To move that the draft order laid before the House on 27 January be approved. Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.

My Lords, this order will enable employment tribunal proceedings relating to leave entitlement under certain working time regulations to be heard by an employment judge sitting alone. Employment tribunal panels usually consist of a legally qualified employment judge and two lay members, one each from the employee and employer sectors. However, since the mid-1990s there have been specific instances, set out in the Employment Tribunals Act 1996, where an employment judge can sit alone to decide a case. Initially this power applied to claims including breach of contract and unauthorised deductions from wages. Claims for redundancy payments and certain national minimum wage claims were added to the list from 1 August 1998 and 1 April 1999 respectively.

Today’s order adds a further category, referred to as “holiday pay”. Again, it covers simple monetary matters and relates to leave entitlements under the working time regulations. Straightforward monetary disputes typically involve clear issues of law where there is no dispute over the facts. In such cases a lay member’s practical experience of the workplace is less relevant. Consequently, the Government, and the majority of our stakeholders, view this order as a sensible measure that will enable the most productive use of the precious time of lay members.

Lay members make an immensely important contribution to employment tribunals. They bring an understanding of the realities of the workplace from the perspective of both employers and employees. During the passage of the Employment Act last year, there was widespread support among Members of both Houses for their role. My noble friends Lord Wedderburn and Lady Turner raised a number of valuable points, for which I am grateful. I apologise to my noble friends for an oversight by the department in not consulting them before this measure was tabled, as was promised by the noble Lord, Lord Jones. The request was not conveyed directly to the department and Ministers. However, we would have wished to consult them, and I hope they will accept this apology.

I know that my noble friends are concerned that there should be no diminution of the role of lay members and I can assure the House that this order will not undermine their valuable contribution. Indeed, as employment tribunals continue to see rising numbers of individual claims it is important that lay members are involved in these cases where their skills and experience can bring most benefit.

During 2007-08, 3,000 holiday pay cases were disposed of by an employment tribunal. Some would not have been suitable to be heard by a judge sitting alone but many would. This order will free lay members to sit on more complex cases instead, allowing them to be heard sooner.

The majority of respondents to the Government’s consultation last year agreed that lay members’ time could be better used. The Council of Tribunal Members’ Association said that it had no objection in principle to this measure provided that appropriate safeguards were in place. I can assure the House that such safeguards are already in place for cases where an employment judge can sit alone, and these will apply equally to cases concerning holiday pay.

When deciding whether a case should be heard by a judge sitting alone or by a full tribunal, an employment judge must consider the circumstances of the case and the views of the parties involved. A judge may also decide at any stage that a case should be heard by a full tribunal; for example, if the facts of the case are likely to be disputed.

The order is part of broader efforts to simplify and improve the dispute-resolution framework. In addition to today’s measure, we are expanding the confidential and impartial ACAS helpline. It is available to answer specific employment questions and to provide advice on resolving workplace disputes. From April, ACAS will offer, in appropriate circumstances, a free pre-claim conciliation service, accessed via the helpline, to employees and employers unable to resolve their disputes.

For the reasons that I have outlined, the Government believe that the reform is a sensible addition to the jurisdictions that can be heard by a judge sitting alone. We are confident that it will ensure that the valuable expertise that lay members bring to the tribunal process is used where it can add greatest value. On that basis, I commend the order to the House.

My Lords, I thank the Minister for introducing the order. We understand that it represents a shift towards a less rigid adjudication of holiday-pay disputes. As such, I cannot see that we would have a major problem with it. However, I will ask a few general questions.

The 2007 Gibbons review made 17 recommendations. Will the Minister say which of these have been implemented to date? The Gibbons review found that the average cost to a business of defending an employment tribunal claim was £9,000. In the light of this significant figure, what plans have the Government to address the problem of vexatious claims, particularly against small businesses that can ill afford them?

