HL Deb 07 June 1999 vol 601 cc1260-92


114A.—(1) This Part of this Schedule applies if the CAC has issued a declaration that a union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of a bargaining unit. (2) In such a case references in this Part of this Schedule to the bargaining arrangements are to the declaration and to the provisions relating to the collective bargaining method. (3) For this purpose the provisions relating to the collective bargaining method are—

  1. (a) the parties' agreement as to the method by which collective bargaining is to be conducted,
  2. (b) anything effective as, or as if contained in, a legally enforceable contract and relating to the method by which collective bargaining is to be conducted, or
  3. (c) any provision of Part III of this Schedule that a method of collective bargaining is to have effect.
114B.—(1) This Part of this Schedule also applies if—
  1. (a) the parties have agreed that a union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of a bargaining unit,
  2. (b) the CAC has specified to the parties under paragraph 43(2) the method by which they are to conduct collective bargaining, and
  3. 1261
  4. (c) the parties have not agreed in writing to replace the method or that paragraph 43(3) shall not apply.
(2) In such a case references in this Part of this Schedule to the bargaining arrangements are to—
  1. (a) the parties' agreement mentioned in sub-paragraph (1)(a), and
  2. (b) anything effective as, or as if contained in, a legally enforceable contract by virtue of paragraph 43.
114C. References in this Part of this Schedule to the parties are to the employer and the union (or unions) concerned.

Loss of certificate

114D.—(1) This paragraph applies if—

  1. (a) only one union is a party, and
  2. (b) under section 7 the Certification Officer withdraws the union's certificate of independence.
(2) This paragraph also applies if—
  1. (a) more than one union is a party, and
  2. (b) under section 7 the Certification Officer withdraws the certificate of independence of each union (whether different certificates are withdrawn on the same or on different days).
(3) Sub-paragraph (4) shall apply on the day after—
  1. (a) the day on which the Certification Officer informs the union (or unions) of the withdrawal (or withdrawals), or
  2. (b) if there is more than one union, and he informs them on different days, the last of those days.
(4) The bargaining arrangements shall cease to have effect; and the parties shall he taken to agree that the union is (or unions are) recognised as entitled to conduct collective bargaining on behalf of the bargaining unit concerned.

Certificate re-issued

114E.—(1) This paragraph applies if—

  1. (a) only one union is a party,
  2. (b) paragraph 114D applies, and
  3. (c) as a result of an appeal under section 9 against the decision to withdraw the certificate, the Certification Officer issues a certificate that the union is independent.
(2) This paragraph also applies if—
  1. (a) more than one union is a party,
  2. (b) paragraph 114D applies, and
  3. (c) as a result of an appeal under section 9 against a decision to withdraw a certificate, the Certification Officer issues a certificate that any of the unions concerned is independent.
(3) Sub-paragraph (4) shall apply, beginning with the day after—
  1. (a) the day on which the Certification Officer issues the certificate, or
  2. (b) if there is more than one union, the day on which he issues the first or only certificate.
(4) The bargaining arrangements shall have effect again; and paragraph 114D shall cease to apply.


114F. Parts III to VI of this Schedule shall not apply in the case of the parties at any time when, by virtue of this Part of this Schedule, the bargaining arrangements do not have effect. 114G. If—

  1. (a) by virtue of paragraph I I4E the bargaining arrangements have effect again beginning with a particular day, and
  2. (b) in consequence section 70B applies in relation to the bargaining unit concerned,
for the purposes of section 70B(3) that day shall be taken to be the day on which section 70B first applies in relation to the unit.")

The noble Lord said: In another place the honourable Member for Daventry, Mr. Tim Boswell, pointed out that Schedule I had no procedure for dealing with a union which was recognised but then ceased to be independent. My speaking notes say that that is almost unheard of. I believe that it has never happened for a union to lose its certificate of independence. But the possibility exists and we should allow for it. So we have a two-page amendment. It is fair that no employer should be required to recognise a non-independent union.

However, we also want to promote stable industrial relations. It would be perverse to require a union to be derecognised simply because it ceased to be independent. Therefore, the Government believe that statutory recognition should be treated as voluntary if a union loses its certificate. That means that the employer could derecognise the union if he or she wished or, if the workers wished to derecognise it, they could apply under Part VI of the schedule.

Amendment No. 221 adds a new Part VIA which gives effect to that policy. We have also provided for the bargaining arrangements to end. There is no reason why the parties should not agree to continue them, but there should be no legal requirement to do so. This is a helpful change to deal with what is likely to be a rare event. I commend the amendment to the Committee.

On Question, amendment agreed to.

Baroness Turner of Camden moved Amendment No. 222:

Page 54. line 7, after ("employer") insert ("other than a breach which is accidental or which is a reasonable furtherance of the principal reason for the employee's action which fell within one or more grounds set out in sub-paragraph (2),")

The noble Baroness said: In moving this amendment I speak also to Amendment No. 225, which covers roughly the same point. Part VII deals with detriment and seeks to protect a worker who has a right not to be subjected to any detriment. The grounds are set out on which an employee should be protected against detriment. Clearly, they are connected with campaigns for recognition.

However, what we intend to do is protect the worker against what is provided for in sub-paragraph (3) because he or she is not protected in the event of a breach by a worker of his contract with an employer or for an unreasonable act or omission by the worker. We wish to write into that sub-paragraph, other than a breach which is accidental or which is a reasonable furtherance of the principal reason for the employee's action which fell within one or more grounds set out in sub-paragraph (2) In other words, the various grounds under sub-paragraph (2)(a) to (e). It seems to us rather harsh that an individual could lose his protection for what perhaps could be an accidental breach. He might be found in a part of the premises where he was not normally supposed to be by sheer accident and in support of what he thought was a quite legitimate activity within the terms of paragraph 115(2).

