any judgment or conclusion; it is for the parties themselves to settle a dispute on terms that they agree rather than ones imposed on them. However, slowly but surely over the period of training, I managed to get rid of those impulsive tendencies, and I duly qualified. Since then, I have increasingly recognised the importance of mediation and have been following very carefully over the past few years how mediation has developed. I recall that the noble and learned Lord, Lord Woolf, felt strongly that in civil litigation there should be every encouragement to people to utilise mediation as a method of solving their disputes rather than resort to litigation. Of course, litigation is costly not only to the parties involved but to the Government, who have to set up the court structure to meet demand that is rising, particularly at present.

In the amendment, I seek to read across into employment tribunals and emphasise again the importance of mediation. When attempted, mediation often sadly comes too late in the process. In some states in America, it is a requirement that the mediation process be exhausted before the parties are allowed to take advantage of the processes in courts and tribunals. The essence of mediation is that it: first, involves a neutral third party to facilitate negotiations; secondly, is quick and inexpensive, without prejudice and confidential; thirdly, enables the parties to devise solutions that are not possible in an adjudicative process such as litigation, tribunal proceedings and arbitration; and fourthly, involves the parties who either have or represent parties who have sufficient authority to settle.

A lot will depend on the skill of the mediator, of course. It is important for the mediator to have had specific training and experience. Over the years, particularly when I had the honour to be involved as Secretary of State for Employment, I have had the highest possible regard for ACAS. We could suddenly move into a debate about the difference between conciliation and mediation, which would be interesting, but I am not too sure that it would be helpful. My main purpose is to encourage alternative dispute resolution.

The amendment would mean that, before the parties could have access to the tribunal process, they would have to go through mediation. I make no apology for that because, as soon as you get close to proceedings, the issues often escalate in seriousness, and suddenly it becomes difficult to try to resolve them. Often there are outside forces involved that come between the parties, and the whole thing gets to such a stage that it becomes virtually impossible for ACAS or an independent mediator, whichever it is, to bring things to a successful conclusion. No one ever benefits from an extended process. The great advantage of mediation is that it speeds up the process of resolving a problem. It is particularly important in employment tribunals, because one hopes that the parties will have a continuing relationship. It does not necessarily mean that the relationship has to end. The great advantage of alternative dispute resolution is to get the parties together to solve their differences and then to move on, without ever having had to go before a tribunal.

I have probably outlined enough the purpose behind the amendment. It perhaps goes reasonably far in the penalty involved and I would be open to persuasion about that, which is why I am testing opinions at this stage in Committee with a view to returning to the issue on Report if possible. It may well be that ACAS should be given a power more specifically to mediate, because there are some highly qualified people within ACAS who could mediate as well as conciliate. Of course, conciliation is what ACAS is expert at but the purpose of my amendment is to highlight the role of mediation, which I believe has an increasing part to play as we move towards a more effective system of alternative dispute resolution. I beg to move.

I have a great deal of sympathy with what has been said by the noble Lord, Lord Hunt, and I admire the work of the Centre for Effective Dispute Resolution, with which he is associated. However, I have always understood—and, in a way, preferred—the idea of mediation as a voluntary procedure. As I understand it, in proposed new paragraph (b) in the amendment, it is not only that before anyone can go to a tribunal there has to be a certificate in writing from the conciliation officer that,

“he has endeavoured to promote a settlement”,

but that the parties to the dispute must have,

“co-operated with the conciliation procedure or … confirmed that they have participated in an independent mediation or conciliation procedure”.

In other words, I gather from what the noble Lord said in introducing his amendment that he requires people to go through some kind of mediation before they can get anywhere near a tribunal. That seems to take his perfectly good idea rather too far, and I question it.

With respect to the noble Lord who moved the amendment, two things must be made clear. I feel like saying, “Hands up”, as my friend Tony Benn once said. I would say, “Hands up those who know the terms and history of the Conciliation Act 1896”. I suspect that not even the noble Lord who moved the amendment would raise his hand to that.

I wish to make two points. First, discussion about Clause 5 and things such as this amendment are understandable in the sense that a settlement before litigation is always desirable. In financial services and commercial law, of which the noble Lord has great experience, no doubt mediation is a suitable and desirable method, but that is not true of employment relations and I shall explain why.

Since the imaginative passage of the Conciliation Act 1896 over 100 years ago, the Board of Trade—later the Ministry of Labour—at the party’s request was given statutory power to appoint conciliators in its discretion in respect of any difference between the parties “existing or apprehended”. That is a very important phrase which is still in the legislation today. Under the 1896 Act, the ministry built up an army of industrial relations officers—the IROs—whose work was explained in many publications. They had no compulsory powers, just like today, but they had power to respond to the parties with the appointment of conciliators. That is why they are given notice of claims in employment tribunals today, as they have been for a large part of the 100-year history, which is at stake in this amendment. The conciliators take steps to explain the positions of the parties without promoting a solution as such but they try to make clear the facts and differences between the parties.

Accounts of that experience over the 100 years appear in various commentaries, including one based especially on the Ministry of Labour’s own evidence to the 1968 Donovan commission, the book called Employment Grievances and Disputes Procedures, published in 1969 by the University of California, the authors of which are myself and Paul Davies.

ACAS has had perfectly capable mediators, but it prefers to use the method of conciliation because of its experience over a century in which the mechanism has been adapted and varied. If your Lordships look at the history you will find many new steps were taken to improve conciliation, but ACAS by the 1960s was quite clear that mediation proposing solutions to the parties was not the way ahead. By the 1970s, for many reasons, including the difficulties encountered by the impact of incomes policies of both Labour and Conservative Governments, it was decided to transfer the conciliation and the arbitration functions to ACAS, which is founded as an independent service and not subject to any Government’s or Minister’s orders or directions. I must declare an interest as having given advice and contributed to the form and substance of the 1974 and 1975 legislation.

The Minister has kindly circulated the latest draft of the invaluable ACAS revised code of practice on disputes procedures, and in his covering letter he rightly stressed the independence of ACAS. But ACAS did not spring fully armed from the heavens, like Athena from the head of Zeus. From the outset its methods have reflected the experience, lessons and modifications adopted in the layers of gradual change and experience since 1896. That experience suggested that voluntary conciliation, clarifying the facts and measuring the distance between the parties was desirable. That great conciliator of the early part of the century, Lord Askwith, wrote in his book of 1920 on conciliation that, for conciliators,

“the main point is to get the parties together”,


“patience, as the first, second and third qualification”.

A mediator no doubt tries his best but, in making proposals for solutions, it was found by ACAS and, before it, by the industrial relations officers, that mediation had drawbacks which conciliation did not. As the leading textbook puts it:

“Mediation differs from conciliation in that a mediator may make positive recommendations”.

The IROs and today’s ACAS conciliators have found in common that conciliation is the better technique.

Even the new ACAS scheme, which is a very special scheme made by order in May 2001 under the 1998 Act to reduce proceedings to a bare minimum without any legal activity, has not been adopted by more than a mere handful of the tens of thousands of the cases known to ACAS in employment disputes.

ACAS conciliation is the method which experience shows has triumphed; it should not be lightly tampered with. In 2006-07, the record shows that ACAS arranged settlements in individual employment disputes in 42,805 out of 176,000, and many ACAS interventions also helped to promote a further 54,271 settlements by means of withdrawal of the claim. The Minister said at Second Reading that,

“around 75 per cent of claims made to an employment tribunal are resolved before reaching a hearing—a substantial portion with the involvement of ACAS”.—[Official Report, 7/1/08; col. 637.]

Your Lordships should take note of that quotation before taking any step to interfere by statute with ACAS’s methods.

That leads me to my second point, a quote from the Minister when he claimed a 75 per cent settlement rate with the help of ACAS. He went on:

“But a significant proportion of cases that reach a tribunal hearing really could be resolved beforehand between the parties, saving cost and time for employer and employee alike”.—[Official Report, 7/1/08; col. 637.]

The Minister said not that a further significant proportion “might be resolved”, but that it “could be resolved”. If I had said that, I would want evidence for that fact; it was stated as a fact, not an estimate or forward dream. There is nothing either in the Gibbons report—his experience is in National Health Service mediation, as different from employment as financial services—or in any other research of which I know to support this statement of fact being made with confidence.

I was going to comment on the Gibbons report. I simply reduce it to the same stuff that is in the Government’s report. Sections 4 and 5 advance anecdotal evidence, such as the report’s authors having “heard it said”, or “it has been mentioned”, without telling us who by or what constituency they represent. It is plastered all over the last sections of the Gibbons report, which also says that,

“the Government should review existing powers to see whether they are adequate and whether extending them would be effective in deterring those cases that have no prospect of success and parties whose intent or action is to waste time and drain valuable tribunal resources”.

That is a statement of fact. Where is the evidence for it? Where is the survey showing that those who do not settle with ACAS’s help include those whose ambition is merely to waste time? I know of no such evidence, and advance to your Lordships the contention that there is no such evidence. The intent to waste time is a serious charge.

The tribunal rules already give tribunals or their chairmen power to impose a forfeitable deposit on a claim unlikely to succeed, and the power to strike out claims that are vexatious or unreasonable. Regulations state that,

“a chairman or tribunal may make a judgment or order … (b) striking out or amending all or part of any claim or response on the grounds that it is scandalous, vexatious or has no reasonable prospect of success”.

Tribunals strike out very few claims, but they do so when they think that they have no reasonable basis. Sub-paragraph (c) reads,

“striking out any claim or response ... on the grounds that the manner in which the proceedings have been conducted by or on behalf of the claimant or the respondent ... has been scandalous, unreasonable or vexatious”.

The very small number of cases that has been struck out on those grounds is of great importance. Of course we all know, or have heard of, an obsessive claimant who just will not give up. Anyone who has had anything to do with the tribunals knows stories of that kind. A special survey by the tribunal service in 1998 found that even if unreasonable claims were defined as claims in which the first legal advice was that the claimant was on to a loser, only a maximum of 4 per cent of claims could be said to be unreasonable. Commentators, such as the main textbook by Professors Deakin and Morris, point out that many of the leading cases were claims in which the lawyer in the first response said that the case could not succeed, but it did. My belief and contention is that there is no objective evidence that that 4 per cent maximum figure is being greatly exceeded or, indeed, exceeded at all, even on that wide and doubtful definition of an unreasonable case.

Can the Minister say today whether there is further objective evidence of this of which I am unaware—or he could write or tell me on Report—that suggests that a substantial proportion of claims that get to the tribunal could be solved by better conciliation? To say that is a criticism of ACAS and the 100 years’ experience that it enshrines. The argument that settlements have been inadequate has nothing to support it, nor is there is evidence that overall the tribunals are too restrained in their exercise of the power to strike out. Until proved by further objective evidence, my submission is that public policy in relation to the matters put forward in Clause 5 and in the noble Lord’s amendment should not be guided by such anecdotal beliefs. The ACAS procedures should be left without statutory interruption and amendment.

I support my noble friend’s amendment. Like him, I declare an interest as I am also an accredited mediator with CEDR; indeed, my noble friend introduced me to mediation. My noble friend said that he came to it with the disadvantage of being a lawyer. I explained to him that I had forgotten most of the law that I had ever known, and he assured me that that would positively assist me in my training as a mediator. Sure enough, it did, and I qualified in due course.

My noble friend dealt with the matter admirably. The only point I want to pick up was made by the noble Lord, Lord Borrie, when he talked about compulsion being brought in by my noble friend’s amendment, particularly the compulsion in proposed new paragraphs (a)—

“he has endeavoured to promote a settlement of the proceedings in accordance with subsection (2)”—

and (b)—

“the parties to the dispute have, in his opinion, cooperated with the conciliation procedure”.

I accept that, in the main, mediation works best when it is voluntary, and that the idea of forced mediation should be viewed with some care. I know that the Government are keen to promote mediation. Indeed, I remember going to see the noble and learned Baroness, Lady Scotland, when she was a Minister in what I suppose was then the Lord Chancellor’s Department or it might have been the Department for Constitutional Affairs—it certainly was not the Ministry of Justice at that stage. As a Minister, she was promoting mediation.

Was any objective evidence or survey put forward in these conversations to show that the ACAS decision is not a useful method in employment disputes—I stress, in employment disputes? ADR, as alternative dispute resolution has become known, is the flavour of the month. The website of the Ministry of Justice suggests that ADR should be used in a wide range of litigation, but the website does not include employment disputes, and the reason for that is ACAS.

I am talking at this stage more generally about mediation over the entire civil field. I cannot recall the details of my conversation with the noble and learned Baroness, Lady Scotland, about whether she thought that it was worth taking it into employment law cases. I was responding to the noble Lord, Lord Borrie, saying that not only are the Government promoting mediation, but also the courts. The noble Lord will remember Dunnett v Railtrack, where the Court of Appeal made it clear that a failure to mediate could be taken into account when assessing damages in due course. Before the noble Lord, Lord Wedderburn, rises, I accept that that was not an employment law case, but it was still a case where the Court of Appeal spoke of the generality of mediation. It is therefore relevant to cite it on this occasion. That is all I want to say at this stage; I have no doubt that we will come back to this matter on Report. I can see that the noble Lord, Lord Wedderburn, seems fundamentally opposed to the idea of any mediation that might undermine what ACAS already does, but my noble friend Lord Hunt said that he could not see why the two cannot run in tandem.