The noble Baroness will be aware that the Federation of Small Businesses has called for a moratorium on the implementation of new employment laws due to come into force on 6 April, until the next implementation date of 1 October. The federation says that these laws could cost small businesses nearly £800 million a year and will put more financial pressure on already struggling companies. The FSB is concerned that firms will be unable to retain staff—or employ extra staff—if they are burdened with such new legislation. Have the Government met the FSB to discuss its request, or have they given it any consideration; and if so, what is the likely outcome?

My Lords, the adding of a fifth category, best summed up as cases relating to holiday pay where employment tribunal proceedings may be heard by an employment judge alone, completes some of the work outstanding from the Gibbons review, and is welcomed on these Benches.

It has been 10 years since the last updating of this kind. Do the Government envisage any further changes to the rules on employment tribunal composition in the next few years? If the Government have in mind areas where this power might be used again in future, will they guarantee that a full and comprehensive consultation will again be carried out before any such proposals are brought to the House for consideration?

My honourable friend the Member for Solihull raised concerns in another place about the initial decision on whether a full tribunal is necessary, and whether the decision can be reversed if a case appears more complex than was first thought. The guidance from the Minister suggests that the judge will take the decision, taking into account the views of both parties. Will the Government issue any guidance to employment judges to assist them in coming to a decision when one party prefers a full tribunal and the other prefers a single judge? As the Minister has indicated, there is a danger that the party against whom such a decision goes could feel aggrieved, particularly if they had sought a full tribunal and a lone judge was eventually selected. That could have damaging consequences for the rest of the tribunal hearing. We hope that such situations could be avoided as far as possible. If the Minister can reassure us on these matters, we shall be happy to support the measure.

My Lords, I feel that this order, which will undoubtedly go through, should not proceed without some mention of its extreme importance in the development of our employment law. When the industrial tribunals, as they were then called, were established in 1964, they were set up with a legally qualified chairman and two wing persons, one from a panel of employers and one from a panel of employees. The reason for that was not to create what the Conservative Opposition have yet again this evening called “rigidity” in their structure—I know from my experience in this House that they have been saying that since 1971. It was in order that the legally qualified chairman should have in his or her tribunal something that is not available in ordinary courts, namely two wing persons who brought to the facts experience from both sides of industry, in order to illuminate the court’s understanding of questions of law that the legally qualified chair, now called an employment judge to satisfy the Ministry of Justice, would deal with in his handling of the case.

The Donovan Royal Commission in 1968 advocated, in chapter 10 of its report, the tripartite structure for what it foresaw to be a potential source of new labour courts, dealing with employment issues between employer and employee, and the Ministry of Labour, in its wise evidence to that commission, suggested that this was a desirable development in the structure of our law and that it should be promoted. Ever since then, as I understand it, it has been a bipartisan policy, not a party issue. that the tripartite nature of the employment tribunals, as they are now called, should be sustained and promoted.

The reason I am speaking is that there is abroad, among practitioners in the tribunals and the employment appeal tribunals, an apprehension and concern that are shared by a wide number of lay members on the employment tribunals—the wing persons, as I call them—that we are groping in the dark more and more towards a system that would merely have an employment judge with two wing persons who were really added extras and not very important. It is true that my noble friend on the Front Bench has said today, as the Government said in response to their consultation, that the wing persons in employment tribunals are valuable and much appreciated. I am glad that that has been repeated, but there is an anxiety among lay members of tribunals that their functions are being gradually diminished, and this order takes a further step towards the jurisdictions that can be dealt with by an employment judge alone.

The rationale for doing so is not easy to see. The first substantive type of case that is selected is the question of holiday pay, to put it in layman’s language. Paragraph 7.4 of the Explanatory Memorandum from the Department for Business, Enterprise and Regulatory Reform says:

“The Government believes that some tribunal cases, which revolve around the determination of facts in cases of monetary disputes, could be dealt with more quickly and simply. Holiday Pay claims often involve straightforward monetary issues”.