I hope that my noble friend regards this as a reasonable proposition. These things can happen in the workplace. One would not want to see a worker lose his protection under this clause of the Bill simply through a minor or accidental breach. I beg to move.

Baroness Miller of Hendon

Paragraph 115(2) sets out the grounds on which an employee is not to be subject to detriment when he is acting in furtherance of recognition or derecognition of a union or bargaining arrangements. Paragraph 115(3) provides that that protection does not apply when the employee acts in breach of contract or his conduct is unreasonable. I believe that that is entirely even-handed. The amendment seeks to drive a coach and horses through the withdrawal of protection by saying that the breach of contract shall not count if it is accidental. How can that ever be established? What is an accidental breach of contract? It is also said that the protection is not lost if the action is in breach of paragraph 115(2), but that provision protects him anyway. I believe that this amendment is simply an attempt to muddy the waters.

Lord McIntosh of Haringey

Is the noble Baroness intending to speak also to Amendments Nos. 223 and 224 which are included in the same group? If so perhaps it would be helpful if she dealt with them now so that I can respond to all four amendments.

Baroness Miller of Hendon

I thank the Minister for his very helpful suggestion. I should like to speak also to Amendments Nos. 223 and 224 together. The part of the first schedule to which these amendments relate deals with compensation that may be awarded by an employment tribunal to an employee if (to paraphrase the provision) he is subjected to any detriment as a result of activities in connection with union recognition. Paragraph 118(2) and (3) contain the formula for assessing that compensation. It is those two sub-paragraphs that I propose should be very slightly modified. As this is not just another case of plucking odd words out of a paragraph, it may be of assistance to the. Committee if I read an abbreviated form of the two sentences as they would appear if these amendments were accepted. Sub-paragraph (2) would read: The amount of the compensation awarded shall be such as the tribunal considers just and equitable in all the circumstances having regard to any loss sustained by the complainant". Sub-paragraph (3) would read: The loss shall be taken to include—

  1. (a) any expenses … and
  2. (b) loss of any benefit".
The words that I propose to delete from sub-paragraph (2) refer to compensation taking into account "the infringement complained of'; in other words, as drawn the provision would allow the tribunal to award not only compensatory damages, which is only right and proper, but also some arbitrary sum as punitive damages. I believe that that is wholly inappropriate in this case. The Bill clearly sets out a menu of detriments in paragraph 115(1). There is nothing in that list of detriments that justifies punitive damages.

Doubtless the Government will argue that it is up to an employer to put himself in the position of not incurring liability under this paragraph. That means that the provision is intended as a deterrent, but in the present climate of compensation culture it would be all too easy for an employee to dream up an imagined detriment that he could attribute to one of the items in paragraph 115(1) and seek unlimited punitive damages from the tribunal. He might allege that he was not promoted because he was one of those who brought the union into the factory. The employer would then be left struggling to prove a negative or to prove that the reason why the complainant was not promoted was because the person who had more experience, was better suited or had greater seniority.

We have all seen cases where disgruntled employees have unjustifiably complained that they have been discriminated against on the grounds of race or sex when that had nothing to do with whether they were or were not promoted. An employer is left with the expense of fighting a case where the employee has nothing to lose as the unsuccessful party does not have costs awarded against him. He may launch a case in the hope that the employer will be blackmailed into paying something, or the employee may find a generous and gullible tribunal which will give him the equivalent of a minor lottery win. There is no case for attempting to intimidate employers or to make them lean over backwards in favour of an employee who was active in getting union recognition as against one who did not, for fear of a malicious gold-digging complaint being launched.

Amendment No. 224 is consequential. Leaving out the words "taken to include" makes it clear that the only basic compensation is for expenses reasonably incurred by the employee and any actual or anticipated loss of benefit. There is nothing for hurt feelings; nothing for bad nerves; nothing for post-traumatic shock syndrome.

The common law of this country has always dealt with employment disputes on the basis of compensating the employee for the actual monetary loss sustained, however that may be calculated—how long the employee was out of work after dismissal; how much he lost in wages as a result of having to accept a lesser paid job; loss of pension rights and fringe benefits; and so on. There is absolutely no need to impose another set of potential claims on industry when all that is needed is the right of an employee who has been unfairly treated to recover his pecuniary loss.

Lord Davies of Coity

I wonder whether the noble Baroness really understands. Employment tribunals take decisions on the evidence presented and it is not helpful to talk about "gullible" employment tribunals and "imaginary" claims. If a tribunal adjudicates on a well-founded, sensible claim where the employer has acted unjustly towards the employee, it is not only a question of expenses and the practical loss experienced but of an entitlement to compensation.

Nothing in the Bill is in contradiction with the normal standards that would apply under the current system of employment appeal tribunals legislation. I am bemused that the noble Baroness thinks that people who have been unjustly treated by their employers are not entitled to compensation when they make a well-founded, not imaginary, application to not a "gullible" but a reasonable tribunal.

Lord Meston

I entirely agree with the noble Lord, Lord Davies of Coity. Listening to the noble Baroness, Lady Miller, there was some confusion of thought between punitive awards and exemplary awards—and the fact that exemplary awards are themselves the exception was lost from sight.

The noble Baroness referred to persons launching unjustifiable claims. Such persons do not receive punitive or exemplary awards. They do not receive any formal compensation. Tribunals are well versed in dealing with such claims.