I thank my noble friend Lord Wedderburn for that walk through the past 100 years of mediation legislation, from Zeus to the Conciliation Act 1896 in one fell swoop. I assure him that in the Black Country they talk of little else. The amendments would in effect force people whose employment rights had been infringed to participate in some kind of conciliation or mediation process before they could bring a claim to an employment tribunal. I thank the noble Lord, Lord Hunt, for his letter, which I received this morning, setting out what he was going to say this afternoon. He stated that he was sorry that we did not reach Amendment No. 17 on the previous occasion. I, too, am sorry, and sincerely hope that we can make more productive use of time, rather than people having to wait for a long time and then finding that they are out of time to speak.

The Government believe that more disputes could benefit from early mediation. Mediation has an increasingly important part to play in resolving the problems before a tribunal claim is made. We announced on 6 February that we intend to invest significant resources in ACAS’s pre-claim conciliation activities to make this service more widely available and better known. We also intend, through Clause 6, to remove time restrictions on ACAS conciliation after an employment tribunal claim has been made, to ensure that ACAS assistance is available whenever—throughout the process—the parties decide that they want it in the period before the tribunal delivers a judgment. We are also investing significantly in improving the ACAS helpline, so that more people are able to benefit from advice on the various ways of sorting out employment disputes, including, I assure the Committee, through the various alternative dispute resolution methods.

Just like the noble Lord, Lord Hunt, I was a lawyer for some 20 years. I was on the corporate side, so I never had the need to avoid litigation or tribunal hearings. That was not where I made my money every day. I often thought, “Settle out of court? Where’s the fun in that?”. If we can make wider use of all forms of alternative dispute resolution methods that would be a very good thing.

Our total investment in additional, early conciliation and improved advice services will be up to £37 million over the next three years. The Government also recognise the important contribution of other providers of mediation and ADR services in helping to settle employment disputes. They can help to resolve problems which are in their early stages, even before the point at which ACAS can offer its services. In my view that would be complementary to and accretive of what ACAS does and would not in any way substitute or undermine ACAS. They also have a role to play in raising the capacity of employers to manage their employees effectively and to deal with conflict in the workplace. We are working with alternative dispute resolution providers of all sorts to examine how they can best promote their services to employers.

It is very important that the noble Lord, Lord Hunt, understands that that is where we are coming from. In no way are we seeking to do away with any opportunity for any form of mediation before a hearing and we certainly do not wish to undermine the excellent work done by ACAS.

Perhaps I may ask the Minister a simple question, which he may wish to answer after today. Did ACAS, in view of its 100 years’ experience, suggest or ask for mediation to operate more in employment disputes? Alternative dispute resolution is now an industry and a very good one where it applies successfully in things like financial services and commercial law, where I have some experience of its work.

I do not know, but I shall find out and I shall come back to my noble friend.

Michael Gibbons, in his review of dispute resolution in Great Britain, carefully considered the arguments for requiring mediation before an employment tribunal claim could be considered. That is the essence of this. He concluded that it would not be appropriate to recommend the introduction of mandatory or near-mandatory alternative dispute resolution. As my noble friend Lord Borrie said, we do not wish to make it a condition of a tribunal hearing that mediation has in some form taken place as a legal condition. Gibbons concluded that it would not be appropriate to recommend the introduction of mandatory ADR. Stakeholders who contributed to the review, including representatives of employees and employers, were firmly of the view that if mediation or conciliation were required in all or the vast majority of cases, regardless of their specific circumstances, then it would become just another procedural step in the process and would quickly become discredited. Most mediators would also agree that mediation is effective only when all parties enter into it voluntarily.

Michael Gibbons concluded that,

“the Review is very reluctant to propose prescription or compulsion in an arena where it has failed so recently … the Review has therefore concluded that the Government should adopt a voluntary approach to encourage and enable more use of Alternative Dispute Resolution techniques to settle disputes early”.

Having consulted on his conclusions, the Government share that analysis. Our approach is to replace the prescriptive requirements of the existing dispute procedures with high-quality advice and support to help people resolve their problems, in a flexible and non-statutory way. We believe that this carrot approach will be far more effective than the stick of statutory prescription.

These amendments would introduce a mandatory system of the kind that the Gibbons review decided against. They would make mediation or conciliation after a claim a required step before a tribunal could hear a case. They would also require ACAS to provide conciliation on request before a potential claim in all the circumstances.

My noble friend Lord Wedderburn asked where the evidence was. When I was director-general of the CBI I toured the country listening to the problems raised by business. I was told of, especially in smaller businesses, many examples where people left their employment happily—indeed they often had a whip-round for the leaving present—and then, on the day before the statutory period came to an end, in came the claim. Often it came with a “without prejudice” letter that said: “We can wrap you up in all this for months at a huge cost in time and money. Pay us X pounds and it will all go away in the morning”. The system is open to abuse. That is why the Government brought in the original idea. We have to ensure that that does not happen. There is your evidence, my noble friend. I heard many times around the country from business that year after year the process was being abused.

Does the Minister remember that in the year that the Employment Tribunals Service carried out its independent report on all possible types of unreasonable claims, business through the CBI suggested—as it has suggested this year—that something like 17 per cent of cases that went to tribunals were unreasonable and would never be there if only we used some other type of conciliation or mediation? In 1998, the Employment Tribunals Service found that, at the largest, the figure was 4 per cent. Is there any evidence whatever, except anecdotal evidence, that that figure has increased?

I assure my noble friend that I am certainly on the side of 17 per cent. I am amazed that it is so little.

These amendments would make a claimant’s ability to access an employment tribunal conditional on an ACAS conciliation officer or independent mediator certifying that all parties had co-operated with the conciliation procedure, a serious obstacle to justice. An unco-operative employer could prevent a claim being heard simply by refusing to engage in the conciliation process. From my previous experience, I am the first to wish to see the employers’ burden of red tape and expense being minimised, but I am also the first to seek experience. If you have an unco-operative employer, I cannot see that this system would do anything to help that fairness argument. It is possible that it might even contravene the right to a fair trial.

The matter also raises practical problems; for instance, how will the independence of a mediator be assessed? Does the noble Lord, Lord Hunt, propose some kind of additional regulatory regime to determine that? I would have thought that many Members of the Committee would not wish to add to the burden of regulation on business. In the light of what I have said, I hope that the noble Lord will agree to withdraw the amendment.

I wanted to hear what the Minister had to say before getting up and saying anything. From what little experience I have of trade unions, disputes, ACAS and this and that, I was beginning to accept the rectitude of the way that this was put by the noble Lord, Lord Wedderburn. He was saying, “Look at the record of ACAS”—and I need not repeat what he said. After that, the record clearly supports the approach of the noble Lord, Lord Wedderburn, and the Minister.

It seems to me that this has to be left as a voluntary position, free from statutory compulsion. In my experience, there were union/union disputes and union/employer disputes but I was never instructed in an employer/employee dispute. However, in disputes where I was instructed, the noble Lord, Lord Wedderburn, was usually the junior on the other side, and on many occasions his leader, who later became a High Court judge, and I used to sort out the mediation process between ourselves and it worked. When it did not work, we were in the position referred to by the noble Lord, Lord Wedderburn, where one side was bound to win and one side was bound to lose. Most of us at the Bar did not look at it in that way. It was an attempt at mediation and it very seldom worked. When it did, it did, but when it did not, the court decided and that was that. The trade unions have always observed the orders of the court.

I am sure that the amendment is well intentioned, and I think that it was the noble and learned Lord, Lord Woolf, who was referred to as commending mediation. However, he was really more concerned with commercial cases than employment law cases, and I do not believe that he would have intended what he said to go beyond the sphere in which he practised and sat as a judge. Therefore, I am grateful for what the Minister said. I think he is right on this and I am bound to support the Government’s attitude.

The responses of my noble friend Lord Henley and the Minister have been well worth waiting for. I was motivated to move this amendment to highlight the importance of mediation. I greatly respect all the experience of my noble friend Lord Campbell and the noble Lord, Lord Wedderburn, on both the practical and the academic side, but the noble Lord, Lord Wedderburn, should not be too patronising about alleged lack of knowledge. I do not think that he looked up when he asked us to put up our hands concerning the Conciliation Act 1896. Had he done so, he would have seen us all nodding vigorously. I recall how the Conciliation Act 1896 built on the very valuable history of conciliation boards being developed at the time in key industries such as the coal trade.

Then we had the Arbitration Act 1889, which moved things in the direction of arbitration. The Conciliation Act 1896 was very important because it disallowed Section 3 of the Arbitration Act 1889 and therefore built up over the years an immensely valuable series of conciliation experiences. Therefore, I do not think that the noble Lord, Lord Wedderburn, should presume ignorance on our part. We have all looked at the history of this.

I particularly wanted to highlight the role of mediation in order to explore what the Minister told us. He said that more resources are going into ACAS conciliation, which I greatly welcome—£37 million over three years is an impressive sum—and that this is complementary, not substitutional, and will deal with conflict in the workplace at the earliest possible opportunity. These are all steps in the right direction. However, as my noble friend pointed out, the only way that mediation has been given that extra boost in other areas is by a series of penalties, such as the costs penalty now frequent in civil litigation including unfair dismissal. The way in which mediation is encouraged by the Bench in all sorts of disputes involves some element of penalty. On reflection, however, I agree with the noble Lord, Lord Borrie, and Michael Gibbons that to go in the direction of compulsion is a big step. I therefore want to go away and think about what has been said. However, it in no way removes the emphasis on the importance of mediation that I wanted to put in this debate. I very much welcome what the noble Lords, Lord Borrie and Lord Wedderburn, and my noble friends Lord Henley and Lord Campbell, said about the key role of ACAS. I would like the Minister to explore whether there is sufficient power under present legislation for ACAS to provide a mediation service as opposed to its traditional conciliation service. I agree with my noble friend Lord Campbell that there is a great history here, where ACAS has achieved a great deal.

Mediation or conciliation must not become just another procedural step. It must be informal and with the wholehearted consent of all the parties who are then able to resolve their disputes without troubling the courts of law or the tribunals. That was the purpose behind my amendment, so I greatly welcome what the Minister has said.

When the noble Lord comes to rethink the amendment, will he again consider his remarks about the work which has been done, which at one point he seemed to dismiss as—in a nasty sense—academic? The 1954 book by Geoffrey Sharpe and the one that Paul Davies and I wrote were both based on groundwork. We spent two years going around the Ministry of Labour and various industries in order to understand that ministry’s evidence to the Donovan commission—the third work that the noble Lord should read.

I have no ideological objection to mediation. Where it works, it is very valuable. It works in financial services and some parts—not all—of commercial law, but ACAS has shown that it does not want to choose it for employment disputes and there are good reasons for that. That is not an academic judgment, but that of the people who actually do the work with the workers and employers at the place of work. I hope that the noble Lord will look at his speech and rethink how he dismissed the published books.

There is no difference in principle at the root of our disagreement. I wholly accept the intendment of the amendment. However, I worry that it could have an effect which it does not seek, and that it appears that ACAS will now enter a far more generic role with its thing on the internet and all that. I am totally in favour of mediation, as I sought to explain in relation to my experiences of these matters in court; if they can be sorted out without going to court, that is always the best thing to do. Perhaps the Minister could confirm this, but I understand that ACAS will have a wider role which will in no way inhibit mediation at any stage if it is apparent. In other words—I do not know, because it is all new—someone sitting in ACAS would be free to say to the parties, or one of the parties because they are not always seen at the same time, “Would you be prepared to seek mediation on this?”. Surely that would be a perfectly proper thing to say and do. If they are prepared to do so, no doubt that would be implemented.

[The Sitting was suspended for a Division in the House from 4.26 to 4.36 pm.]

I can give the noble Lord, Lord Campbell, the assurance that he sought. Nothing being proposed will stop ACAS suggesting mediation to the parties in dispute as one of the solutions. It will not fetter that. In fact, if anything, we are after more mediation in all forms at all times.

Perhaps I may bring this to a close by saying that I have listened to the noble Lords, Lord Hunt, Lord Campbell and Lord Henley, and my noble friends Lord Wedderburn and Lord Borrie. I am a lawyer who never got on his feet in court but sat in smoke-filled rooms the whole time and I am now in the company of so many advocates who have so much experience of this at international level and who are an example to us all. I am reminded of what the great FE Smith said, just before he came into this place as Lord Birkenhead. One day, he was summing up, and afterwards the judge—sadly, history does not say who he was—said, “Actually, Mr Smith, I am none the wiser”, to which FE Smith replied, “That may well be, my lord, but you are better informed”.

It was certainly well worth waiting for the Minister to speak again to hear him say clearly that the Government are in favour of all forms of mediation at all times. I welcome that. I agree with the second point made by my noble friend Lord Campbell. There is nothing between us. We must scrutinise the legislation to make sure that the position we want to achieve is brought about as a result of this legislation. If that has not yet been done, we must make sure we improve it.

To the noble Lord, Lord Wedderburn, I merely say that I await his reading list. He said that I needed to read, and I am always willing to learn. He mentioned several books, and I would be grateful if he could let me have a full list. I will endeavour to read them all before I return to this subject on Report.

The noble Lord is very kind, and I promise to send him a much more extensive reading list than I mentioned today. Reading lists of people who have experience are worth while. I must tell the Committee that the arguments put forward today are very close to directing ACAS to engage in mediation when its experience since 1896 suggests that that is not the best method. ACAS is independent; it is not subject to direction, and its independence is something that your Lordships ought to be very careful not to infringe.

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 18 and 19 not moved.]

Clause 5 agreed to.