There may be a case for having wider jurisdictions for a judge alone sitting on the tribunal, but it certainly is not substantiated by choosing cases that are primarily questions of fact. It is the questions of fact that the wing persons, the non-legal judges, are equally, if not more, able to deal with than what is now called the employment judge. Indeed, the Donovan commission’s 1968 report said four times that the point about the tripartite judges, the legally qualified chairman and the two wing persons, one from an employers’ panel and one from an employees’ panel, was that the judges were, and should be, on a footing of equality. I thought that that notion had been shared by different Administrations, even when there was a great deal of difference about employment law, from 1971 until today.

My Lords, I support my noble friend Lord Wedderburn. I well recall the discussions we had during the passage of the Employment Bill, which is now an Act.

We had been contacted by the organisations representing lay members serving on employment tribunals. They believed that they were being gradually phased out as they had been sitting on fewer cases. Moreover, a review commissioned by the Government appeared to be inclined in that direction. Indeed, the view seemed to be taken in the review that all tribunal members could be interchangeable. There seemed to be a lack of understanding of the special knowledge of employment issues that could be deployed by the lay members representing employees and employers. As a result of the representations made to us by these lay members, we raised the issue during debates on the Bill and had discussions with the then Minister, the noble Lord, Lord Jones of Birmingham. We believed that we had convinced the Minister of the validity of our concerns. He certainly assured us that the Government were well aware of the worth of lay members and the need for their continued involvement in employment tribunals. I am very glad that the Minister has reiterated that view this evening.

After our discussions, we expressed our satisfaction with the outcome and duly reported accordingly to the lay members who had approached us. I was therefore somewhat surprised to see in the draft order now before this House that the Government are departing from what we took to be firm assurances about the continuing role of lay members in these important tribunals. I do not doubt at all that the noble Lord, Lord Jones, certainly did not intend to mislead us in the discussions. He himself no doubt believed that what he said was accurate, and he was working from the brief that he had from the department.

This is an important issue. An employment judge, sitting alone, is unlikely to have the breadth of knowledge and experience of the current lay members representing employees and employers. The matters that the order stipulates as being suitable to be heard by an employment judge sitting alone are likely to be of considerable importance to the workers bringing the cases. The Government claim that there has been full consultation, but tucked away in the accompanying paper is the single line,

“there was some opposition from employee organisations”.

Yes, I do not doubt that there was.

Important workers' rights are involved. Unions have raised the possibility that some of the cases could be complex. The safeguards proposed only seem to involve a communications strategy—a matter of simply telling people what all the changes mean. It is our belief that the whole idea of an employment judge sitting alone in these cases should not be proceeded with.

When we had talks with the lay representatives during discussion of the Employment Bill, some expressed the view that, despite what the Government had said about the value of the contribution they made, there was a view within the department that they should indeed be gradually phased out over time, leaving the process entirely in the hands of single employment judges. My noble friend Lord Wedderburn has dealt in detail with their feelings in that respect. We thought that we had managed to deal with that feeling, and as a result the lay members we met pronounced themselves satisfied.

However, perhaps they were right after all and this is a first step towards the objective, and the valuable contribution that these people make to justice and employee rights is to be discontinued. I very much hope that this is not so. Generally speaking, employees have confidence in the present system. They know that their cases will be heard before people who have knowledge of the world of work. That is important. Incidentally, I had discussions today with the noble Lord, Lord Campbell of Alloway, who has experience in these matters. He was involved in the original Donovan commission report, which eventually led to the establishment of these tribunals. Unfortunately, he cannot be here this evening for personal reasons, but has given me permission to say that he fully agrees with what my noble friend Lord Wedderburn and I have said. He opposes the idea that eventually lay people should not sit on the tribunals. He believes that they have a great deal to offer and he does not care for a situation in which an employment judge sits alone on these cases. He asked me to bring that to noble Lords’ attention. I urge the Government to think again about what has been said this evening.

