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Grand Committee
Monday, 25 February 2008.
The Committee met at half-past three.
[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]
Employment Bill [HL]
(Second Day)
The Deputy Chairman of Committees (Lord Brougham and Vaux): 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.
Lord Wedderburn of Charlton: 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]:
Lord Hunt of Wirral moved Amendment No. 17:
“(2ZA) No proceedings to which this section relates shall be heard by the tribunal until the conciliation officer has certified in writing that—
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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.
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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.
Lord Borrie: 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,
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.
Lord Wedderburn of Charlton: 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.
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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.
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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
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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:
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
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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.
Lord Henley: I rise briefly to 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
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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)—
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.
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Lord Wedderburn of Charlton: 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.
Lord Henley: 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 say that 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.
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The Minister of State, Foreign and Commonwealth Office & Department for Business, Enterprise and Regulatory Reform (Lord Jones of Birmingham): 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.
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