20: After Clause 5, insert the following new Clause—

“Tribunal proceedings: no undue delay

In the Employment Tribunal Act 1996 (c. 17), after section 18 there is inserted—

“18A Tribunal proceedings: no undue delay

When conciliation is attempted but this fails to produce a settlement, the claimant may require that steps are taken to ensure that Tribunal proceedings are commenced without delay.””

The noble Baroness said: As I said earlier, many of us agree that fair and reasonable procedures should be in place between unions and employers so that possible disputes, both individual and collective, can be dealt with at workplace level. In passing, I thank the Minister for sending me a copy of the ACAS draft code, which details disciplinary and workplace arrangements.

I am very glad to have that. However, it is not always possible for these procedures to work. That is particularly the case in loss-of-job issues. As I indicated in my Second Reading speech, job loss is for many a traumatic event; it can lead to loss of self-esteem, a breakdown in self-confidence and can sometimes make securing alternative employment difficult. It can even sometimes lead to marriage breakdown. The individual concerned is often not interested in alternative dispute resolution, no matter how well intentioned. He or she will not be satisfied and will not feel that justice has been served unless they have had their day in court. It is for that reason that I spoke as I did at Second Reading and have tabled this amendment.

The individual must not come to feel that procedural attempts are being made to prevent the case getting to the tribunal. Of course, a settlement must be made—everybody agrees with that—but the individual must be assured that the procedures are not being unnecessarily prolonged so that a tribunal hearing is delayed or perhaps avoided altogether. The amendment gives the individual the right to insist that enough is enough and that his or her case must be heard by a tribunal. Only in this way will individuals in the position which I have described feel that the system exists to protect them and to provide fairness and justice.

I hope that the Government will accept my amendment. If they do not accept this wording, then perhaps they will accept the principle so that alternative wording to the same effect can be produced on Report. I beg to move.

I wholly accept the principle of the amendment but I am puzzled about the steps to be taken. What sort of steps does the amendment refer to? Is it an application to the High Court to order the tribunal or to give a date? How do you make that application? In other words, I agree with what the noble Baroness wants but I do not know how she wants it done. There is no time limit, which is right; I do not think that you should have a time limit. The amendment says, “without delay”, but somebody then has to decide whether there has been too much delay. There is no provision to make an application to the High Court or to the appeal tribunal. That could be the appropriate way, but you need some means to implement the steps.

I support my noble friend’s amendment but with one reservation. I may be unduly sensitive to this because I had to apologise for not doing it at the beginning of our proceedings. Getting a tribunal judgment without delay after conciliation steps and the like have been taken is in accordance with Article 6 of the European Convention on Human Rights, which, if I may paraphrase, says that in the determination of civil rights everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal.

The convention on human rights assumes that the answer to the question asked by the noble Lord, Lord Campbell, can be found on the ground within a reasonable time. I cannot say what a reasonable time is in any individual dispute; someone will have to decide. My noble friend gives the individual claimant the right to say he has had enough. I do not think that that would impair ACAS’s conciliation work, which the Committee will have seen that I am very keen to support on the basis of 100 years’ experience. Article 6 says that you must have a fair and public tribunal hearing within a reasonable time. That is made clear and substantive in my noble friend’s amendment.

I sympathise with the intention behind the amendment, but the results would not be workable in practice. I agree that, where the possibilities of conciliation are exhausted, it is important that a hearing should take place quickly to enable resolution of the issue—not just that it is done, but that it is seen to be done. It removes the uncertainty for both parties and enables them to move on positively from the events that gave rise to the dispute. People call it getting on with their lives.

At present, there is a gap between the receipt of a case at the Tribunals Service and the listed date for the relevant hearing. That enables ACAS to attempt conciliation. ACAS receives all claim forms and offers conciliation to all claimants. The mandatory fixed time periods for conciliation, which we propose in Clause 6 to remove, currently set the framework for when the hearing date is fixed by the Tribunals Service. For cases where there is a seven-week time period for conciliation, hearing dates are generally fixed for the eighth week after receipt of the ET1 claim form; for cases with a 13-week conciliation period, dates are fixed for the 14th week. The small number of cases with no fixed conciliation period is listed for hearing when the ACAS conciliation officer informs the Tribunals Service that initial attempts to conciliate have proved unsuccessful. The Tribunals Service has a target of holding 75 per cent of all hearings within six months of receipt of the claim form, which it has consistently exceeded.

The Tribunals Service will revise its procedures for listing cases if the fixed periods for conciliation are abolished, as is provided for in Clause 6. It may be possible to list some cases for an earlier hearing than at present. Who would be against that? Hearings are listed as soon as practicable, given the need for work to be done in case management discussions and otherwise to elucidate the issues in the claim, and the practicalities of timetabling all the cases where hearings are required.

I hope that I have reassured noble Lords that the administrative mechanisms already in operation are working and will be further refined should Parliament approve the provisions in the Bill. That will enable just outcomes to tribunal cases as quickly as is practicable. There is no need for the additional mechanism proposed in the amendment. It would create administrative confusion if it served to require the prioritisation of cases where conciliation had been tried and had failed, and where the claimant pressed for a quick resolution at tribunal. It could also create an incentive to engage in conciliation without a sincere wish to resolve the case, perhaps merely to delay things or in the hope that people got fed up and went away. Doing so would enable the listing of the case to be expedited, which is surely in the best interests of everyone. It does not make sense to create a system where certain cases could be accelerated at the request of a well informed claimant. Tribunal resources are finite; this would hold back consideration of cases where the applicant did not know to press for an early resolution. I repeat that I sympathise with the intention behind the amendment, but the results would not be workable.

In the light of what the noble Lord, Lord Wedderburn, said, I ask whether “within reasonable time” would not have been a more useful wording. Courts are very used to dealing with reasonableness, whereas “without delay” is extremely difficult to define or prove, as my noble friend said. If the amendment is to be pursued, perhaps “within reasonable time” might be more appropriate.

I thank the Minister for that response. I am glad at least that he accepts that it is absolutely necessary that tribunal cases should be heard as quickly as possible, although he does not accept the arrangements suggested in the amendment. We have to give that serious consideration because I believe that there is a problem here. People want their cases to be heard as quickly as possible within a reasonable time and the question is: what is a reasonable time? A given length of time can be reasonable in some cases and not quite so reasonable in others. We need to examine what has been said. I thank the noble Baroness opposite for her contribution. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

21: After Clause 5, insert the following new Clause—

“Employment disputes: status of agency workers

The Secretary of State shall make regulations by order providing for improvement in the status of workers in employment disputes who are supplied or engaged by an employment business or employment agency.”

The noble Lord said: Amendment No. 21 falls within the provenance of the Bill because it concerns the position in disputes of a particular class of persons who at the moment are unjustly treated. The purpose of the amendment is to improve the status of workers supplied to work for an end user by an agency. As Lord Justice Mummery said, in a judgment on 5 February this year, to which I shall return:

“There has been an explosion of numbers in the workforce engaged to work under arrangements with employment agencies”.

He estimated the total number to be 1.3 million. Another estimate used, especially in the debate on the employment of agency workers in the other place last Friday—which I hope all Members of the Committee will read—is 1.4 million and there is evidence to suggest the figure is 1.4 million and rising. In other words, workers are being taken on as persons supplied by an agency. The president of the appeal tribunal, Mr Justice Elias, has recently said:

“Many agency workers are highly vulnerable and need to be protected from the abuse of economic power by the end user”.

He went on to suggest that a legislative solution is “urgently required”.

This amendment has two perspectives. The first perspective encourages the Minister to make regulations in the triangular relationship in which an agency worker finds him or herself. There are three aspects to the triangular relationship. The first is a contract between the agency and the worker, which is usually stated in terms not to be a contract of employment; it is a contract to supply labour. The second aspect is a contract between the agency and the end user—the employer, in conversational terms—which is not a contract of employment, but merely a labour-supply contract. There is no question of an employment contract there. Thirdly, we have the relationship between the worker and the end user.

My noble friend Lady Turner will deal with the triangular relationship in regard to real temporary workers; I wish to concentrate on agency workers who stay at the same point of employment—again I use a conversational term—for many months and in many cases many years. That triangular relationship of employment agency workers is increasing.

This month the Court of Appeal in the case of James v Greenwich Council decided that those judges who had said they would infer a contract of employment between the contract worker and the agency and the end user, of which there is quite a history of judgments suggesting that is what the courts should do, gave business-reality to the relationships because the agency worker is working side-by-side with permanent employees, very often on inferior terms and without employment protection rights. The Court of Appeal unequivocally rejected that approach and held that judges must not imply a contract of employment between the end user and the worker unless it is necessary on facts.

Miss James had worked as a care staff support worker at the same workplace for more than three years. She was provided to the council by an agency and paid by means of a payment from the council through the agency to her. The end user paid more than the wage because the agency had a slice of the payment. She was provided to the council by the agency and paid in that way. She carried out her work according to the instructions and control of the council—that is usually one of the tests of an employment relationship in the legal, technical sense—and was on the same rota as permanent employees. She wore a badge describing her as a permanent staff member, but she had no express contract of employment with the end user, Greenwich Council. She was off sick for a while, and when she returned, the council abruptly told her that she was no longer required as it had replaced her. After three years, she was naturally somewhat amazed at that and claimed that she had been unfairly dismissed.

The first hurdle that such a claimant needs to surmount at the tribunal is to show that she worked under a contract of employment, otherwise she has no rights in respect of unfair dismissal, which Miss James alleged this was. The council denied that she was an employee in any legal sense. It said she was an agency worker who was, in legal terms, self-employed. The court refused to imply any contract between Greenwich Council and Miss James, and in its judgment the Court of Appeal said that that must be the pattern applied in future cases to agency workers working, even for long periods, for the same employer. The court went on to say that a contract of employment can be implied to give business efficacy to the case, but only in a very rare instance. Lord Justice Mummery declared that the test of the necessity must be imposed on this relationship between end user and agency worker. He said that proceedings in the tribunals concerning the disputed legal status of agency workers had been put on hold in a large number of cases awaiting judgment in the tribunals. He directed the tribunals to approach the long list of cases on hold to apply this test.

That means that many thousands of workers—an increasing number—who have worked at the same workplace for years, but who are supplied by an employment agency will not qualify for basic employment protection rights, such as the right not to be unfairly dismissed. I know that there is a qualification period, and they will need that as well as a contract of employment to get a case on its legs, but under this test they do not have a chance of a court implying a contract of employment. The object of this amendment is to provide an opportunity, by regulation from the Minister, to rectify that position, possibly by laying down a presumption that an agency worker who has worked in the same place of employment for a certain period is presumed to be under a contract of employment. That was the approach of one of the members of the Court of Appeal, Lord Justice Sedley, in a previous case which was rejected by the Court of Appeal in the Greenwich case. The idea that such a step would destroy the flexibility of the labour market is in my contention absurd. It is hardly extravagant to provide that basic right to agency workers after working in a place for a long time—the right to be treated fairly.

There is a second perspective to the amendment. The Minister arguably has a power already to make such regulations, improving the law on workers supplied by an agency. The amendment could be seen as a wake-up call to use those powers, which derive from Section 23 of the Employment Relations Act 1999. That gives to the Minister power to extend certain employment rights, including the unfair dismissal and various similar rights, to a “specified description” of workers, who might not ordinarily be seen as working under a contract of employment, and to clarify who is the employer. The Minister has remarkable powers under Section 23 and the amendment made to that section in Section 41 of the Employment Act 2002 does nothing to make that power irrelevant to this point in the argument.

A decade ago, Lord Justice Buckley said in the case of Montgomery v Johnson Underwood in 2001 that further consideration for the status of agency workers must be given by government and that,

“the power conferred by section 23 of that Act on the Secretary of State … to extend the protection of employment legislation to a specified description of individuals might be put to important use in this respect. Continued confusion about whether there exists any protection”,

for agency workers,

“against unfair dismissal assists nobody”.

Our amendment gives the Government a splendid opportunity to say that it is unnecessary to accept it because powers already exist to improve the situation under Section 23. I am aware that there is a draft of the European directive, on which I am not relying—but if your Lordships read the debate in the House of Commons of last Friday, it is a central feature in improving the lot of those workers, on which more than 150 Members of Parliament in the other place were prepared to vote as something that was required.

The James judgment makes government action even more urgent. We now know that the triangular structure for agency workers deprives hundreds of thousands of workers of basic employment protection rights. Maybe we can reach some agreement on that European draft directive. That seems rather unlikely at the moment—but why on earth should the Government not use their powers under Section 23 of the 1999 Act to make some improvement at least in the legal position of these agency workers who at the moment—as your Lordships will see if they read the debate in the other place—are deprived of employment protection rights? Some will say that that is why the category of agency workers is “exploding”, as Lord Justice Mummery said. If you take on an agency worker, scarcely any employment rights are thought to be basic to modern employment relations, including the right to be treated fairly, even in dismissal. Those rights do not apply to such a worker.

To move the position forward, for the reasons that I have given, I beg to move.

During Second Reading, many noble Lords referred to the need to provide employment rights for agency workers, many of whom are vulnerable and often extremely exploited. The TUC briefing drew attention to the need to provide such protection. A Private Member’s Bill, the Temporary and Agency Workers (Equal Treatment) Bill, has had its Second Reading in the Commons. It proposes to give the 1.4 million temporary and agency workers the same protection that applies to permanent staff. Workers of this type have existed for a long time, particularly in the construction industry, where they have been viewed as being employed on individual contracts and therefore as self-employed, thus exempting the employer from providing the sort of employment rights and protection, including health and safety, that would otherwise be necessary. Nowadays, many are immigrant workers, as has already been explained by my noble friend Lord Wedderburn. Often employed via an agency, they are frequently very anxious to secure work and willing to accept lower pay and conditions, thus undermining the pay and conditions established in the relevant industry. There has been a growth in casualisation, which has now become quite a business in itself.