Lord McIntosh of Haringey

I have some sympathy with Amendments Nos. 222 and 225, proposed by my noble friends, which are intended to protect workers against detriment or dismissal where they accidentally breach their contracts or commit breaches in reasonable furtherance of a purpose protected by virtue of Paragraph 115(2), which is concerned with grounds for protection against detriment, or paragraph 120(2), which is concerned with dismissal. Our intention has always been that a worker dismissed on one of the grounds set out should not be protected where the worker's action amounted to a breach of contract in a different way or was unreasonable.

I also remind my noble friends that Part VII of the schedule does not exist in isolation. The effect of that part is to make it automatically unfair to subject a worker to detriment or dismissal if the reason is one set out in paragraphs 115 or 120, unless the worker falls foul of sub-paragraph (3). This does not, of course, mean that it is fair to dismiss or punish such a worker. Rather, it is simply not automatically unfair. An employee who was dismissed in these circumstances, or who was subject to such detriment as to justify a complaint of constructive dismissal could still argue that the dismissal was unfair and the tribunal would consider such a complaint in the normal way.

However, I listened carefully to what my noble friend said in support of the amendment. I am not entirely sure that the Bill as drafted achieves everything we intended. With the assurance that we will look closely at this matter again and, if necessary, come back with a suitable amendment on Report, I hope that he will feel able to withdraw his amendment.

I turn to Amendments Nos. 223 and 224 in the name of the noble Baroness, Lady Miller. Part VII of the schedule provides workers with protection against detriment or dismissal arising from their actions concerning recognition or derecognition of a union under the schedule. That is only fair. Without such protection, workers could not make a free choice as to whether or not they wanted to be represented by a union. If a worker believes that he or she has suffered detriment, the case may be put to an employment tribunal.

These amendments would restrict a tribunal award for detriment to the economic loss suffered. They would exclude any element of compensation from the award. I do not believe that this would be a sufficiently credible sanction on a bad employer, even if one puts aside the points made by the noble Lord, Lord Meston. The bad employer will think, "Even if I lose, I won't have to pay any more than I would have anyway. And I might win, or my employee might not complain". That is a calculation stacked against the worker. Instead, we need to send a clear signal that treating workers badly because they favour recognition, for example, is not acceptable and carries a penalty.

Of course, we sympathise with employers' fears that this will lead to a spate of tribunal actions. That is not our intention. We have been careful to ensure that workers must act in accordance with their contracts and must act reasonably in order to benefit from protection against detriment.

These amendments would reduce the protection available to workers who suffered genuine detriment, and would therefore encourage unscrupulous employers to take action against workers wanting to recognise or derecognise a union. Paradoxically, these are the very cases in which workers are most likely to need the protection of a union from a bad employer. I therefore ask the noble Baroness not to move her amendments.

In summary, I hope that my noble friends will feel that our undertaking will enable them to withdraw their amendments and I hope that the noble Baroness from the Opposition Front Bench will feel that our arguments have persuaded her not to move her amendments.

10 p.m.

Lord Wedderburn of Charlton

Will my noble friend look again at this issue? On page 55, under what concerns dismissal, the reasons, the main one of which is one of those set out for the worker's protection, are in sub-paragraph (2). As regards detriment short of dismissal on pages 53 to 54, the grounds for protection are set out in sub-paragraph (1). However, sub-paragraph (2) sets out a list which is totally modified on page 54 by sub-paragraph (3). There is no mention of the main purpose. If the worker picks up a pencil and part of the work rules in his contract is that he must not pick up company pencils to register a communication which would have fallen with sub-paragraph (2) he does not fall within that sub-paragraph; he has broken his contract. I hope that my noble friend will look at least at the question of how far the breach of contract must be a substantial one and how far it is related to the grounds in sub-paragraph (2).

Lord McIntosh of Haringey

Of course, I shall look at it again, but on my reading of paragraphs 115 and 120, the respective sub-paragraphs (3) are identically worded in each case.

Lord Cavendish of Furness

Perhaps I have been absent from your Lordships' House for too long. When the noble Lords, Lord Wedderburn and Lord McCarthy, speak they often say "we". Given that the noble Lords speak on their own account, how does the Minister interpret the use of the word "we"?

Lord McIntosh of Haringey

I respond to arguments and not to personalities.

Lord McCarthy

It is the three of us who have tabled the amendments.

Baroness Turner of Camden

I thank the Minister for his reply. I still have some doubts which have been voiced so eloquently by my noble friend Lord Wedderburn. As he rightly says, this is a different part of the Bill from that to which my noble friend drew our attention. They were the rights set out under the heading of "dismissal", whereas here we are talking about detriment.

I shall carefully read what the Minister said in Hansard to see whether a slightly different amendment may be suitable on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon had given notice of her intention to move Amendment No, 223:

Page 54, line 42, leave out ("the infringement complained of and to")

The noble Baroness said: I shall not move Amendments No. 223 and 224, but I want to make one point. When talking about the menu of detriments in paragraph 115 of sub-paragraph (1), I said that there was nothing in the list of detriments that I thought would justify punitive damages. However, I have listened carefully to what the Minister said and I shall not move the amendment.

[Amendment No. 223 not moved.]

[Amendments Nos. 224 and 225 not moved.]

Baroness Miller of Hendon moved Amendment No. 226:

Page 56, line 31, at end insert ("but he must provide written reasons, in an explanatory note to any draft order, for not following the recommendations of the CAC")

The noble Baroness said: In speaking to Amendment No. 226 I shall also speak to Amendment No. 230. Both amendments are in support of the concept of open government, or to use the new buzz word "transparency".