My Lords, I agree with a great deal of what has been said by my noble friends Lady Turner and Lord Wedderburn of Charlton. They have made the general argument that the Employment Act has resulted in a trend of judges hearing cases alone without the benefit of the experience of the wing men—the employer and the employee representatives. I remind the Liberal Democrat Benches that my noble friend Lord Wedderburn referred to the Donovan report and the way in which industrial tribunals—employment tribunals, as they are now called—have a wing-men approach. That tripartite function of membership is so important. It dates back to Lloyd George, who introduced tripartite membership of tribunals dealing with national insurance and other matters. He conceived that there should be a three-person tribunal with a legally qualified chairman and people representing the employer and the employee. It has a notable and significant history and I am worried, as are my noble friends, that the clock may be being turned back without adequate justification.

My Lords, I am very grateful for the comments and questions, particularly as many, if not all, noble Lords who have spoken are significantly more experienced in this area than I am. Therefore, I shall write on any questions that I am unable to answer. The noble Lord, Lord De Mauley, asked about the 17 recommendations from the Gibbons review. My understanding is that we accepted almost all of them and that they come into force on 6 April. If there are any exceptions to the 17—which is a rather precise number—I will write.

With respect to the question asked about the moratorium, this is a very difficult area, not least because at a time of economic crisis it is important that we reduce as much as possible the burden of regulation and other burdens on businesses. That is why we have had discussions with the FSB and other wider business organisations. It is clear that it is very difficult to stop employment regulations that have been planned for and are in mid-flow, because preparations have been made by certain companies. It is difficult both in law and in practice to discriminate between employees who work for small employers and those who work for larger employers. That is something that small employers simply do not wish to happen, because they do not believe that they would be able to compete effectively in the labour market if they were seen in any sense to not have protections that would apply if employees worked for larger employers.

The noble Baroness, Lady Garden, my noble friend Lord Wedderburn and other noble Lords asked whether there were any further plans for changes to the tribunals and the composition of the tribunals. I am advised that there are no current further plans, but if there were, obviously we would consult fully. I have already made a commitment, as I am aware that noble Lords would have wanted to have been consulted personally and specifically, and we will ensure that happens, but there happen to be no current plans for changing the composition of the tribunals.

I wish to go back to the main issue, which is that there is in some sense a view or a desire—in the rather emotive language used by my noble friend—to pension off lay members or to see them phased out. I reassure noble Lords that that is absolutely not the case. I will take back to the department the strength of feeling on this matter, to make sure that we consider it effectively and properly, but I do not believe that that is the view of the department or of the Government. As I stated at the start of the debate, we value the role of lay members.

The issue was raised that, essentially, whether lay members are used is a matter for the sitting judge to decide. I assure noble Lords that there is specific guidance on this matter, and this guidance has obviously been in place and has been working effectively since the mid-1990s, because it already applies to certain areas of employment law, including claims for breach of contract, unauthorised deductions from wages, claims from redundancy payments and certain national minimum wage claims since 1998. There is a practice that is seen to have worked effectively. In particular, the judge is required in the guidelines to take account of the views of any of the parties on whether the proceedings ought to be heard by a full tribunal or by a judge sitting alone; so there are safeguards in place.

Nevertheless, I understand and accept the strength of feeling that has been expressed. I would be very happy to take that back to the department and write to noble Lords to assure them that we have no further plans and that we value very highly indeed the role of lay members. In fact, the number of tribunal claims is forecast to increase, so we would expect their role to increase. The holiday pay issue that we are talking about relates only to 3,000 claims, so it is not material. Furthermore, it would obviously not be appropriate for all 3,000 to be heard just by the judge sitting alone. I do not believe that we are talking about any material impact on the integrity of the tribunal system, which we respect. I appreciate the points that have been raised, and I shall take them back to the department. I commend the order to the House.

Motion agreed.