The unions backing the Private Member’s Bill, which include my union, Unite, have undertaken substantial research into the conditions suffered by such workers. The results indicate a truly appalling level of exploitation. Many such workers had been promised reasonable rates of pay and decent accommodation but they actually got neither. The accommodation is often very crowded and, in some instances, unsafe, without proper fire protection. The agency will often claim to stay on the right side of the minimum wage provision by deducting charges from the pay towards the unsatisfactory and inadequate accommodation or for the minibus which takes the workers to and from work. If they get ill, they get sacked immediately. All report a deep sense of insecurity. This is an extremely insecure and exploited workforce.

As I understand it, the Bill in the Commons has a double purpose: to protect non-agency workers being undercut by cheaper, temporary labour and to prevent vulnerable workers being exploited by unscrupulous agencies. Agency staff are employed systematically across the public sector, in the NHS and in education, as well as in agriculture and the food and drink industries. The unions believed that the Government had committed themselves to introducing protection for such workers as a result of the Warwick agreement, but they appear to have backed away from the full protection which would be accorded by the Bill and now, I understand, are talking about a commission including both sides of industry. I cannot help feeling that this is a kind of long-grass solution.

There seems to be a feeling that the flexibility which the Government think is so important would be threatened by giving agency and temporary workers the same protection as permanent staff. I am sure that most people would support flexibility for people with young children and particularly for those with caring responsibilities, but what we now have for these 1.4 million people would appear to be disposability rather than flexibility. It enables unscrupulous employers to get work done on the cheap—to the great disadvantage of the employees, including permanent employees, whose rates of pay can be undermined by the existence of such a workforce. It is flexible from the employer’s point of view but exploitable from the view of the workforce.

I should like to see the Government accept the argument that my noble friend Lord Wedderburn and I have set out this afternoon and move the situation forward. I support the amendment.

With the greatest respect to the noble Lord and the noble Baroness, I oppose the amendment. I accept the problem as recognised by the judiciary by convention and I accept the erudite exposition of the noble Lord, Lord Wedderburn, but this is without the Long Title of the Bill. Of course, there is a problem with these agency workers and, as the noble Baroness said, the matter is receiving attention in another place. However, the Long Title of the Bill is concerned only with the,

“enforcement of offences under the Employment Agencies Act”.

That assuredly has nothing to do with what we are told is the triangular status of these agency workers, which of course I accept. The problem cannot be addressed in this Bill, because it goes totally beyond its ambit. The matter has previously attracted the attention of the noble Lord, Lord James of Blackheath, in your Lordships’ House, who has spoken to the matter forcefully. He was very concerned by the problem of agency workers. Amendment No. 25 contains a reference to his concern, reflecting what he said in your Lordships’ House. I am in no sense trying to get at the merits of the argument. A serious problem has to be addressed, but assuredly not by this Bill. At least, that is what I suggest.

Would the noble Lord accept, first, that the James v Greenwich Council case concerned a dispute as to the rights of the worker, and, secondly, that the Long Title of the Bill states that it is a Bill to,

“make provision about the procedure for the resolution of employment disputes”?

It is not just about enforcement; it is to do with the resolution of employment disputes. The noble Lord said that agency workers are outwith the scope of the Bill, and it is the job of your Lordships’ Clerks to suggest that this is so. In putting down the amendment, I made reference to that part of the Long Title. It is right to accept it and not throw it out on the technical ground that it is outside the scope of the Bill.

We are not in the Appellate Committee; I shall certainly not start a technical argument with the noble Lord. However, the noble Lord distorts the Long Title. I accept that it is concerned with providing for the right of trades unions to exclude members, but it is not concerned with the enforcement of an offence.

Perhaps I may intervene for the first time in the one hour and 40 minutes that we have spent on three amendments, which always happens when we get into the hands of the barristers. I support the noble Lord, Lord Wedderburn, in what he said on the procedure. I bow to no one in my respect for the noble Lord, Lord Campbell of Alloway—apart from in the damage he does to microphones. I have listened to him for the past 12 years in your Lordships’ House say that amendments are not valid because they do not conform to the Long Title. Those of us who have sat through 28 pieces of employment legislation will know that Her Majesty’s Government often put in provisions that bear little relationship to the general title of the Bill. If, as the noble Lord, Lord Wedderburn, indicated, his amendment falls simply because it does not meet that procedural requirement, it is not beyond the wit of the expensively paid people behind the Minister to ensure that it does.

At a more fundamental level, I wonder whether this debate is not a little premature. I heard on the radio this morning that a meeting between the Prime Minister and the trade union movement about this issue is being held in Downing Street as we speak. Would it not be better if the noble Lord, Lord Wedderburn, withdrew his amendment until we knew what our Prime Minister has decided to put forward in relation to this issue? Are we not in danger of having a theoretical debate when we do not yet know what He Who Shall Be Obeyed has decided?

It is a very interesting constitutional point that we cannot discuss anything until the Prime Minister has decided whether it is appropriate for us to discuss it. I make two or three small points. First, I support what my noble friend Lord Campbell of Alloway said when he doubted that this was within the ambit of the Long Title. It might be, but my noble friend was saying that it is not quite within the spirit of the Bill. I would like to offer one small bit of advice to the noble Lord, Lord Jones, for when he winds up. The amendment proposed by the noble Lord, Lord Wedderburn, and the noble Baroness, Lady Turner, comes from the fact that both noble Lords do not like agency workers—the idea of temporary workers—that they have fewer rights than other workers, and that there should be a flexible labour market with all the advantages there are for both employers and employees.

One should emphasise the fact that for many employees there are considerable advantages in being agency workers and suchlike. I would have thought that the simple solution for the Minister is to reject the amendment because it is simply designed to make it much harder for people to seek employment as agency workers or as temporary workers. The same should apply to the Private Member’s Bill that was discussed in another place last Friday. No doubt the noble Lord will give the Government’s view on that and on this amendment in due course.

I make it clear that of course I was not suggesting that because the Prime Minister is discussing the matter today that it is outside our ambit to discuss this at all. I was suggesting that no one knows what will happen in the negotiations between the Prime Minister and the trade union movement. We do not yet know whether the point the noble Lord, Lord Wedderburn, made, as reflected in the amendment, will be agreed by the Government. We are asking the Minister to make a comment on the amendment of the noble Lord, Lord Wedderburn, before he knows the result of the negotiations between the Prime Minister and the trade union movement. Therefore, in order to expedite the passage of this Bill, would it not be better to postpone the debate until Report, when we will know better what has occurred at Downing Street today? That is all I was suggesting.

I do not accept that point. It is perfectly legitimate for us to discuss the matter in advance of the Prime Minister and the trade unions reaching their conclusions.

I support the noble Lord, Lord Henley, on that point, although, I make clear, on nothing else that he said. The noble Lord, Lord Razzall, may be relieved to hear that I am not a barrister, a lawyer or legally qualified at all like most of the contributors to the debates this afternoon. I worked for the same trade union as the noble Baroness, Lady Turner of Camden, and at the same time, and took many industrial and employment tribunal cases. Therefore, I feel that I have a strong view that how the Bill is framed will not entirely meet the needs of those who seek to benefit from employment tribunals.

I say to the noble Lord, Lord Razzall, that the point he makes has some validity. Some discussions are ongoing. Indeed, a Private Member’s Bill is currently going through the other place. I wish Mr Miller all luck with it. At the same time arguments are to be advanced in favour of agency workers which I believe are germane to the Bill we are discussing. In response to the noble Lord, Lord Campbell, I say that surely the Clerks know their business well enough that if they felt this was outwith the scope of the Bill it would not be in the Marshalled List for us today.

I do not wish to rehearse the arguments in any great detail on behalf of my noble friends Lady Turner and Lord Wedderburn. But the point has to be made that it is not in any sense a contradiction in terms to argue for this amendment and for agency workers to have comparable rights to permanent employees—even if not the same rights—and at the same time deny that flexibility of work benefits both some employers and some employees. As I said at Second Reading, where it benefits employees, fine—let those employees work quite happily in situations and under conditions that suit them, perhaps because of family arrangements or semi-retirement or because they can only work at certain times of the year. That is fine, but there are many people seeking full-time employment whose only recourse is to agency work, which is the very antithesis of full-time, permanent employment. I was struck by the regular use of “end user” by my noble friend Lord Wedderburn. That seems utterly appropriate because it is what the end users are doing to the people whom they employ on an agency basis—they are using them. That is quite clear. I am sure that the term was not meant unkindly in that way, but that is what it amounts to and it has to be exposed for what it is.

Many of the arguments were made in an excellent debate on Friday in another place. However, the bottom line is that there is insecurity for agency workers. I have not been an employer but I should have thought that any employer would want the people working for him or her to feel sufficiently secure in doing a job in order to contribute to the benefit of that business, service, voluntary organisation or whatever. As was backed up in some of the testimonies given in respect of the Bill in the other place, if people feel insecure—if they cannot join pension schemes, get proper paid holidays or get reduced sick pay—that impacts not just on those individuals but on their families. When we are talking about flexible working, there has to be an element of fairness, and I shall come back to that in just a second.

We heard all sorts of stories on Friday about aspects of salaries—uniforms, travel and accommodation—that are directly deducted and over which people have no choice and there is no opt-out. People have to accept them whether they want them or need them. The final insult is being charged for cheque-cashing facilities at the end of the week. These are just employers’ ruses and I do not think that anyone can seriously seek to defend them. No training is offered and, as I said earlier, there is no security. Many such employees go well beyond the qualifying limit for taking cases to employment tribunals and it is iniquitous that they should not have the right to do that. If an employer acted in a way that would enable a permanent employee to take his or her case to a tribunal, the same should be true for someone who is not a permanent employee.

My noble friend Lord Wedderburn said that this was really about the right of people to be treated fairly. When the Minister replied to the debate on Amendments Nos. 17 to 19, he reminded us that he was the first to speak up in favour of reducing what he termed the employers’ burden, but then he said that he was also the first to seek fairness in employment. That is exactly the nub of the argument here. This is about fairness, and fairness is a double-edged sword. You cannot have fairness on one side: if it is fair to one person, it must be fair to the other. When the Minister replies to the debate, I ask him to bear that in mind in relation to the right of agency workers to take their cases to employment tribunals.

I have listened carefully to all the submissions and, first, I make a plea that we remove the alarmist language from this whole debate. From my noble friend Lord Wedderburn I heard that this is a complete group of workers that is “unjustly treated”. That is not true. Some are but many are not. I heard about “abuse of economic power” and about people needing to be “protected”. Just now from my noble friend Lord Watson, I heard about what is being done to these people and that it needs to be “exposed for what it is”. At the same time, from my noble friend Lady Turner I heard the words “both sides of industry”. All that smacks of 1970. It smacks of exactly what the private sector—both unions and employers—over the past 15 to 20 years, and especially the past 10, have worked so hard to avoid. One reason why we have the most successful economy in the whole of Europe is that we have the most flexible labour market. Whatever certain people with vested interests might tell you, there is a connection between low levels of unemployment and high levels of flexibility.

I do not recognise the word “industry”; I recognise the world of employment, of business and of the public sector. I do not see sides. Six and a half years as director-general of the CBI made me understand that there is only one side in the private sector: it is those people who come together to create a successful undertaking from which everybody can benefit. It is not true that every one of those people who enters a contract by which they can retain agency workers works in such a way as to do them down. I come across many agencies that train agency workers a great deal, based on the selfish realisation that the more they train them, the higher the rate that they can command for entering a contract for the provision of their services and, by definition, the greater the take-home pay of the agency workers.

I hope that, on this amendment and Amendment No. 26, and when the House debates what is happening in another place now, we will remove the alarmist, damaging vocabulary that belongs to another age. We are in the 21st-century world of work; there are many people across Britain who do not recognise the vocabulary that my noble friends have used. Flexibility is a two-way street. Agency work often provides an entry to the world of work that has been denied to many people in the past. It provides an entry for those who come out of prison and try to go straight; it provides an entry for many a woman who is trying to get back into the world of work after some time out, either to have children or to care for an elderly relative. It provides an entry for students during their summer vacations, allowing them to get used to the world of work and to learn that the pleasure of earning a living is not entirely ours.

The 21st-century world of work contains people who abuse the situation, who treat agency workers abominably and who need to feel the power of regulation to make sure that the abuse stops and to ensure the fairness—I thank the noble Lord, Lord Watson, for saying it—that I respect in the workplace. However, it is a minority. They must be weeded out and it must stop. I was very influenced by going to BMW’s Mini plant in Oxford. It is a fabulous brand; the engine is made in Britain. It sells around the world, creating jobs and wealth for this nation. While it has a fully unionised, full-time workforce, it is huge user of agency workers, to deal with peaks and troughs and the availability of student labour in the summer, when holidays eat into the full-time workforce commitment. The owners of the plant said to me: “If this stops, if this puts us on an equal footing with Germany, France, Spain and Scandinavia, please explain to us why we should carry on investing in this country”. They are not gangmasters; they are not the people who should be weeded out and stopped; it is a high-class German manufacturer making a fabulous, globally successful product in this country, creating quality jobs and caring for its workforce, and saying that the ability to have a flexible workforce with agency workers is not only something that it values but is one of the reasons that it invests in this country. I, as chairman of UK Trade & Investment, valued its investment and trust in my nation enormously.