I shall deal first with Amendment No, 226. Paragraph 19 of the first schedule provides for the machinery to be employed by the CAC when it is dealing with an application for union recognition. The Government have already discovered that the machinery that they proposed needed some adjustment, hence Amendment No. 29 which was proposed by the Minister.

This is a massive Bill containing a whole new and novel system of the administration of labour relations, including concepts of a quasi-judicial nature. Quite rightly. the Government have introduced what I may call a long-stop provision, enabling the Government to have second thoughts if they discover that what has been legislated for is not necessarily working perfectly.

That is exactly the same sort of situation as I believe a helpful amendment, which I intend to introduce later and which comes before Clause 27, is designed to cover.

The long-stop provision that the Government have proposed is in paragraph 125: that if the CAC in the light of its experience of the operation of the Act, decide that the paragraph 19 machinery is not working properly, they can ask the Secretary of State to amend the paragraph. Sub-paragraph (2) gives the Secretary of State the necessary power to amend paragraph 19.

However, it is also provided that the Secretary of State does not have to amend the paragraph in the way proposed by the CAC. I suppose that is fair enough because it is the Secretary of State who represents the Government and not the CAC.

Therefore, we have no quarrel with the concept of paragraph 125, except in one respect. If the Secretary of State decides to depart from the advice of the CAC, which will be based on their practical experience of the working of the schedule, he should be prepared to give his reasons at the earliest possible stage—that is, when he tables the proposed new regulations.

Sub-paragraphs (3) and (4) require the Secretary of State to make any amendments by statutory instrument, and for such instrument to be subjected to a positive resolution of both Houses. As his decision will be subject to parliamentary scrutiny, no real concession is being asked for, except for Parliament to be given as much advance notice as possible of the Secretary of State's reasons. The dividend that the Government will receive is that it may save them some precious parliamentary time if prior information enables the regulation to go through on the nod.

I now turn to Amendment NO. 230. This is on the same grounds and for the same purpose. When the CAC makes a decision that can affect the parties to a dispute, or even a set of complicated negotiations, it cannot be wrong that it should give reasons to the parties for its decisions and that those reasons should be in writing. The amendment also provides that other persons should be entitled to a copy of those written reasons; first, because the CAC will be acting in a quasi-judicial capacity and justice must be open; secondly, and no less importantly, because the publication of decisions will ensure that the parties to future matters being dealt with by the CAC will be aware of its attitude to given problems. A set of precedents will be established. h will also ensure that there is consistency in the manner in which the CAC makes its decisions. I beg to move.

Lord McCarthy

Amendment No. 226 is a useful amendment, in that it gives the Government an opportunity to tell us whether they really mean what the Bill implies; that is, that all the CAC does is make a declaration. In other words, the CAC simply declares that, by whatever method it used—presurnably it counted the union membership cards and decided within the bargaining unit that 50 per cent were members of the union—it recognises that union. Alternatively, it declares that it is not that way; that a ballot was held; that there was 50 per cent support for the union and the 40 per cent rule was agreed to. And it will say nothing else.

Is it the case that declarations of the CAC will merely record that a criterion of one kind or another was met, and nothing further?

Lord McIntosh of Haringey

I rise to speak to Amendments Nos. 226 and 230 in the name of the noble Baroness, Lady Miller, and Amendment No. 229 in the name of my noble friend Lord Simon of Highbury, which also comes within this group.

My noble friend asked whether all the CAC does is make declarations. All these three amendments concern declarations and decisions by the CAC. The declarations by the CAC have statutory effect and that is pervasive all the way through Schedule 1 to the Bill. The CAC is not simply a declaratory body; it is a body which triggers a whole series of statutory procedures to enable, in proper circumstances, the recognition of trade unions for collective bargaining to take place.

I believe we are in general agreement about the principles of these amendments: that the CAC should give notice to the appropriate parties; that is, that the CAC should usually give reasons for its decisions and the Secretary of State should have to give reasons if he decides not to accept the CAC's advice. Where we appear to differ is how best to achieve those ends, and I hope to convince the Committee of the merits of the Government's approach in Amendment No. 229.

I hope it will be agreed that it is right for the CAC to notify involved parties of its declarations. The CAC's declarations are usually declarations that a specific union is now recognised or has ceased to be recognised—obviously something about which the parties need to know. For example, the CAC may issue a declaration under paragraph 25(4) that a union is not entitled to be recognised. Amendment No. 229 provides that the union and the employer must be told of that. That is a necessary and helpful change and on that basis the amendment will be moved in due course.

I return to the amendments in the name of the noble Baroness, Lady Miller. Amendment No. 226 would require the Secretary of State to give, in writing and in advance, his reasons for not following the advice of the CAC in amending Paragraph 19. That is the part of the schedule which deals with "automatic" recognition for unions with over 50 per cent membership in a bargaining unit.

It is reasonable to require the Secretary of State to justify to Parliament any decision to amend Paragraph 19 which is not proposed by the CAC. Of course, subparagraph (4) means that any change to Paragraph 19 must be scrutinised by both Houses of Parliament. The Secretary of State will have to explain and defend his decision whether or not he takes the CAC's advice. That is regarded as more than adequate scrutiny for most other purposes. I therefore see no need for this amendment, and I invite the noble Baroness to withdraw it.

As regards Amendment No. 230, I am happy to agree with the general principle behind this amendment. I believe that the CAC should in general provide the reasons for its decisions, in the interests of open government. However, I do not think it is helpful to make it part of the CAC's general duty.

