Standing Committee E
Tuesday 23 March 1999
(Afternoon)
[Part I ]
[Mrs. Gwyneth Dunwoody in the Chair]
Clause 29
Unfair dismissal: special and additional awards
4.30 pm
Mr. Tim Boswell (Daventry): I beg to move amendment No. 114, in page 17, line 12, leave out `twenty-six nor more than fifty-two', and insert
`thirteen nor more than twenty-six'.
We are pleased to have you back in the Chair, Mrs. Dunwoody, as we reach the running off of our debates.
It is important that we do not relax our guard, but continue to discover the implications of the Bill. I tabled the amendment not so much to state a definitive policy as to invite the Minister to clarify matters, because, unusually, the explanatory notes do not make them entirely clear. It is important that we do not create an injustice or make a material change by accident.
I understand that the Minister's objective is to run together the additional and special awards, as set out in the explanatory notes. It is entirely commendable and sensible to want one regime for both. In fact, if it is that difficult to explain them, it is likely that they will be safe in the hands of experts, and not easy to disentangle. We welcome simplification in principle.
In contradistinction to what might loosely be called ordinary compensation payable for cases of unfair dismissal, the awards relate to the two circumstances under which employers decline, refuse or are obdurate about re-employment, with compensation therefore enhanced. In the one case, it relates to a refusal to take on staff in what might be termed normal circumstances; in the other, it relates to a refusal to re-engage under five specific heads, which are listed in the explanatory notes and which include membership of a trade union, or complaints on health and safety grounds, with which I have some sympathy.
I am anxious to tease out what is happening. It would be useful if, either now or in correspondence, the Minister would let us have a little schema or matrix on the various compensation awards that are payable. I understand that over and above what the explanatory notes call normal compensation, there is, in normal cases, an enhancement for gender, disability or ethnic discrimination. In such cases, descrimination goes up from a scale of 13 to 26 weeks to one of 26 to 52 weeks.
I turn to cases of additional and special compensation. I am prepared to defer to the Minister, because it is not quite clear, but I understand that additional awards other than those for sex, race or disability compensation are for 13 to 26 weeks. However, special awards seem to have no formal limit. Perhaps they attach themselves to the higher rate payable in discrimination cases.
It would be useful if the Minister would explain that difference, because the regulatory impact assessment suggests that the coalesced consolidation of the additional and special awards could lead to a reduction in compensation in certain cases. Indeed, paragraph 144 of that document refers specifically to
``The lowering of the maximum level of compensation''.
I take it that that must mean a reduction from 52 to 26 weeks.
The cases are few in number. The RIA suggests that there were fewer than 350 in 1996-97, although, as my hon. Friend the Member for South Dorset said earlier, there is an explosion generally in employment tribunal cases. There were 55 re-employment orders, but the regulatory impact assessment and the explanatory notes are silent about the number of cases in which they would apply.
If I have construed the matter correctly, some cases would involve a slight reduction of the maximum level of compensation. In the interests of simplification, it may be desirable to make such a change, but it would be helpful if the Minister would explain the various categories, the intention of the clause, its effect and say why the changes would be beneficial.
The Minister for Small Firms, Trade and Industry (Mr. Michael Wills): I welcome you back to the Chair, Mrs. Dunwoody. As members of the Committee will know from the explanatory notes, the intention of the clause is to simplify the existing system of additional and special awards made by employment tribunals in cases of unfair dismissal, when a re-employment order has not been complied with. As the hon. Gentleman correctly identified, such situations are fairly unusual and we want to deal with that rather than with anything else.
The Committee will agree that, in such cases, it is important that the employers have a real incentive not to behave in such a way and the Bill will introduce a punishment when re-employment orders have not been complied with. Rationalisation is long overdue. The hon. Gentleman asked me to write to him with a matrix of all the various compensatory awards that were applicable, and I undertake happily to do that. At present, if a re-employment order is not complied with, someone may receive an additional award at a higher or lower level depending on the type of case. In certain cases, people may receive a special award, instead of an additional award either at a lower level, if the person has sought a re-employment order, but the tribunal has not made one, or at a higher level if a re-employment order has been made, but not complied with. The situation is complex.