I am with my noble friends when they say that we must stop the abuse that goes on, but I plead with them to stop the alarmist language. Let us perhaps find a term which applies if someone is in a relationship with an employer for such a long time that, as my noble friend Lord Wedderburn said, they are employees and deserve the protection as such.

The Government are not against that. I remind my noble friends that the Government are elected to govern for the whole country, not one vested interest—be it the CBI, the TUC or anybody else. The Government are not against saying, “Let us have some regulations and protection in place for people in the same contractual relationship for so long a period”. As the lady from Greenwich found out, they are frankly being treated as an employee and should be protected as such.

Let us not throw the baby out with the bathwater, or get to a point where the big and quality investors in the country leave. Globalisation gives them choice, and a flexible labour market is ultimately one of the reasons they choose Britain. It is, frankly, to be solved by a period of time after which such workers will be treated as employees in all respects. That period is currently up for negotiation. We are awaiting a lead from the European Commission, and for Brussels to come up with some ideas and thoughts to get this sorted once and for all. Members of the Committee will not find the Government against that, provided it does not eat into the flexibility at the constructive-quality end that helps not only those who make proper use of agency workers, but those in society who want to avail themselves of agency work for all the reasons I have mentioned.

The Government have undertaken a review of the current framework to cover all employment rights, determined by an individual’s employment status, to see if that is still appropriate, whether those rights fit into the 21st century, whether they are fair and whether they can support our aim of getting a high participation in the workplace. We are looking specifically at the differing rights and responsibilities in employment law of “employees” and “workers”.

[The Sitting was suspended for a Division in the House from 5.31 to 5.41 pm.]

I remind the Committee that I was referring to the review that was undertaken. While undertaking that review, we found that temporary work such as agency work is greatly valued by employers and many individuals. I know that “workers” and “agency workers” are specific terms used in legislation and I use them accordingly. But other than that, I prefer to use words such as “employees”, “self-employed” or “individuals”; I see the word “workers” in the divisive way that I see such words as “bosses”, “industry” and “sides”.

We were given examples of abuse and lack of knowledge about existing rights but there was a lack of evidence that the appropriate response from government was a wholesale change of the current system. That was not going to be welcomed. Employers commented that extending all rights would be likely to result in a reduction in temporary work and that these lost jobs would not all be replaced by permanent ones. The overall conclusion of the review was that the existing framework met the UK’s 21st-century labour market’s needs and there was no need for further legislation in this area. The rationale behind the decision was published in our policy statement, Success at Work: Protecting Vulnerable Workers, Supporting Good Employers, in March 2006, just under two years ago.

This amendment implicitly aims to extend the current coverage of unfair dismissal rights to the wider category of “worker”. We looked at this issue in particular during the review and at the balance of rights and responsibilities. It would be unfair to employees in the workplace to give unfair dismissal rights to individuals who, unlike employees, do not have to give notice or more than short, limited notice if they wish to leave a job. Those on agency contracts working alongside employees enjoy benefits not available to employees, as employees enjoy benefits not available to agency workers. Flexibility is a two-way street.

If this right were extended, employers would be likely to respond by requiring workers to give extended periods of notice, undermining the very flexibility that we know both employers and workers value; and the economy values that flexibility. That is why—I repeat—we have the most successful economy in Europe and the most flexible labour market. This would reopen issues that we carefully considered as part of the review.

The Government do not support the amendment, but we support the principle of equal treatment for agency workers. We consider that the best way forward to achieve that is for an agency workers’ commission in the United Kingdom, involving all interested parties from all sides of society in the workplace, to address that point and to devise a means of achieving equal treatment while preserving the flexibility that both sides want, and which preserves the flexibility of the UK labour market.

The Government take the protection of agency workers extremely seriously. That is why, for instance, last autumn we announced the doubling of employment agency inspectors. I would sincerely caution noble Lords to avoid damaging this very successful employment economy to attack—rightly—a small but damaging minority. We must protect those people. Please do not harm the rest of it to achieve your ends.

I ask the Committee to remember that the words about abuse, the use of economic power and the like, and the need for legislative intervention were used not by me but by Mr Justice Elias, who has enormous experience of employment cases and who also made reference to flexibility in the labour market; and by Lord Justice Mummery, who pointed out, if it needs pointing out, the enormous explosion in the numbers of agencies where people go to get a job. Of course I understand the desire that the Minister mentioned of a woman with children getting into a job in this way, if there is no other way to get it, but I do not like the fact that she can be disposed of at will without any notice, and chucked out of her job because she has no employment rights.

Secondly, my noble friends know that I do not often pray in aid as a force the European Commission, but I do on this occasion. Its Green Paper on the future of labour law pointed out that there must be a balance to achieve what it calls, and what is now the new word in all the writing on the subject, “flexicurity”. It is not yet in the dictionary, but flexicurity, it explains, contains two things—first, a flexible market that especially the employer will find extremely useful in the day-to-day and even long-term running of his business; and secondly, security for workers in regard to employment rights. The European Commission’s whole Green Paper is based on that balance.

It is not very easy to achieve a balance. Sometimes in the debate today I felt that we were back in 1971, when people suggested to the Conservative Government, who wished to introduce it, that the right of unfair dismissal to be allowed to workers in employment tribunals would totally upset the labour market. Unfair dismissal has been with us a long time. Agency workers are entitled to that right as much as other workers with whom they work cheek by jowl at the workplace. The amendment is intended to promote that balance, first by new powers. The amendment takes the regulation route. Maybe that is wrong. My honourable friend’s Bill in the other place may be a better way of moving the situation forward.

One thing is absolutely clear: we are in a moving situation. The Prime Minister’s offer proves that we are not now static on agency workers. The unfairness of the legal position for agency workers has been recognised by a number of judges and people who know more than I do about their status.

We aim for flexicurity, as the Green Paper suggests, and want a balance. Of course, I do not suggest that all employers act in an abusive manner towards either permanent or agency workers. As with the right to complain of an unfair dismissal, the amendment is intended to stop the minority of employers who abuse their power to dismiss. I can only say that anyone who reads the report of the debate of last Friday in the House of Commons and pays attention to what has been said will see that we are in a moving situation, whether the answer is a European directive or a new statute, as my honourable friend Mr Miller suggested in the Commons, or whether, as the amendment suggests, the Minister makes use of existing powers in the 1999 Act to improve the position of a substantial group of workers. That was the object of the amendment, and I hope that we can all agree, having read last Friday’s debate and the terms of my suggestion, that we want flexicurity. We want a flexible labour market, but you cannot have one in the 21st century without giving agency workers basic rights which we have come to see as fairness at the place of work. I thank everyone who has spoken in the debate.

I am grateful to my noble friend Lord Wedderburn for making a plea for fairness in the workplace. We all want that. I hope that his knowledge of the law would be such that he will respect another law: that of unintended consequences.

France does not have the concept of agency workers in the same way at all. France has an enormously high rate of unemployment, and very low take-up of people coming into the workplace. Why? Because employers in a globalised economy vote with their feet. They go to places where they can avail themselves of a flexible labour market. Germany has high unemployment, and an even higher level of people who are not even entering the world of work for the first time. We excel in both those areas. One reason is that employers can avail themselves of agency temporary workers. The solution is a period when, at the start, an employer or someone wishing to avail themselves of agency temporary work can actually enjoy the same situation on both sides as exists today. But, after a period of continued work, the protection that my noble friends seek would click in. That would prevent so much of the abuse to which my noble friends so rightly draw the Committee’s attention, while providing the flexibility, for a few months at a time, that so many employers need to compete in a globalised economy and our society needs to fulfil full employment.

We are trying to sort out what that period is with Brussels. I hope that the debate last week in the other place shed some light on it, and I am sure many Members of the Committee will have something to say about it. That is the solution. However, if you make it known and put agency workers in precisely the same position as those who are employed, you will suffer in a globalised economy because people will vote with their feet and go elsewhere. They will not create permanent posts to take those people’s places; they will merely take them to another economy, and that is what we have to guard against. That is not alarmist talk. We would much prefer to see clarity and have these abuses—which are dreadful and happen all the time—stopped for ever with well implemented regulation that is tough on people who cause distress to agency workers who are unprotected. That will happen after a period of time and is not for today.

I take that to be a question—I was in a semi-recumbent position—but I agree with a lot of it. I think that my noble friend Lord Watson referred to parallel rights for agency workers. Slight differences may be desirable to stop this minority of employers abusing, as Mr Justice Elias said, their economic power over people who have no rights. When we introduced the notion of unfair dismissal to the Conservative Government, we did not say that all employers dismissed unfairly; we said that there were such cases and that workers should have a right to appeal against it.

I do not think that the Minister referred to the European Commission’s Green Paper and the notion of flexicurity, which is now spattered throughout the literature of western Europe. I did not suggest that we should have the same law as France or Germany—that would be absurd. It would be as absurd as Michael Gibbons’s reference to adopting part of New Zealand law without going into the special circumstances that make it relevant to New Zealand.

I say that we should have a right to promote fairness in the workplace, and that moves us to discussions on agency workers, whether that is put to a royal commission or any other inquiry. In 10 years’ time, I do not believe that agency workers in Britain will be deprived by the law of rights that are equivalent to those of permanent workers, as they are today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

22: After Clause 6, insert the following new Clause—

“Proceedings in public interest disclosure cases

In the Employment Tribunals Act 1996 (c. 17), after section 8 (procedure), there is inserted—

“8A Publication of information

(1) Where proceedings include a claim under the Public Interest Disclosure Act 1998, the President shall, within 28 days of the conclusion of the proceedings, publish the relevant papers electronically and without charge.

(2) The duty in this section is subject to—

(a) sections 10B, 11 and 12 (restrictions of publicity in cases involving national security, sexual misconduct and disability), and(b) a decision by a tribunal or the President that particular information should be omitted or deleted from the relevant papers in that case.(3) A decision may only be made under subsection (2)(b) where the tribunal or the President is satisfied that the publication of that information would be contrary to the public interest.

(4) A decision made under subsection (2)(b) shall be in writing and shall include reasons.

(5) In this section—

“conclusion” means determination, withdrawal or settlement of the case or the time when no party has for the previous six months notified the tribunal of action to progress the case to hearing;

“relevant papers” means any claim, response, further particulars, decision, determination, notice of withdrawal or settlement and any decision under subsection (2)(b); and

“President” has the same meaning as in section 7A(3).””

The noble Lord said: First, I declare an interest as patron of Public Concern at Work, commonly known as the whistleblowers’ charity. This charity took the initiative in promoting the Public Interest Disclosure Act 1998, which has its 10th anniversary this year. That Act encourages responsible whistleblowing by employees. It was introduced in the other place by Richard Shepherd, a Conservative Member of Parliament, and in this House by me. It protects employees who express concerns about wrongdoing that threatens the public interest and, in particular, it gives a remedy to a whistleblower who is sacked or otherwise disadvantaged in the workplace. It provides protection most readily where the concern is raised with the employer, but it also protects disclosures made to regulators and wider disclosures where they are justified and reasonable.

When the Act was passed 10 years ago, the legal position was that information about claims made under it would be on the public record. This was important because openness would help to discourage specious claims by employees and encourage employers to deal and cope properly with any significant public-interest risk raised with them.

However, in 2000, after the DTI lost a High Court case and the judge, Mr Justice Jackson, had confirmed that claims were properly on the public record, the DTI—without consultation or announcement—introduced temporary regulations during the parliamentary recess to reverse this legal position of the claims being on the public record. Later, more permanent regulations were made to remove all information about Public Interest Disclosure Act and other employment claims from the public record. I am afraid that the DTI—I am so glad it is under different management now—had a rather bad record there because, in 2005, the Parliamentary Ombudsman strongly criticised the DTI for its handling of the matter, finding that it had failed to consider the public interest, had repeatedly misled Public Concern at Work to avoid public criticism and had blocked parliamentary scrutiny.

The purpose of my amendment is to provide, from now on, open justice and transparency in proceedings under the Public Interest Disclosure Act. At present, no information about any whistleblowing claim brought under the Act is available on the public record unless the claim results in a tribunal hearing and judgment, in which case the decision is available for inspection by the public.

What do the employment tribunal statistics tell us? In 2005-06, 1,015 claims made under the Public Interest Disclosure Act were disposed of, but only 283 of them after a tribunal hearing. Information about those cases is on the record, but all the rest—roughly 70 per cent of whistleblowing claims—remain shrouded in secrecy. No information is available about the nature of the wrongdoing alleged, nor about who was at risk; depending on where the employment is, it might be consumers, patients in a hospital, taxpayers, shareholders or fellow employees. No information is available about who the concern was raised with, or the employer’s response to the claim made by the employee whistleblower. Of course, no information is available about any alleged reprisal made by others, whether employees of some rank—a manager or whatever—or the employer himself.

One of the most serious consequences of this secrecy is that it enables and encourages an unscrupulous employer to buy off a genuine whistleblower and cover up any wrongdoing by the employer himself or his senior staff. An employer may settle the claim so as to avoid the case going to a hearing with the consequent publicity that, as I have already described, a hearing and judgment in the tribunal would entail.

