Standing Committee E
Tuesday 16 March 1999
(Morning)
[Mr. Peter Atkinson in the Chair]
10.30 am
The Minister for Small Firms, Trade and Industry (Mr. Michael Wills): On a point of order, Mr. Atkinson. The Minister of State, Department of Trade and Industry, sends his apologies for not being in Committee. Unfortunately, he is in hospital for tests. He would much prefer to be here rather than there, but I am sure that members of the Committee wish him a speedy recovery and return.
Mr. Tim Boswell (Daventry): Further to that point of order, Mr. Atkinson. We should like to be associated with the hon. Gentleman's remarks. We hold the Minister of State in considerable affection and recognise his expertise in employment relations. We also recognise some of the difficulties that his absence is bound to impose on the Minister for Small Firms, Trade and Industry whose duty it will be to handle our discussions. We are not insensitive to such matter, but we are most anxious to debate the Bill as the Minister of State would wish us to do.
Mr. David Chidgey (Eastleigh): Further to that point of order, Mr. Atkinson. We add our good wishes for the Minister of State's speedy recovery. He must be disappointed not to be here to argue the points in which he so valiantly believes. We shall miss him and hope that he will be back with us soon.
The Chairman: We shall miss the Minister's sense of humour, too.
Mr. Ian Bruce (South Dorset): On a point of order, Mr. Atkinson. I do not want to interrupt the heartfelt concerns that are being expressed for the Minister of State's return to Committee, but do the Government intend to introduce some draft regulations? Yesterday, I was sent a press release that was issued by the Department of Trade and Industry on 25 September 1998 when the right hon. Member for Hartlepool (Mr. Mandelson) was Secretary of State for Trade and Industry. It listed the matters that were to be covered by clause 28. However, those matters are not set out in the Bill. Moreover, the press release stated that draft regulations and a consultation paper would be issued later in 1998, on which the industry could comment. Apparently, each time that the industry has asked for it, it has not been forthcoming. Do you know whether it will be made available to the Committee?
The Chairman: I hear what the hon. Gentleman says, but it is not a matter for the Chair. No doubt the Minister has heard what he said.
Clause 1
Collective bargaining: recognition
Question proposed, That the clause stand part of the Bill.
Mr. Wills: Clause 1 is a paving clause; it gives effect to schedule 1. It is now appropriate to refer to the schedule as it will contain procedures for union recognition and derecognition. It is a central part of the Bill. We gave a commitment in our election manifesto to enable unions to be recognised if that was what the majority of the work force wanted. The clause and the schedule will implement that commitment. It is one of the main planks of the Bill that, along with the national minimum wage, working-time regulations and family-friendly policies, will form the framework of decent and fair minimum standards at work. We are committed to introducing those measures.
We are also committed, in a spirit of co-operation and partnership, to making such measures as practical and workable as possible. It may help the Committee if I explain the reasons behind the Government's amendments to schedule 1. We have been consulting more or less continuously on fairness at work since May 1997. Employers' organisations, trade unions, other organisations, individual employers and workers, academics, lawyers and countless others have bombarded us with advice and opinions, in letters and notes, and at many meetings with officials and Ministers. We were also privileged to receive numerous comments from the media. That flood of welcome, but often contradictory advice, began immediately after the election, and has continued in waves ever since. Fresh waves resulted from the publication of the White paper and of the Bill.
We listened to all those representations and considered them carefully. That is still going on and as a result, we are constantly refining our proposals. To introduce some Japanese into the proceedings rather than Latin, it is kaizen—a process of continuous improvement. In that spirit, I emphasise that all constructive suggestions made by the Committee will be as welcome as those from any other source. We shall carefully consider any suggestions that are made today and at subsequent sittings.
Most of the Government's amendments to schedule 1 make technical improvements. They correct defects and omissions, or clarify and strengthen the drafting. Some have been made in response to suggestions that were made after the Bill was published. I shall explain all the amendments. However, we have revised the flow charts that the hon. Member for Daventry (Mr. Boswell) originally suggested, and which I believe he has found helpful. Those revisions will reflect the changes that will be made to Part I of schedule 1. We have produced a version of the schedule that shows the effect of the Government's amendments. I stress that it is an unofficial document: we must continue to work from the Bill and the amendments. Nevertheless I hope that hon. Members will find it helpful to see the effect of the amendments in a single document.
I recognise that schedule 1 is complex, but we were governed by our experience of previous employment relations legislation. The provisions of the Employment Protection Act 1975 were pithy. They dealt with trade union recognition in six sections and in slightly less than six pages, although Bills in those days were printed in a smaller format. Unfortunately, that Bill was problematic for several reasons, not least because of its very pithiness. A major shortcoming was its lack of detailed criteria and procedures for making decisions.