As my honourable friend the Minister for Small Firms, Trade and Industry said in another place: We expect the CAC to give its decisions and reasons in writing in almost all cases, but it may be desirable for some minor decisions—for example, on minor procedural matters—to be conveyed orally in the interests of speed and efficiency. The CAC will normally give reasons for its decisions, but occasionally it may regard that as unnecessary or undesirable—for example, if it would damage industrial relations or criticise an individual. The CAC increases its risk of judicial review if it decides not to give written decisions with reasons, but it would not be right to oblige it to do so in every case".—[Official Report. Commons, 16/3/99; col. 440] Perhaps I may add another example. There may be cases where an employer has relevant information which is commercially sensitive. For instance, if a secret merger is on the cards, the appropriate bargaining unit might be X rather than Y. This amendment would require the CAC to state its reasons, even if they were commercially sensitive, and hence the employer would not tell the CAC about the merger. That is one example of the CAC not being able to reach a correct decision because of a requirement to give reasons.

To give an example of a minor decision where written reasons are probably not necessary, the CAC must sometimes decide things like whether an application is in writing, or an application states that it is made under the schedule. I am thinking of paragraph 7, but there are other examples as well. These are questions of fact, and it would be perverse to require the CAC to give reasons in writing, or indeed at all.

Although I sympathise with the reasoning behind Amendment No. 230, I see no need for it. I fear that it might sometimes impair the work of the CAC. Therefore, I invite the noble Baroness not to move the amendment when we reach that stage in due course.

10.15 p.m.

Lord Meston

Before the Minister sits down, I must say that it strikes me that the CAC may well be a "public authority" within the meaning of the Human Rights Act and that it is determining civil rights and obligations. Therefore, to use an unfashionable Latin phrase which was dispensed with earlier in the proceedings on the Bill, it ought, prima facie, to be giving reasons, otherwise there is a risk of infringement of the European Convention on Human Rights.

Lord McIntosh of Haringey

I do not dissent from that view. As a public body, I am sure that the CAC will take account of its obligations under the European Convention and that it will wish to give reasons wherever possible. I have merely been suggesting examples of where it would be undesirable for the CAC to do so. I am sure that the European Convention would take into account those special circumstances.

Lord McCarthy

I have a question for my noble friend the Minister which is slightly different. I may have misunderstood what he said and, in that case, I apologise. Perhaps he will say that we must read the Hansard report to find the answer. I rather gained the impression at one stage that my noble friend was saying that there were circumstances in which the Government could override a decision of the CAC or that the Secretary of State could set aside a decision of that committee. From the way that I have read the Bill, it seems to me that, if the CAC makes a declaration, that is the end of the matter and it cannot be set aside in any way. It is quite true that paragraph 126 of Schedule 1 states that the Secretary of State may issue general guidance, hut, when speaking about the particular decisions which the CAC makes on declarations of recognition, surely there can be no alternative open to the Secretary of State other than to accept them. Is that correct?

Lord McIntosh of Haringey

No, the Secretary of State can disagree with the recommendations of the CAC but if he does so he must justify any order to both Houses of Parliament.

Lord McCarthy

Where is that stated on the face of the Bill because I cannot find it?

Lord McIntosh of Haringey

Perhaps the Members of the Committee will talk quietly among themselves while I try to find it. Paragraph 125(1) states, If the CAC represents to the Secretary of State that paragraph 19 has an unsatisfactory effect and should be amended, he may by order amend it with a view to rectifying that effect". Paragraph 125(2) states, He may amend it in such way as he thinks fit, and not necessarily in a way proposed by the CAC (if it proposes one)".

Lord Wedderburn of Charlton

I appreciate what the Minister says and I thank him for that reference. However, most of the people with whom I have discussed this matter thought that paragraph 125 constituted an amendment of the relevant documents and so on which have had an unsatisfactory effect in order to deprive them of that effect in the future. Is it not a matter of changing the decision of the CAC and for the Minister to step in with big boots to step on the CAC's decision in a particular case? Is that what the Minister is saying?

Lord McIntosh of Haringey

We are in danger of getting into theology here. If the Secretary of State may amend the provision in such way as he thinks fit, he could amend it in a fundamental way. I think that is what is provided for in the Bill.

Lord McCarthy

He could amend paragraph 19, but he surely could not amend the decision of the CAC as regards a declaration.

Lord McIntosh of Haringey

My noble friend is, of course, correct. The Secretary of State can amend paragraph 19 of Schedule 1 but not necessarily in such a way as proposed by the CAC. The degree of amendment that implies can be interpreted by lawyers.

Lord Cavendish of Furness

Paragraph 125 states, If the CAC represents to the Secretary of State that paragraph 19 has an unsatisfactory effect". However, am I right in saying that subparagraph (2) is not necessarily triggered by the CAC making those representations to the Secretary of State? Is it a stand-alone provision?

Lord McIntosh of Haringey

Paragraph 125 states that the Secretary of State cannot amend the decision. He can amend paragraph 19 of Schedule 1, but not necessarily in a way proposed by the CAC.

Baroness Miller of Hendon

After that little interchange on Amendment No. 226 I hope that the noble Lord, Lord McCarthy, will not take it amiss when I say that when he suggested that my amendment had some merit I wondered whether I had read the wrong amendment as I did not think that we would be in agreement on that. I am well aware that any order will have to be laid before Parliament by means of a Statutory Instrument and that that instrument should constitute a positive resolution of both Houses. That is right and proper. I do not think that we differ greatly in our views on this matter. I hope that on reflection the Government will consider that this measure may be a means of conciliation. It is late, but I am tempted to divide the Committee as I believe I would be accompanied in the Lobby by unusual "friends", as it were. However, I am not serious about that. At this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Wedderburn of Charlton moved Amendment No. 227:

Page 57, line 5, at beginning insert— ("(A1) Where the CAC specifies a method whereby parties are to conduct collective bargaining, such a method imports a duty on the parties to conduct collective bargaining with a view to reaching agreement on matters falling within the meaning of collective bargaining in the relevant part of this Schedule.")