Given that the Public Interest Disclosure Act expressly encourages employees to raise concerns about wrongdoing in the workplace internally so that responsible employers can deal with these concerns properly and without delay, the current secrecy surrounding the great majority of Public Interest Disclosure Act claims undermines the purposes of the Act. The present secrecy means that crime, company fraud, health and safety problems and tax evasions can be readily hushed up, contrary, I suggest, to the public interest.

Recent correspondence between Public Concern at Work, which briefed me on this matter, and Ministers, suggests that the Government may oppose my amendment on the basis that its outcome would be to “name and shame” employers on the basis of untested allegations. Your Lordships will notice from the wording of my amendment that it is clear that no allegation will go on the public record without the employer having the opportunity for his full and considered response to be made available at the same time.

The amendment introduces a strong presumption, but no more than that, that information about whistleblowing cases should no longer be kept secret. It creates a presumption, not an absolute or inflexible rule. New subsection (2) in the clause proposed in my amendment makes it subject to the statutory safeguards that exist for,

“cases involving national security, sexual misconduct and disability”.

The presumption is also made, subject to a decision by a tribunal or the president of the employment tribunals, that if the publication of particular information in a case would be contrary to the public interest it must not be disclosed. Where the presumption operates, the information will be made available within 28 days of the conclusion of the case. The conclusion is defined in the amendment, in proposed new subsection (5); it includes where there has been a decision, a withdrawal or settlement of the claim, or where it has not been pursued for six months.

The information that will be made available will be the claim, the response, any further particulars and the decision, the notice of withdrawal or the settlement agreed between the parties. That will ensure that anyone obtaining the information can have a balanced rather than a one-sided picture of the whistleblowing case. The information will be made available electronically, by e-mail or on the internet, free of charge. That ensures that the amendment would satisfy the public interest in a way that incurs minimal administrative burden and negligible cost. I beg to move.

I support the amendment. My noble friends and I have something of a track record on whistleblowing. Many will remember the appalling casualties in the Piper Alpha disaster some years ago. My noble friend Lord Wedderburn drafted a Bill, which I introduced as a Private Member’s Bill; we got the Government to support it and the Bill became law, protecting whistleblowers who blew the whistle on unsafe practices in very dangerous circumstances. The Bill became part of a much wider health and safety Bill but the cover for whistleblowers still exists.

My noble friend Lord Borrie has taken the matter further, beyond simply health and safety. However, in view of our interests in health and safety, I am particularly concerned that there appears to be no provision now for any information to be available. The object of the amendment, rightly, is to ensure that information becomes available, because unless it is available how will people know what happens as a result of whistleblowing, particularly in a health and safety situation? That is very important. I express my appreciation to my noble friend for introducing it. I support the amendment.

The noble Lord, Lord Borrie, does not do himself proud enough when he introduces this amendment. Ten years ago, when I chaired the National Consumer Council, a very brilliant young lawyer called Guy Dehn, who worked at the council, made this matter a real cause. It became his absolute passion. I think that the noble Lord, Lord Borrie, became chairman and has now moved on to being a patron. Therefore, my interest has been very involved with this, certainly from the consumer viewpoint in the 10 years that this body has been in existence. They have been 10 long years; it has been a long road, and it is remarkable that Guy Dehn—brilliant as he is—has stayed at the helm of this young organisation to try, almost single-handedly, to bring about some wonderful changes in this country.

Certainly, bringing things out into the light has been very important. I was lucky enough to be on the board of three public companies. In all three of them, I watched whistleblowing at work being introduced and I saw how different companies of different sizes were able to cope with it. It is therefore right that we should speak about it today.

The noble Lord, Lord Borrie, gave us a summary of a drawn-out process that one can without doubt call obscure. Whether whistleblower claims which are settled before they reach a tribunal should be on the public record has been buried under a morass of regulations and inadequate consultation. What is worse, it appears that the then DTI undertook to hide the regulations and their overall intention from the charity, Public Concern at Work. As the noble Lord, Lord Borrie, pointed out, the ombudsman’s report was damning about the way in which the Government handled the regulations. I would be interested to hear from the Minister whether the Government have any intention of revisiting the matter and, this time, adopting an open and transparent approach to the problem. The Government appear to have buried their heads in the sand about the strength of feeling on this matter. I hope that they will be responsible enough to take the proper steps to address the concern so well expressed by one of their own noble friends.

Amendment No. 22 seeks publication of the papers in tribunal claims which have been determined, withdrawn or settled and include a claim under the Public Interest Disclosure Act 1998. I understand that the intention of the amendment is to expose publicly employers who are alleged to have sought to cover up dangerous or unlawful activity. The Government recognise concern about the issue, and we support action by the appropriate authorities to stamp it out and exposure where proven—I repeat, where proven.

However, we are concerned about the practical impact of the amendment. In cases that reach the stage of a tribunal hearing, the evidence is of course put into the public domain of the hearing—almost all tribunal hearings are in public. However, in cases that do not reach a hearing, such as those that are withdrawn or settled beforehand, the Government would be concerned about publication of the papers. There would have been no investigation of the alleged wrongdoing to test the facts. The Tribunals Service would be publishing material that might include unsubstantiated allegations to which, depending on the stage of proceedings reached, the respondent might not have had the opportunity to respond. I have heard much about fairness from noble Lords today, and that would be inherently unfair. Publication of that material would not be a proportionate response in those circumstances. It is arguable that to publish might be counter to the Data Protection Act; it could also be a breach of confidence or of copyright. I am sure that those people whose writing can be misleading, but factually accurate, would consider it open season.

Furthermore, in cases that have been withdrawn or settled, not only are the employer’s details still confidential but so are those of the claimant. The claimant has every right to expect them to remain confidential. We can speculate that the claimant may have been bought off, but, equally, the detriment he claimed may have been reversed or ameliorated through conciliation. None of that would work if all his details were to become a matter of public record precisely at the moment that he settled. PIDA claims are not about the working practices underlying the claim; they are about the detriment, actual or potential, suffered by the claimant. Revealing the claimant’s details may lead to the employer feeling betrayed by an employee with whom he has reached an amicable agreement, and there is a risk of further detriment. That is in no one’s interests.

My noble friend Lord Borrie discussed information that is no longer on the public register. Employer and claimant details were on the public register before 2004. Information relating to employment tribunal claimants and respondents was put on the public register prior to the introduction of the current employment tribunal rules in 2004. However, it became clear that that was encouraging ambulance chasers and reducing the chances of the parties achieving a conciliated settlement. “Publish and be damned” comes to mind. Therefore, confirmed by a public consultation, it was decided to preserve the confidentiality of the parties and to publish details of judgments only. That policy was supported by the key stakeholders.

My noble friend Lord Borrie also referred to the appeal made to the Parliamentary Ombudsman on behalf of the charity Public Concern at Work concerning access to the details of respondents to PIDA claims and the findings of the ombudsman’s report. The noble Baroness, Lady Wilcox, also referred to that. The Government accept the findings of the report, which recognised that there was no intention to deceive. The Government fully accept that action may be needed to prevent the undesirable practices that an employee may attempt to expose, leading in turn to his suffering detriment and to a Public Interest Disclosure Act claim. Both the CBI and the EEF have told us that they oppose this amendment for reasons similar to those that I have just set out, but they have asked us to stress that they of course support rooting out employers who engage in dangerous, fraudulent or abusive behaviour.

I am grateful to my noble friend Lord Borrie, who, in explaining his amendment, said that it should be read in the context of a statement of settlement, or similar, being added to the paper published. I am grateful for that clarification of the purpose of the amendment, but I am afraid that I am not persuaded that such a procedure would be workable or overcome the difficulties with the amendment. There would still be no court finding on the substance of the employer’s alleged behaviour against which to test the statement. It would be making public an allegation, not a proven fact. The certificate could still reflect a cover-up between the employer and the claimant who, for whatever reason, had settled directly. Furthermore, there is no mechanism to ensure that the parties would agree to put their statement into the public domain, nor that they would be able to agree its terms.

I know that my noble friend recently discussed this matter with my right honourable friends the Minister of State for Employment Relations and the Member for Makerfield. In his subsequent letter, the Minister of State said that he believed the amendment would impact adversely on the innocent and that there was no evidence that it would increase our ability to tackle bad employers. I therefore ask my noble friend to withdraw the amendment.

First, I thank my noble friend Lady Turner of Camden for her support. That comes from extremely long experience of trade union work and work in this House on employment matters. I am also grateful to the noble Baroness, Lady Wilcox, for her praise of the director of Public Concern at Work, who has been, as she rightly said, there since the beginning, 10 years ago, and has done distinguished work on behalf of employers and employees in securing some sort of remedy for those who suffer through giving information to the proper authorities about wrong-doing in the workplace.

I am bound to say that I am disappointed by the Minister’s response. He expressed concern about publication of the claim, the response and the settlement and so on if there was no hearing. He either did not mention or did not stress my point that the employer’s case would also be on the record. I have no doubt that, if my amendment were accepted, employers, no doubt seeking the best legal advice in the circumstances—perhaps more than they do at the moment—would ensure that their response and the wording of any settlement and so on did justice to their case. The idea that the record will merely show unproven allegations seems to me to be incorrect.

I also have to say that I feel that the Minister rather ignored the evils of secrecy that currently exist. I mention that in mid-January the Financial Times carried a report that the former head of Cantor Fitzgerald’s spread-betting unit was bringing a claim under the Public Interest Disclosure Act alleging that he had been dismissed following raising concerns about legal and financial irregularities in the firm. A week later the Financial Times reported that the dispute had been settled for £15 million and that the employee had withdrawn his allegations. I do not know whether there was a serious matter costing punters and taxpayers hundreds of millions of pounds or whether it was some insignificant matter that the employee had blown up out of all proportion in order to leverage the maximum compensation he could get. In other words, I have no idea what lay behind that, nor does the general public, and nor do regulators interested in financial matters in the City, yet there may be a very strong public interest reason that they should know.

In the light of the Minister’s response, of course I will discuss matters with my advisers. He rightly says that I have had the benefit of discussions with the Minister for Employment, Mr Pat McFadden, who sits in another place. In the past I have had the benefit of discussions, and I have seen pronouncements on the subject by previous Ministers. In 2004, not so very long ago when employment tribunal regulations came before this Chamber, the noble Lord, Lord Triesman, indicated that he was in favour of open justice. Similar words were used by Mr Gerry Sutcliffe, the noble Lord’s opposite number in the other place. Now the curtain of secrecy has come down again, and it will be a very serious matter if one cannot get over that, especially, I may note, when, in the High Court, Civil Procedure Rules enable non-parties, outsiders, to get access to the claims and the defences raised, which seems a better possibility than this almost absolute secrecy.

Surely, if my noble friend is looking for the sense of justice to which he has just referred and the fairness to which this Committee has referred, I hope that we are not expecting employers to defend their position on a matter which has not been the subject of any legal hearing or scrutiny in the pages of newspapers, providing fuel to other vested interests in society.

There may be many reasons why matters come to an end in secrecy before a hearing, but those reasons do not necessarily imply guilt. My noble friend Lord Borrie says that employers could perhaps pay even more money and wrap themselves up for even more time by using even more expensive lawyers to provide them with advice at that stage. That practical advice may be to settle, the only coercion being the threat of publicity. It is naive to believe that publication would provide fairness to both sides.

It would not be helpful for me to pursue the matter further. I rest my case and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

23: After Clause 6, insert the following new Clause—

“Restriction of frivolous proceedings

(1) Section 33 of the Employment Tribunals Act 1996 (c. 17) (restriction of vexatious proceedings) is amended as follows.

(2) In the heading, after “vexatious” there is inserted “or frivolous”.

(3) In subsection (1), after “persistently” there is inserted “or frivolously”.”

The noble Baroness said: I speak to this amendment on behalf of my noble friend Lady Gardner of Parkes. The purpose of the amendment is to add a new category of cases which could be disallowed under the meaning of “frivolous”. I understand that my noble friend was responsible for the amendment which created Section 33 of the 1996 Act. Therefore, she has a particular interest in this issue. Although the section has been very valuable, unfortunately many misguided and mischievous cases have been brought. If the applicant is of a very persistent nature, they can be very repetitious and a waste of tribunal time and public money.

My noble friend wishes to say that she is not entirely fixed on the word “frivolous”; other phrases or words may be more appropriate. However, she feels that there is a need to strengthen Section 33 of the Act to deal with the misguided, mischievous and frivolous cases that are brought. She seeks the Government’s assurance that they are satisfied that the present section is sufficient to be effective without further amendment. I beg to move.

I offer my support to the amendment moved with such skill by my noble friend Lady Perry. I am sure that the absence of my noble friend Lady Gardner is not frivolous. We all know that she is not a frivolous person in the way in which she treats Grand Committee. She makes a very serious point in trying to strengthen Section 33 of the Employment Tribunals Act 1996, formerly the Industrial Tribunals Act.

I confess that I ought to be able to remember with slightly greater detail Section 33, as I presume I must have been the Minister who took it through in 1996, but it is not a section that has stuck fast in my mind. No doubt the Minister will be able to assist me, after some 12 years, and remind me further about that section when he responds. A full response would be useful so that my noble friend Lady Gardner can decide what to do on Report. As my noble friend Lady Perry has put the matter, she is not totally wedded to the word “frivolous” but feels that there is a case for some strengthening of the words of the 1996 Act by adding something after “vexatious” and certainly adding something after the word “persistently”. She has come up with the words “frivolous” and “frivolously”. The Government may have a better suggestion.