The Advisory, Conciliation and Arbitration Service, which was charged with applying the legislation, constantly faced judicial review of its decisions, which were taken in the absence of clear guidance from the law and from legislators. We are determined not to let that happen again. Our proposals are therefore very different from those of the 1975 Act. They are also more comprehensive, because we want the law to be precise and complete. We want to give clear guidance to employers, trade unions, workers and the Central Arbitration Committee on every aspect of what the law requires and allows. It is a complex subject, and we have had to encompass a wide variety of situations and permutations. Inevitably, therefore, the schedule is complex. I make no apology for it, but it is important that the Committee understands why.
Fortunately, most people do not need to read the law; that penance is inflicted chiefly on parliamentarians, lawyers and civil servants, and we are all remunerated for it. [Interruption.] I hasten to add that we are remunerated as parliamentarians. My Department will issue plain English guidance on the law and we are making a great effort to ensure that the guidance is clear, helpful and user-friendly. I hope that the explanatory memorandum sets a good precedent. The CAC, which will play a fundamental part in implementing the Bill, will be available to help the different parties to applications through the procedures. The inevitable complexity involved in making the law precise and comprehensive need not trouble the end user.
I am grateful to you, Mr. Atkinson, for allowing me to make those general introductory comments before I deal with the detail of clause 1 and schedule 1. I hope that they will help the Committee understand the Government's intentions.
I hope that any doubts that Opposition Members may have had about the need for the Bill have been removed by several recent cases in which employers who have resisted recognition, perhaps for many years, and have been involved in troublesome disputes as a result, have begun to see the light. It is especially heartening that the Bill is having a positive effect even before it has become law. In the past few months, some long-running disputes over union recognition have been resolved by the application of the principles embedded in the clause and schedule 1.
At least one employer agreed to a ballot, which showed clear majority support for trade union recognition. The employer therefore accepted that the union should be recognised. Others have dropped their opposition to unions in the face of clear evidence that most workers in a bargaining unit wanted their union to represent them. That is doubly encouraging. First, it shows how a statutory procedure can help resolve disputes. Such a demonstration that legislation is workable before it has reached the statute book must be rare, but we welcome it. Secondly, it shows that most employers faced with clear evidence of their workers' wishes will agree to bargain with unions. That is the essence of the Bill. It reinforces the Government's view that few cases will need to be pursued all the way through the procedures specified in the schedule. Only the most recalcitrant employer or trade union will fail to reach agreement on one of the many occasions that the schedule offers.
Voluntary agreements are the best way to build partnerships between workers and employers. They have worked well for about 90 per cent. of the 50 largest United Kingdom companies that choose to recognise trade unions.
Opposition Members may say that employers should not be forced to recognise trade unions. I doubt whether they would say that—indeed, I am not sure that they will—if they genuinely knew what it was like to work for a bad employer. Employers and trade unions have changed a great deal since the 1970s, and for that reason alone, I do not accept that the Bill will damage industrial relations. If the Opposition persist in the view that it will, that will show that they do not listen to the thousands of employers who have increasingly successful partnerships with their employees and trade unions.
I was interested to read what Mr. Noon said after his company had reached an agreement to recognise the General, Municipal, Boilermakers and Allied Trades Union. According to that well-known supporter of trade unions, the Daily Mail of 4 March:
``Asked if he feared the kind of industrial unrest which typified the heyday of union might in the late 60's and 70's, he replied: `Why should there be such problems? I am very pleased with this partnership.'''
Employers and employees already work in partnership; they depend on each other. We have wide agreement on both sides of the Committee about that. We have designed the recognition procedure as a way of encouraging partners to talk to each other. The ultimate sanction is, therefore, not an imposed agreement on terms and conditions, which might produce a momentary benefit for employees but would do nothing for the long-term relationship in the workplace. Rather, the ultimate sanction is a duty to meet and to try to negotiate.
The principle behind statutory recognition is simple. If a majority of workers want to be represented by a trade union in collective bargaining, they should have the right to be so represented. According to Mr. Noon in the Daily Mail:
``Once we became aware that the majority of our workforce were GMB members we decided there should be recognition. That is democracy.''
The majority of employers honour the wishes of their workers in that way, but a significant minority do not. We prefer voluntary agreements to imposed settlements. The procedure for recognition reflects that, by allowing time for agreement at every stage. The flow charts in the explanatory notes make that very clear.
10.45 am
I turn now to those firms to which statutory recognition will not apply—those with fewer than 21 workers. Opposition Members may say that that threshold is too low; some of my hon. Friends may think it too high. The Government recognise that small firms may be different in that they are often managed on a personal basis and collective bargaining may be inappropriate. However, some small firms below the threshold already recognise unions voluntarily, and I am sure that they will continue to do so. As my right hon. Friend the Leader of the House said when introducing the White Paper ``Fairness at Work'', we will review that limit if it is not working satisfactorily.