The noble Lord said: In all statutes there are key words. In every discussion that I have been privy to in regard to the Bill there have been a number cif them. We have just discussed part of one of them; namely, the declaration of the CAC. The amendment is about the key word, the concept, of "method". It can be approached very simply. Its easily understood use is contained in paragraph 27. I counted about 30 other places where it was also used and where its grammatical construction was not precisely the same. It is also in the general part of the schedule at paragraph 125 and onwards.

In paragraph 127 the method of conducting collective bargaining is set out, but only in respect of the change of methods. The Secretary of State, having consulted ACAS, may then specify the method by which collective bargaining might be conducted. Then follows one of the most remarkable sub-paragraphs in recent legislation: if such an order is made the CAC must take it into account under the relevant paragraphs but, may depart from the method specified by the order to such extent as the CAC thinks it is appropriate to do so in the circumstances". Having been required to consider the method, it may then set it aside. That is a possible construction which might lead the CAC into some difficulty.

That paragraph does not contain a definition or explanation of what a "method" is. There are those who say—this is also in some of the Explanatory Notes to the Bill—that one can equate it to something like a bargaining procedure. The Explanatory Notes tend to do that with regard to diagrams. Those of us who are less numerate than literate do not find it easy to follow precisely from the text what the notion of "method" is.

I raised the matter on Second Reading and, because it was the only place then and I believe it is the only place now, I quoted from where the Government give their secret thinking on the definition through a statement by the Minister for Small Firms, Trade and Industry, Mr. Wills, on 16th March. As far as I am aware, he is the only person who has confronted the question of what is a "method". Before referring to what he said, it may be convenient to look at paragraph 27, one of the first places where the definition appears in the Bill. According to paragraph 27, the CAC is to help the parties reach an agreement. I fully support my noble friend the Minister in some of the remarks he made about the nature of this attempt to put collective bargaining on some kind of statutory footing. It is an attempt to put it on a voluntary basis up to that point; the CAC is to try to get agreement.

But at sub-paragraph (3) it states: If at the end of the agreement period the parties have not made such an agreement the CAC must specify to the parties the method by which they are to conduct collective bargaining". Sub-paragraph (4) states: Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties".

I add as an important footnote that sub-paragraph (4) shows us that in these usages—not everywhere—the method is to have effect as if it were contained in a legally enforceable contract. Whether or not there is significance in that, it plainly gives rise to legal obligations of some kind in respect of what the CAC is declaring.

My honourable friend in another place, Mr. Wills, gave an answer as to what it meant. He said: If the CAC has to impose a bargaining procedure because the parties cannot agree, it will be legally binding". We all agree that that is what it means; it clearly says so. He went on: However, it will he a procedure for holding talks only; the parties will not be required to reach agreement for the simple reason that people cannot he forced to agree".—[Official Report, Commons, Standing Committee E, 16/3/99; col. 348.] I remarked to your Lordships on Second Reading that the last part of his statement was obviously right. Parties cannot be forced to agree. They can only be subject to some penalty if they do not agree.

The important part of the statement seems to me the crunch of the core concept. It will be a procedure for holding talks only. On its face, that is plainly not right. They are not talks only; they are talks about certain things or with a certain approach or which in some way are relevant to all the other places where we find the method central to the structure.

I do not wish to advance the argument that the definition of the method, or even the absence of definition, has taken us into the country of duties to bargain. There are many types of duties to bargain. This Bill avoids them. In my submission, it correctly avoids them because, in our circumstances at least, that would not be a very sensible way to further the venture.

On the other hand, if one looks at the other side of the statement, it is not a procedure for holding talks of any old kind. That would be absurd. On Second Reading, I quoted the case of Mr. Boulwar in the United States, who came with his research team, saying, "This is what we will offer and that is an end of it". I have never had an answer to the question whether Mr. Boulwar would have satisfied his duties under this Bill. I suspect he would not. I suspect that, when consulted, the CAC would say, "We do not think it is enough simply to meet with the union." What would it say? I suggest it would say, "You really must, under the definition of the method, come with some kind of view to reaching agreement".

It so happens—and, in my submission, it is pure chance—that the duty to consult with a view to reaching agreement is part of the two EC directives which have some relevance: the directive on collective redundancy of workers and the directive on the transfer of undertakings and the safeguarding of employees' rights in such a situation with our regulations, which are normally known as TUPE. They were re-written in 1998 as directives 50 and 59. However, the phrase which was key in their origins, and still is in our law, is that the parties should consult, that the employer should consult with employee representatives, with a view to reaching agreement in their texts.

I do not think that that goes very far. I do not believe that most employers and unions would regard it as an unreasonable definition of what they are about. They are there to consult with one another on something which might become an agreement and are under no obligation to go further than that.

However, it does line up the ball park and avoids a situation, which I repeat the Bill would do well to avoid, in which the CAC has made its declaration and says, "You must now fulfil the method." The employer has been half-hearted about it, because that will normally be the situation, as they have just agreed, and the employer's lawyers say, "This is not an indication of method at all. We simply do not know what your obligation to execute a method as part of a legally enforceable contract means at all." At that point, with no definition, the scheme is in jeopardy.