I said on a previous amendment that we have all heard of cases which get through the net of conciliation, when the tribunal has power to strike them out. However, there is no evidence at all, from any survey, that those cases are numerous. Section 33 of the Employment Tribunals Act gives the tribunal or the chairman power to strike out a claim that is vexatious or unreasonable. The regulations that I quoted under a previous amendment add to that, but at the moment I have lost my note of them. The right of the tribunal and the chairman to strike out claims that are vexatious, scandalous or unreasonable or are being pursued in a manner which is vexatious or unreasonable is made very clear in the 2004 regulations. The only work that has been done on this suggests that there are very few of those because cases are not often struck out.

I do not see how the word “frivolous” would add anything to the present law. If the noble Baroness wants the word, she can have it as far as I am concerned, but I do not believe that it will make any practical difference for those practising in the employment tribunal world.

It is very important that vexatious, unreasonable or frivolous actions should not waste the time of an employment tribunal. There are plenty of powers to get rid of them as the employment regulations of 2004 stand and as the Employment Tribunals Act 1996 stands. I do not see that this amendment would add anything in practice, although I have yet to discuss this with people who practise day-in and day-out before employment tribunals.

I declare as an interest the chambers in which I used to be an active member but am now a retired member. It contains many members of the Bar who practise in tribunals, and I have never heard from any of them that there are a lot of frivolous claims that get past the checks and waste the time of the tribunals. If there is such research, it should be produced on Report, but those practitioners would say, “You can have the word if you want to, but it won’t make a jot of difference”.

I am particularly grateful to the noble Lord, Lord Henley, for his observations on who started this in the first place. I particularly welcome the contribution of the noble Baroness, Lady Perry.

The Government are committed to creating an environment in which employers and employees make genuine attempts to resolve their workplace disputes without recourse to the employment tribunal. When such disputes go on to become employment tribunal claims, it is important that measures are in place to ensure that claims are made responsibly and discourage those which seek only to inconvenience or harass a party or to bring the system into disrepute for selfish reasons. The Government believe that only a very small proportion of tribunal claims fall into the latter category, and they are dealt with, as appropriate, by the tribunal system.

The amendment seeks to include within Section 33 of the Employment Tribunals Act 1996 restrictions on frivolously instituted vexatious proceedings. Section 33 contains provisions for restrictions on habitually and persistently made vexatious proceedings. The Government recognise that a distinction can be drawn in certain circumstances between habitual and persistent, and frivolous, vexatious proceedings, and believe that it makes sense to treat them differently in the law.

My noble friend Lord Wedderburn raised the point about research, and I would welcome some work being done in future on how many frivolous claims are settled at the beginning of the whole process so they do not feature in current research. Employers buy them off—especially small businesses, which write a cheque to avoid being wrapped up in the mire of litigation. A frivolously started claim might not find its way into the statistics because the cheque is written completely unfairly to get rid of something that will cost the business a great deal. That is an abuse of the process but one that does not feature on the radar of survey work of what tribunals actually hear.

I can provide the assurance to the noble Baroness, Lady Perry, that the provisions are sufficient to cover the point that she rightly raised. The powers contained in Section 33 of the Employment Tribunals Act 1996 are appropriate for dealing with a course of conduct that could include repeated frivolous claims, whereas a frivolous case in the terms of this amendment could be a one-off claim, although it would still have to be a vexatious one. It is based on the provisions of Section 42 of the Supreme Court Act 1981, which also draws this distinction.

The powers available under this provision enable the appeal tribunal, when there has been habitual and persistent institution of vexatious proceedings without reasonable grounds, to make a restriction of proceedings order which includes that no proceedings shall without leave of the appeal tribunal be instituted in any employment tribunal or before the appeal tribunal by the person against whom the order is made; any proceedings instituted by that person in any employment tribunal or before the appeal tribunal before the making of the order shall not be continued by him without the leave of the appeal tribunal; and no application is to be made by him in any proceedings in any employment tribunal or before the appeal tribunal without the leave of the appeal tribunal. That is evidence of the assurance the noble Baroness sought.

Other powers are available to tribunals in respect of weak cases. The Government suggest that if frivolous cases are weak, they can be considered under those powers. They include striking out, cost orders, pre-hearing reviews and a requirement for payments of deposits. The law already safeguards access to justice, while giving employment tribunals appropriate mechanisms for dealing with weak cases.

I put on record that I referred to the regulations of 2004: Regulation 18(7)(b) and (c). I shall not detain the Committee longer on that.

I am grateful to the Minister for the reassurance which my noble friend was seeking, and I thank my noble friend Lord Henley for his supportive and helpful remarks. I listened with great interest to what the noble Lord, Lord Wedderburn, said based on his practical experience of these cases. My sample population of one—my daughter, who is an employment law barrister—tells me of many cases that I, as a lay person, would regard as frivolous, but perhaps she only tells me about the interesting, frivolous ones that keep me amused. I note the Minister frequently coupled the word “frivolous” with the word “vexatious”. There is a distinction between the two. People can be frivolous but not desperately vexatious or vice versa. My noble friend Lady Gardner of Parkes is attempting to pick up the category of frivolity. I am reassured by what the Minister said. My noble friend will be able to read in Hansard his reply and the comments of other noble Lords. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

24: After Clause 7, insert the following new Clause—

“Award of compensation: order for direct recovery etc.

In the Employment Tribunals Act 1996 (c. 17), after section 36 (enforcement of decisions etc.) there is inserted—

“36A Award of compensation: order for direct recovery etc.

The Secretary of State shall by order make regulations providing for the direct recovery by a claimant of an award of compensation made by an employment tribunal within three months of the decision, and for interest to be payable on amounts paid later than that date.””

The noble Lord said: In support of this amendment I have to rely on those who have done a great deal of work in relation to employment tribunal awards of compensation that are not paid. Citizens Advice has produced a report on what it calls “rogue employers” who are, of course, a minority. It states:

“we believe that these provisions”—

that is those of the 2007 Act, which has improved the position with regard to application to the county court—

“do not go anywhere near far enough. For it is the common experience of CAB advisers that registration of an unpaid award in the County Court—which under the provisions of the 2007 Act is to become automatic and free of charge—frequently fails to secure payment as the associated consequences for the employer of continued non-compliance are negligible … Furthermore, these provisions of the 2007 Act”,

which I have already said improve the position,

“have not yet been implemented, and the Government has not yet given any indication of when they will be. A Ministry of Justice consultation document on implementation of Part 1 of the 2007 Act, published on 28 November 2007, simply states that ‘some detailed work remains to be done on this so that the new provisions work seamlessly between Acas, the tribunals, the county courts and enforcement agencies’. We suspect and fear that this work is no longer a priority for the Tribunals Service and Ministry of Justice.

Accordingly, for the time being successful tribunal claimants who have not received their award still need to pay to register the unpaid award in the County Court before they can begin enforcement action, and those who have not received a COT3”—

the form for payment—

“settlement cannot enforce the settlement through the County Court (as the 2007 Act provides for) … the survey of CAB advisers we conducted for our March 2005 report Hollow victories suggested that, each year, the 430 Citizens Advice Bureaux in England and Wales alone deal with some 650 unpaid employment tribunal awards, which is one in 20 of the some 13,000 awards made by the tribunals each year. Accordingly, it seems reasonable to conclude that the total number of unpaid awards is in the region of 1,000 per year—or one in 13 of all awards.

Citizens Advice believes that this is a significant proportion of all tribunal awards, and we would suggest that such a degree of non-compliance seriously undermines the credibility of both the employment tribunal system as a whole, and the very welcome reforms of that system set out in the current Employment Bill. Furthermore, we would suggest that such non-compliance tends to impact disproportionately on the lowest paid and most vulnerable workers, who are over represented in the caseload of Citizens Advice Bureaux and who are, increasingly, a main focus of the Government’s wider policy on employment relations (see page 8 of our December 2007 report Rooting out the rogues).

Indeed, however ‘small’ the total number of unpaid awards … the impact on individual claimants is substantial, and can be devastating”.

Citizens Advice’s document sets out the devastating consequences. It is not easy for a worker who has obtained an award of compensation in a tribunal to get it enforced. The thrust of the paper is that the Government should set up some automatic machinery by means of a new body that will see to it that compensation awards are paid. It may be that this amendment is not exactly drafted in the terms that Citizens Advice, which is daily concerned with people who just cannot go on trying to enforce their compensation awards, would suggest. Its thrust is to ask the Government to see that even after the reform of county court enforcement under paragraph 43 of Schedule 8 to the 2007 Act a new departure is needed. We suggest it should be direct recovery by the claimant of compensation awarded by the employment tribunal, certainly within three months—that is unduly modest—and for interest to be payable on amounts paid later than that date. I beg to move.

I support the amendment of the noble Lord, Lord Wedderburn. He is entirely right that it raises concerns on which the citizens advice bureaux have strongly lobbied us. A number of us, including myself, mentioned it at Second Reading. Whether this is the best way of dealing with it is obviously a matter for the Government. I do not think that the noble Lord, Lord Wedderburn, will have any pride in his drafting.

The problem is a straightforward one. Very often, according to Citizens Advice, individuals—usually at the bottom of the employment heap, as it were—get a judgment and, when a rogue employer does not pay it, they are faced with the problem of going through the normal judicial procedure of going to court to get it enforced. They quite often face the risk of putting down money that they do not actually have for court fees. There is wide concern across all sides of your Lordships’ House that the Government should take the opportunity to deal with this, so that employees who get an order have the ability to enforce it without putting further sums of money at risk against rogue employers. I am delighted that the noble Lord, Lord Wedderburn, has brought this up and am happy to support it.

I support the amendment. It is important to draw parallels between the clauses in the Bill, which make provision for payment in full of the national minimum wage where employers are not up to the mark on that, and the amendment. I referred to the Minister’s remarks at Second Reading, where he commented on what he termed a small minority of employers who do not meet their obligations under the national minimum wage. He quoted figures, such as the £3 million paid in compensation as a result of government action on that.

The situation is similar with employment tribunal awards. Like other Members of the Committee, I commend Citizens Advice for what it has done on this and the resources and information it has provided. A figure that sticks in my mind is that up to one in 20 awards at employment tribunals are simply not paid. In many cases, the individual who has been successful at the tribunal is faced with having to win again, but is unable to provide the time, resources or determination. He or she may be worn down, and is probably no longer in employment anyway—or not with that employer. It may not be pursued for a number of reasons and it seems strange, to put it no stronger, that Clause 7 provides for additional compensation to be made for financial loss and also for unlawful deduction of wages or non-payment of redundancy payments, over and above the basic tribunal award. I ask the Minister what happens if those payments are themselves not then made. What recourse does an individual have? He or she must go back and spend a basic minimum of something like £500 just to get the matter into court. That can be a daunting prospect, particularly for somebody who is not in work as a result of a dispute with an employer.

There would be consistency, should the Government accept this amendment, so that non-payment of tribunal awards and other awards consequent on the action of the employer should be recoverable in the same way as non-payment of the national minimum wage. I therefore hope that the Minister can give a positive response when he replies to the debate.

I thank my noble friend Lord Wedderburn for raising the issue. We know that the number of unpaid awards is a real issue. A problem has been that we have never yet seen robust evidence for the figure of one in 20, and would very much like to see those figures. However, we absolutely accept that the issue needs to be examined. Indeed, as I speak, the Government are commissioning research to do just that.

If the Minister and his officials have not already done so, might they meet Citizens Advice, which has considerable information that it could put at their disposal?

I am grateful to my noble friend, but he will not be surprised to hear that my officials have already met Citizens Advice, for which I have the highest regard having been a chairman of a small citizens advice bureau some years ago. But my noble friend is perhaps suggesting that there should be another meeting. The Government are attempting to have research done on what is undoubtedly a very important matter. We are talking about orders, and they should be paid.

Some callers to ACAS refer to unpaid awards, but there is no systematic recording of that information. Some of them may still be within the generous 42 days permitted for payment. There is no hard evidence—I wish there were. Anything that Citizens Advice or anybody else can do to provide that hard evidence would be very much appreciated.

The amendment would do three things. First, it would allow awards to be enforced without the need for a county court order. Secondly, it would extend the period after which enforcement of awards could be initiated to three months—three months slightly surprises us, given that the current period is 42 days, which is less than half three months. Thirdly, it would make interest payable on awards which remain unpaid after that period; that is, three months.

As the law stands, and as the Committee will know well, employment tribunal awards should be paid within 42 days of the judgment, unless the respondent chooses to appeal to the Employment Appeal Tribunal. Unpaid awards may then be enforced in the same way as county court judgments; that is, by means of a court order. Most awards are also subject to interest after the 42 days have elapsed, except in the special case of discrimination and equal pay claims, where interest accrues from the date of decision and where the tribunal has a discretion to award interest on any award for injury to feelings from the date of the act which gave rise to the complaint.

As my noble friend said in moving the amendment, Section 27 of and paragraph 43 of Schedule 8 to the Tribunals, Courts and Enforcement Act 2007 will enable tribunal awards, including employment tribunal awards, to be enforced as if they were payable under a county court order; that is, the claimant can, for example, go straight to the bailiffs for enforcement. The 2007 Act also contains parallel measures, in Section 142, which will enable a legally binding agreement brokered by ACAS to be enforced in precisely the same way.

Additional provisions in Schedule 8 to the Act will enable unpaid awards to be included on the Register of Judgments, Orders and Fines. Inclusion on that register, which is often consulted by banks, building societies and credit companies when considering applications for credit, can make it more difficult for defaulters to obtain credit, and will provide an incentive to pay promptly.