Another detail of the legislation that has excited some comment is the matter of what is reasonable support. The CAC will not accept applications unless they have reasonable support, which we have defined as having at least 10 per cent. of the proposed bargaining unit in membership and as being more likely than not to gain majority support for recognition. That will rule out frivolous applications. We have also included detailed rules to deal with competing applications and to prevent the CAC from having to decide between rival unions.
In the past, one of the most difficult issues has been the determination of the appropriate bargaining unit for recognition. Given the almost infinite variety of situations in the workplace and their changing nature, it is impossible to lay down detailed rules and the CAC will have to exercise discretion. We shall give it the clearest possible guidelines to help it exercise that discretion. The overriding criterion is the need for the unit to be compatible with effective management. That is the modern definition of recognition; it is tailored for single status, single-table bargaining workplaces, if that is what the employer wants. There will be no return to fragmentation and the damaging demarcation disputes of the past.
Of course, we recognise that bargaining units may change as the result of mergers and acquisitions, divestments, diversifications and other changes and we have made detailed provision for that.
On recognition ballots, recognition will generally rely on a majority vote, with at least 40 per cent. of affected workers having to be in favour. When more than half the workers are union members, recognition can occur without a ballot on the basis that union membership usually indicates a wish for the union to conduct collective bargaining on behalf of its members. However, the CAC can hold a ballot if there is good reason to doubt whether the majority of the work force wish the union to bargain on their behalf.
When a union is recognised, whether voluntarily or through the statutory process, a bargaining procedure must be established. I am confident that, in most cases, when the bargaining unit has been settled and support for recognition has been demonstrated, the parties will just get on with it and reach agreement on a recognition procedure, perhaps with the benefit of ACAS's experience and assitance. If that does not happen, either the employer or the trade union can apply under schedule 1 to the CAC for assistance in establishing a bargaining method.
If the CAC has to impose a bargaining procedure because the parties cannot agree, it will be legally binding. However, it will be a procedure for holding talks only; the parties will not be required to reach agreement for the simple reason that people cannot be forced to agree. Derecognition will follow a broadly similar procedure. Employers will continue to have the right to derecognise voluntary recognised unions at any time.
Unions recognised by the statutory procedure will be protected against derecognition for three years. After that, if workers or the employer apply to the CAC and workers vote in favour of the move, recognition will end. If a union has been recognised automatically by having more than 50 per cent. membership, it is easier to trigger a derecognition ballot than if the union has been recognised via a ballot. In both cases, the criteria for derecognition are the same—a majority and at least 40 per cent. of the bargaining unit must support derecognition.
There is a special procedure for derecognition of non-independent unions that are controlled or liable to control by employers. The aim is to ensure that an employer cannot frustrate the wishes of his work force by recognising a non-independent trade union, a so-called sweetheart union.
If workers are happy to be represented by a union without a certificate of independence, there is no problem. An employer is free to recognise such a union voluntarily, and no other union can apply for recognition in respect of those workers. If workers are not happy with a non-independent union, they will be able to have it derecognised. A different, independent trade union can then apply for recognition if it has the support of the workers. That is a carefully balanced provision, which avoids inter-union disputes and unjustified disruption of existing arrangements, but ensures that workers can be represented by the union of their choice.
For recognition and derecognition to be effective, workers must be able to take a stance without fear of being treated badly by their employers as a result. Part IV of the schedule provides protection against detriment or dismissal resulting from taking part or refusing to take part in a campaign for recognition or derecognition.
We are confident that we have set out a workable scheme for union recognition and derecognition in schedule 1, but we realise that it may need some fine tuning in practice. We will review the working of the legislation, and we have included powers—I draw the Committee's attention to them—to enable us to amend the 21-employee threshold and the 40 per cent. ballot majority requirement if either proves not to work satisfactorily.
For the same reason, we have provided that the CAC can tell the Secretary of State if it thinks that automatic recognition is having an unsatisfactory effect. The Secretary of State will then be able to amend the automatic recognition procedure, and to issue guidance to the CAC on how automatic recognition should work. The Secretary of State can also specify a model method for collective bargaining to be adapted by the CAC to meet particular circumstances. We envisage a code of practice, possibly drawn up by ACAS, on trade unions' access to employees during recognition campaigns.
We propose that, in applying the rules on recognition, the CAC should have a duty to promote fair and efficient practices and arrangements in the workplace. That sums up exactly what the Government seek to promote in the Bill and throughout our approach to labour market issues: fairness and efficiency. We believe that treating people fairly is right in itself, but we also believe that it is good for employees' commitment, morale and productivity—therefore, it is good for businesses.
I believe wholeheartedly in the proposals, which provide a better way to deal with union representation disputes. They will defuse conflict and avoid industrial action—as I said, they have already begun to achieve that. The key to better relationships between workers and employers, to better morale and to greater profitability is to respect workers' wishes—that is what recognition is about. The schedule stands for partnership, not conflict. I therefore commend clause 1 to the Committee.
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