I seem to have said that in relation to other matters, but I say it again. If you do not attend to these legal questions in advance, they will blow up in your face. That is what happened once previously. Nobody knew of a man called Mr. Ward at Grunwick Processing and what blew up in the face of a previous scheme. Therefore, this amendment goes only so far as to suggest that method in this schedule imports a duty with a view to the parties conducting collective bargaining with a view to reaching agreement on matters falling within the meaning of collective bargaining in the relevant part. The final two words are somewhat circuitous because collective bargaining may mean different things in different parts.

I do not want to go further into the question of what it will mean in Part II. Perhaps the Committee will allow the words to stay there until we see more. In my view, Amendment No. 227 is of the greatest importance because it tries to give a shape and a protection to the CAC in regard to a concept which is central to the execution of its duty. I beg to move.

Lord McIntosh of Haringey

I want to give a substantive answer to the amendment itself. However, before 1 do that, I have to respond to what my noble friend said about method and about the question of whether a legally binding method contains a mechanism for resolving disputes.

Perhaps I may start with the issue of imposed method. We have said that we will consult ACAS about this, but what we have in mind is a simple method for the parties to meet to carry out collective bargaining about pay, hours and holidays. The method is likely to set out the frequency of regular meetings, how additional meetings cart be triggered, who will take part in normal meetings, and what further and higher level meetings can be triggered in the event of a failure to agree. The objective of the method is to get the parties talking to each other and to give them the incentive and opportunity to negotiate a procedure agreement which better suits their particular circumstances. This could involve changing the scope of collective bargaining—for example, by adding or possibly dropping matters as well as by changing the mechanics of bargaining. I know it is true that there is no definition of method on the face of the Bill but I hope that my noble friend w:11 find that helpful as a description of what we mean by method.

My noble friend asked whether the legally binding method will contain a mechanism for resolving disputes; for example, about unilateral access to arbitration. We do not intend the model to provide for arbitration or other third party intervention, though it will of course be open to the parties to amend the method and agree this if they want to. The duty on the parties will be simply to meet and to talk. We recognise, as my noble friend recognises, that they cannot be forced to agree.

I turn to the amendment itself. I know that my noble friend feels strongly about the matter. I can assure him that the Government reflected long and hard on the policy in this area. There are two principles underlying our thinking. First, we want statutory recognition to be as far as possible equivalent in its effects to voluntary recognition. Otherwise there would be an incentive for one party to prefer statutory recognition when everyone is agreed that voluntary agreements are the best solution. So it is important that statutory recognition should deliver no more and no less than voluntary recognition. Voluntary recognition does not guarantee that there will be an agreement at the end of bargaining; nor does statutory recognition. Voluntary recognition does not provide an automatic route to arbitration; nor does statutory recognition. Voluntary recognition does not contain an obligation to bargain in good faith or with a view to reaching agreement; nor does statutory recognition. That is deliberate and it is balanced.

Secondly, we wanted as far as possible to promote dialogue and avoid confrontation. That is why the ultimate sanction is for the parties to 1De forced to talk to each other. We cannot force them to agree and it would be wrong to impose some third party as arbitrator. There might be a way of dealing with short-term disputes but that does nothing to promote long-term partnership and dialogue. My noble friend suggests importing a duty to bargain with a view to reaching an agreement, a concept that he borrowed.

Lord Wedderburn of Charlton

With great respect to my noble friend, one should look at the wording of the amendment, To conduct collective bargaining with a view to reaching an agreement". That is not the same thing as a duty to bargain.

Lord McIntosh of Haringey

I accept that correction, but my noble friend acknowledged that this concept was derived from European law. I know that he has sometimes argued against picking a concept from one legal system and importing it into another. I also know that we already have this concept through the European directive on collective dismissals—what: he calls collective redundancy. He referred to TUPE. We shall shortly have to implement something similar in the context of European works councils.

The Government are uneasy about the situation. We are afraid that introducing the concept in the circumstances of an imposed legally binding procedure is fraught with danger. Such a duty is almost an invitation for each side to claim that the other is not bargaining in good faith. It is likely to lead to difficult, counter-productive court cases. What is the court to say, for example, to an employer who says: "This is my best offer; I cannot afford any more"? Will the court crawl all over his books to decide whether or not he is telling the truth? Even if he is telling the truth, is he bargaining "with a view to reaching an agreement"?

I accept what my noble friend says and I will not attempt to argue with what will appear in Hansard. The Government examined this approach very carefully arid decided that it was unlikely to work well. You cannot force people to bring goodwill to the negotiating table, but you can oblige them to turn up for negotiations. The procedural alternative that we have proposed, whereby the matters to be subject to negotiation and the mechanics of that negotiation are specified in the imposed method, is simpler, easier to verify and less likely to lead to damaging and pointless disputes. I hope that my noble friend will feel able to withdraw his amendment.

Lord McCarthy

The noble Lord has given us a great deal to think about and we shall reconsider our attempt to put some precision into this term, but I also emphasise that he too should think about it.

The Government introduced the word "method" when they removed the phrase "default procedure agreement". I take it that that phrase which, God knows, is relatively clear and straightforward, was taken out because it does not take you anywhere. While you call the ultimate sanction a default procedure agreement, it becomes obvious that there does not have to be an agreement, as the noble Lord stated. You set up the procedure and get the parties together, but there does not have to be an agreement. So, rather than leave that on the face of the Bill, we then saw the word "method". This is the most bizarre word to use. In the Oxford Dictionary there are many definitions of the word "method" and none of them helps us. They are: a mode of investigation, a systematic treatment for a disease; an orderly arrangement of ideas and topics; a procedure for obtaining an objective. That is not what we are talking about. We are still waiting for the definition of the word "method", which is not merely a repetition of the phrase "default procedure agreement".