Responsibility for implementing these provisions, which are now an Act of Parliament, lies with the Ministry of Justice, which intends to implement them in April 2009, alongside the repeal of the statutory dispute procedures under the current Bill. Practical work is to be done to put in place the necessary administrative measures between the courts and the employment tribunals, and to ensure that good information is available to claimants. The provisions apply to any sum payable, including any award of costs as well as awards owing to successful claimants.

It appears that the proposal to extend the period after which enforcement could be initiated to three months would have the effect of providing additional time for respondents to pay. An award must currently be paid within 42 days, unless an appeal to the EAT is lodged. I do not think that many Members of this Committee, nor those who support the amendment, would welcome this change. We are somewhat surprised that it should be part of such an amendment.

Again, with regard to the payment of interest, it appears that the amendment would increase the time period before interest was charged on awards, which in most cases is currently 42 days from the date of judgment. The Committee will not be surprised to hear that the Government have no wish to increase that period, and I am sure that it is not noble Lords’ intention to do so. However, the measures that I have already described to streamline the enforcement process are designed to encourage early payment to the benefit of claimants.

We are also providing help to vulnerable claimants through Clause 7 of the current Bill. Clause 7 gives tribunals the discretion to make additional awards against respondents to cover the full financial loss arising from money not paid to, or unlawfully withheld from, the claimant in claims for unlawful deductions and unpaid redundancy awards. This will extend an existing power in relation to unpaid holiday pay under the Working Time Regulations to these further jurisdictions and mean that claimants will not have to apply to the courts for awards compensating for consequential losses.

In addition to the provisions in the Tribunals, Courts and Enforcement Act, I should also refer to the fact that the Government are commissioning research on the payment and enforcement of awards to inform future procedures. Therefore, not only are we looking at the number of those who are paid but we are also commissioning research on the payment and enforcement of awards to inform future procedures. I hope that that is of interest and is approved of by the Committee.

We share the concern raised in this debate that enforcement of awards is not just important but vital, and we are already taking action. Perhaps the action will not be quite as quick as those who support the amendment would like, but it is coming. I hope that there is a degree of reassurance in what I have had to say so that my noble friend can withdraw his amendment.

I thank all noble Lords who have spoken in the debate—the noble Lord, Lord Razzall, my noble friend Lord Watson in particular, and, indeed, the Minister. When I saw it in print, I realised that there was something terribly wrong with the drafting: to have put three months instead of 42 days was ridiculous. The Minister has done a great job in destroying the drafting of the amendment, so all I can do is rely on its spirit.

First, I am very glad to hear that the Government are doing further research. When they do it, perhaps I may ask them to pay heed to what Citizens Advice has come up with, because it is not talking without evidence; it is talking about citizens advice bureaux throughout the country. One passage that I read, which, alas, I have sent to Hansard, spoke of the citizens advice bureaux throughout England and Wales finding that this is a terrible problem. Unpaid awards by what Citizens Advice calls “rogue employers” is certainly something that we must deal with. Therefore, the spirit of my amendment, which we will look at again on Report from the root upwards, is that we welcome the Government’s further research, just as we welcomed paragraph 43 of Schedule 8 to the 2007 Act, and we hope that the question of unpaid awards can be addressed directly out of that research and that some improvement can be made in the very near future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Arrears payable in cases of non-compliance]:

24A: Clause 8, page 7, line 1, leave out subsection (8)

The noble Baroness said: This is a probing amendment among a clutch of probing amendments, and it is intended to draw attention to a retrospective calculation that the Government intend to use to calculate the remuneration that an employer will have to pay if it transpires that he is paying less than the minimum wage. Retrospective provisions are generally considered as something that should be avoided at all costs. The idea of incurring a new or heavier punishment for an activity that at the time of occurrence did not result in such a penalty is a breach of one of the most fundamental principles of law. Yet in the Bill, if I am reading it correctly, we see that arrears that have been built up before the new provisions are implemented will be subject to the new formula for calculating arrears, not the old one, if the new one will result in a higher total. This would seem to result in a situation where an employer who is served an enforcement notice immediately after the provisions have been enacted would be forced to pay considerably more in arrears than an employer who had been underpaying by the same amount over the same period of time but who was served the day before. I hope the Minister will be able to reassure me that that is not the case. It is possible that I have misunderstood the legislation. I cannot work out whether the retrospectivity will apply just to a tax year that overlaps when the provisions are implemented or to the whole period of the underpayment. I sincerely hope that the Minister will be able to clarify that for me. I beg to move.

I am grateful to the noble Baroness who has started our—brief, I hope—discussion of the national minimum wage clauses in the Bill. They are important clauses. Clause 8 provides a new, fairer method of calculating the amount of arrears of national minimum wage due to a worker. It provides that the arrears will be calculated in relation to the national minimum wage rate in force on the date they are repaid as opposed to the rate in force when the work was done. That goes some way to making good the loss of earning power the worker suffered by remaining underpaid over the period he was without his national minimum wage payment.

Amendment No. 24A, tabled in the name of the noble Baroness, removes subsection (8) of Clause 8, which provides that the new method of calculating arrears will apply to all arrears owed to underpaid workers when the provision comes into force. It would prevent the new method of calculating arrears contained in Clause 8 being used to help workers underpaid before commencement.

We recognise that applying certain sanctions to employers for non-compliance before commencement has the potential to cause unfairness. That is why we have not taken that approach with the rest of the changes to the national minimum wage regime. For example, the penalty contained in the new notice of underpayment in Clause 9 will not apply to an underpayment of national minimum wage before commencement. However, we considered long and carefully whether the provisions in Clause 8 should apply retrospectively and we concluded that, in this case, it is right because the aim of Clause 8 is not to penalise employers; rather, it is to ensure the fairest outcome for workers who have been underpaid. Amendment No. 24A would deny underpaid workers arrears calculated under the new method until some considerable time after Clause 8 comes into effect. Moreover, it would have no impact on outstanding arrears, which could go back as far as six years. If someone had been underpaid for six years, it is surely right that there should be some allowance for the increase in the cost of living since the underpayments began.

If Clause 8 were to come into force on 1 October 2008, at the same time as the annual uprating of the national minimum wage, the amendment would mean that a worker who was underpaid after commencement—that is, from 1 October 2008—would not receive any additional remuneration until at least 1 October 2009. Under current legislation and under Clause 9, a notice of underpayment may include a pay reference period ending up to six years before the date of service of the notice. Under the amendment, a worker whose employer had failed to pay outstanding arrears for several years before commencement would not be entitled to any uplift to take account of the years that he was without the money.

A further effect of Amendment No. 24A would be to increase the complexity of the calculation of arrears for employers and workers, as there would be two arrears regimes in force at the same time. We do not think that that is right.

We recognise that the effect of subsection (8) would be to impose an additional burden for employers in those cases where the underpayment has been significant or has gone on for a period of time. However, this burden will apply only to those employers who have failed to make good the arrears owed to their underpaid workers by commencement. Employers would have to pay an additional amount as remuneration only if the arrears are repaid in a different national minimum wage rate year from the one in which the underpayment occurred.

On the other hand—and this is significant—it is open to employers, aware of the proposed changes to the law, to repay arrears in accordance with the current law until Clause 8 comes into force. If an employer repays his workers and becomes compliant with the NMW legislation at any time before commencement, he will remain unaffected by Clause 8.

We will do our best to ensure that employers are aware of the changes that the Bill will bring in to the national minimum wage regime well before they come into effect. We are currently working with stakeholders to develop guidance to ensure that everyone is fully aware of the changes the new legislation will bring, and what they need to do to be compliant well before those changes come into effect.

In short, we do not believe that it is unfair that the provisions in Clause 8 are retrospective. The employer has a responsibility to pay the correct amount of pay at the correct time. The changes contained in Clause 8 will have an effect only on employers who are non-compliant with the national minimum wage.

Workers paid below the national minimum wage are likely to suffer financial hardship even if arrears are eventually paid, if no account is taken of the effect of the underpayment in real terms. It is right that the repayment of arrears to a worker should take account of the length of time the arrears have been outstanding. Our fear is that if Amendment No. 24A were carried, it would bite hardest on those workers whose arrears have been outstanding for a longer period—that is, frankly, those who have been treated the worst by their employers. For those reasons—and I hope that I have not gone on at too much length—we believe that what is in the Bill is the right way to deal with this difficult problem. Therefore, I invite the noble Baroness to withdraw her amendment.

I thank the Minister for the time and trouble he has taken to respond to my question. The good news is that I have not misunderstood the legislation. I began to think that maybe it was just me and that I was going to stand up and be made to look silly. But, no, I have not misunderstood what the legislation says here. This is retrospective provision, generally considered to be something to be avoided at all costs. The idea of incurring a new or heavier punishment for an activity that at the time of occurrence did not result in such a penalty—and I am repeating this—is a breach of one of the most fundamental principles of law.

Once the Government have started down this rocky road of retrospection, they will find themselves in the most terrible difficulties in the days ahead. I can see now why the noble Lord, Lord Jones of Birmingham, was not in the room when the amendment was being debated because, when director-general of the CBI, retrospection certainly was not something he would have voted for. At the moment I have no other option but to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 agreed to.

Clause 10 [Powers of officers to take copies of records]:

On Question, Whether Clause 10 shall stand part of the Bill?

I am probing just to allow the Minister the opportunity to defend the necessity of giving these powers to the compliance officers. Clause 10 gives civil enforcement officers new powers to take materials away to copy relevant documents. It is, as I am sure the Minister will say, a relatively small power to give them, especially in comparison to those awarded in Clause 12, which I will come to later. Even small increases need to be justified. Can the Minister give us any evidence that the lack of these powers have prevented compliance officers issuing an enforcement notice, or is this just another example of the Government tweaking the employment law?

I shall do my best to explain Clause 10. The Government are determined to ensure full, effective enforcement of the national minimum wage legislation that we have passed—and I know that the Committee would want such enforcement. At present, officers who enforce the national minimum wage have the power only to require the production of records, to inspect them and copy them at the employer’s premises. In the majority of cases, these powers are sufficient. In the event that compliance officers are unable to copy the material at the employer’s premises—for example, if photocopying equipment is not available or there is too much information to copy in the time available—employers often allow officers to take the material away to copy it. However, when an employer does not agree to the removal of national minimum wage records, officers do not have the right to remove these records to allow them to make copies. We have therefore concluded that the efficiency of national minimum wage enforcement would be increased if HMRC had the power to remove national minimum wage records from the employer’s premises for a reasonable time to allow them to take copies. Subsection (3) of Clause 10 provides for this.

It is important for both employers and workers that records are handled properly when taken away from an employer’s premises. Compliance officers have to act in accordance with strict rules to safeguard records on HMRC premises, and consideration is being given to whether there is a need to strengthen these rules. The power to copy information in Section 14(1) of the National Minimum Wage Act 1998 currently allows officers to copy “any material part” of the records. Subsection (2) of Clause 10—

[The Sitting was suspended for a Division in the House from 7.11 to 7.21 pm.]

Perhaps I may repeat myself for a moment. The power to copy information in Section 14(1) of the National Minimum Wage Act 1998 allows officers to copy “any material part” of the records. Clause 10(2) amends this power to enable an officer to copy a complete record, rather than have to sift through at the initial stages of the investigation to determine what he believes will be the material part of it. We do not believe that it is right that officers who are enforcing the minimum wage should have to rely on the good will of the employer to allow records to be removed or be required to copy records at the employer’s premises. We consider that the modest changes—and they are modest—proposed in this clause will make the information-gathering process by HMRC more effective.

I thank the Minister for that explanation. Is it possible when we meet again for him to give us evidence that the lack of these powers have prevented compliance officers issuing an enforcement notice? Is it driven because of that problem? If it is a matter merely of making things more convenient, I am not sure that we should be making a law for it—for the Executive to be happier and more comfortable and not have to “sit through”. Those seem to me to be the wrong words, framing up more powers being given to enforcement officers simply so they are not uncomfortable.

The noble Baroness talks about us making this more convenient, but it is a ridiculous system where all the compliance officers are able to do is to go to somebody’s premises. If there is no copier there they cannot copy anything. If a great deal of information is needed and they do not have the time to do it—because presumably the employer would have to stay much later than otherwise and the officers would not have the time anyway—it is a matter of convenience so that enforcement action can be taken. What the noble Baroness should not forget is that there are, I am afraid, a very small minority of employers who will do everything that they possibly can to obstruct being found out that they have not paid the national minimum wage. I do not think that anyone could argue that what is being proposed in Clause 10 is a great attack on civil liberties or a great increase in executive power.

I thank the Minister for that, but I am not sure. What is this—guilty until proved innocent or innocent until proved guilty? I cannot see all this about having to go along to someone’s premises, and whether it is inconvenient and you have too many bits of paper to work on. Also, hard cases make bad law. The odd one or two are badly behaved but, having worked in and run small businesses and known how much intrusion there can be when people turn up and start accusing you of things, I know that it can be very upsetting. And this is just for the convenience of someone being able to take a photocopy? I ask the Minister to bring me evidence that the lack of the powers has prevented compliance officers issuing an enforcement notice. I do not think that that is too much to ask; I am sure it is not beyond the ability of this wonderful Executive to provide. For the moment, of course, I will withdraw the amendment, as I have to in the Moses Room. Oh! I am not withdrawing anything, so I shall just sit down, but I ask the Minister to speak with his officials and see whether that question can be answered.

Clause 10 agreed to.