To put the matter at its simplest, all the so-called special categories will go. There will no longer be any special awards, but all will be entitled to additional awards if a re-engagement was not made once it had been ordered. There will be no changes regarding sex and race discrimination cases.
I appreciate that the amendment is a probing amendment, so I shall not spend long on it. In simplifying the awards, we have had to decide where exactly to pitch the level. The aim of the award is to punish employers for not complying with the re-employment order, which we all agree is important. The additional award available under clause 29(2) is between 26 and 52 weeks' pay. Bearing in mind that the current limit on a week's pay for that purpose is £220, the figure will be between £5,720 and £11,440. In our judgment, that level of penalty should provide an incentive for employers to comply with a re-employment order. The level in the amendment will not. I accept that it is a matter of judgment, but in this case I prefer to abide by my judgment rather than the hon. Gentleman's. For that reason , we cannot accept the amendment.
Mr. Boswell: The Minister has set out to explain matters. He has undertaken to write to me, and I suspect that my hon. Friends and others would also benefit from a useful explanation of that complicated matter. I think that there is some rationale to his actions, and we do not want to send a signal that delinquent employers can walk away from a tribunal's findings and take no notice of them. In that spirit, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 ordered to stand part of the Bill.
Clause 30
Indexation of amounts, &c
Mr. Boswell: I beg to move amendment No. 271, in page 17, line 31, at end insert
`by more than 1 per cent.'.
The Chairman: With this it will be convenient to consider amendment No. 272, in page 18, line 5, leave out `£50,000' and insert `£40,000'.
Mr. Boswell: Apart from the implications highlighted by amendment No. 272, to which I shall return, the principle of indexation is acceptable. I distinctly remember debating with the Minister of State an indexation order that raised all the figures. Although I say ``distinctly'', as I recall it, we repaired from all-night deliberations on the Report stage of the National Minimum Wage Bill at about 8.30 am, and came into this Room at 10.30 am and debated, in a constructive way, the indexation order. Such orders will become a thing of the past, as indexation will be automatic.
I have two reservations. The first, which is minor, is dealt with by amendment No. 271, which would prescribe that if the retail prices index for September was higher or lower by 1 per cent. than the index for the previous September, an order would be triggered, but if the difference were less than that, no order would be triggered. That would avoid unnecssary change and promote a degree of stability if appropriate. Change of less than 1 per cent. either way in the retail prices index makes no material odds, and I am concerned that if changes are made, people may not have received intelligence of them and the award may be out of line. A tribunal may pick that up, but if the matter were resolved privately and practitioners were unaware of a change, there might be a slight untidiness.
If I had taken literally the Government's commitment to keep inflation level at about 2.5 per cent., I would have produced a different formulation, but I provided one designed to point out to the Minister that we do not need trivial changes. He has already conceded a point in a different context about the sums in subsection (3), in which he allows for a degree of rounding. The issue is no more substantial than that, and I leave it to his consideration.
Amendment No. 272 deals with a more substantial point, one on which I can give some thanks to the Minister and his colleagues for having listened to and—a rare occasion—having even taken notice of Opposition Members, although I appreciate the fact that we have had other allies on the matter, in relation to the capping of employment tribunal awards. As the Minister will remember, the Government's original proposal in ``Fairness at Work'' was not to have a cap at all, and some of us pointed out that the most likely result of that would be for persons with fat contracts—people who might be termed ``Islington persons''—to avail themselves of the law to screw their employers for substantial sums because of some procedural delinquency. I do not condone employers' doing so. The horny-handed sons—and daughters—of toil would not receive anything comparable. We suggest a limit of £40,000, rather than £50,000, because it is a matter of public knowledge that the Confederation of British Industry, in response to ``Fairness at Work'', suggested that the figure should be lifted substantially from its present £12,000 to £40,000. That is more than a factor of three, but the Government chose to go to £50,000. I remind the Committee that under the clause, the figures are subject to indexation, but I shall leave that matter and return to the substantive point.
4.45 pm
The CBI, as the negotiator in what became the compact of 17 December, and as a major player representing business, thought that the figure should be £40,000. Inevitably, it was heavily influenced by the views of small firms, which said that that was the maximum with which they could be comfortable; but, lo and behold, the Government came up with £50,000.
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