The noble Lord made some extremely interesting comparisons between the voluntary recognition situation and the compulsory recognition situation. However, there is a fundamental difference. With voluntary recognition you must assume that the parties want to reach an agreement; otherwise, if the employer did not want to reach an agreement, they would de-recognise; they would not deal with the union; they would not talk; they would not be there. The very fact that they continue to recognise the union and the union continues to turn up means that we can assume that in voluntary recognition there is a desire to reach agreement.

If we are to add nothing more than a default procedure agreement as the ultimate sanction, and if we continue to rule out any recourse to a third party decision, what is the ultimate sanction when a final decision has to be taken as to what "method" means? Either we shall not decide, and we shall not say, or the courts will decide. That cannot be what the Minister wants.

Lord Wedderburn of Charlton

I hope that we can return to the nub of this amendment on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.45 p.m.

Lord McCarthy moved Amendment No. 228:

Page 57, line 7, at end insert— ("(1A) Where the parties fail to reach agreement on any outstanding issues between them at any stage of procedures set out in this Schedule, the CAC may decide, after hearing the views of the parties, that these issues should be submitted to an independent arbitrator nominated by the CAC after consultation with ACAS. (1B) Where an arbitrator is nominated by the CAC under sub-paragraph (IA), he shall hear the parties on the issues in dispute between them and make a declaration on the issues and, if he sees fit, make a substantive award. (1C) The substantive award of an arbitrator under sub-paragraph (1B) may state the terms and conditions of employment and, if so, those terms and conditions take effect as terms of the employment contracts between the relevant employees and any employer who is a party in the dispute; and those terms and conditions (or terms and conditions no less favourable) shall he amended only by a subsequent award, or by incorporation into the terms of the employment contracts of the relevant terms of a collective agreement between the employer and the relevant union.")

The noble Lord said: This amendment is an attempt to provide something concrete, something that goes beyond the default procedure agreement.

Those with long memories will appreciate that this is an attempt to recreate in modern terms, as it were, the procedure of Section 11 of the 1975 Employment Protection Act. We are told that this compulsory arbitration device did not work last time, so why do we want it now? The answer is that it did work to some degree, as the noble Baroness said, and I shall come to that. But if we put together the admirable parts of this Bill, in which measures are being taken to prevent the procrastination of employers in terms of access, with the use of the compulsory procedure, plus an ultimate recourse to a Section 11 device, there is a mixture that did not exist previously. But it requires us to realise what happened last time.

It is true that the existence of the Section 11 procedure did not work previously, in that there remained a hard core of employers who would not recognise the union. When they went to the CAC and were given an award in terms of wages and conditions, they paid that substantive award. None refused to pay. so we did not have to enforce it through the courts. But they did not recognise it. The assumption had been that everyone, when faced with a substantive award rather than recognition, would say: "I do not want constantly to be taken to arbitration in this way". It is a fact that a minority of hard-line employers paid the award and did not recognise.

But it is also the case that many employers—and there is a great deal of research to this effect—when asked why they recognised the union, and why they did not want to go to the CAC—and we investigated the fact that we had during that period the biggest rate of increase in union membership since the war—said that they did not want to face the alternative of compulsory arbitration.

It may well be that the existence of the Section 11 procedure provides a measure of coercion on the great majority of reluctant employers. But it does not provide the ultimate coercion on the small number of tough employers who would rather pay than recognise. Nevertheless, it is one additional pressure. In the absence of any provision of this kind, we fear that the Government will find that they cannot define what "method" means, and the courts will have to tell them. I beg to move.

Baroness Miller of Hendon

I believe that this amendment says that if employers and employees do not agree during the CAC process, the matter should be referred to arbitration—the CAC in consultation with ACAS. Why? Resolving such matters is exactly why the CAC is there. Also, the amendment proposes that the arbitrator should have the right to make substantive awards; for example, decisions on terms and conditions of employment. Again, I ask why. Surely that is the CAC's job.

Lord McCarthy

Did the noble Baroness ask why the matter did not go to ACAS rather than the CAC?

Baroness Miller of Hendon

Is not the point of the amendment that if employers and employees do not agree during the CAC process, the matter should then be referred to arbitration by the CAC in consultation with ACAS? I simply ask why. I thought that the CAC was to resolve these matters.

Lord McCarthy

One must make a distinction between the procedures and substantive terms and conditions. This time the CAC cannot make an award on substantive terms and conditions. It cannot give more money. It cannot shorten the hours. In effect, it cannot impose any sanction on the employer. All it can do is ask for specific performance on a procedure. There is no substantive remedy. We are saying that there should be one. A substantive remedy is that the CAC brings in a form of compulsory arbitration. We cannot take that to ACAS because it does not want to be involved in compulsory recognition. It considers that voluntary negotiation, conciliation and mediation is its business and does not want to become involved directly in compulsory recognition. If we are to have compulsory arbitration it has to be outside ACAS. It cannot be within the CAC because it has conducted the investigation. The people who investigate and declare cannot make a substantive award. So there has to be someone else.

We are saying that the CAC should have a panel of arbitrators and one, two or three of them could take on the task.

Baroness Miller of Hendon

I do not know whether I am particularly thick or, because it is late at night, I am particularly tired. I thought that this Bill was based on Fairness at Work and even-handedness between the employers on the one hand and the employees on the other. I thought that when an arrangement was set in place and the CAC was going to deal with it, that was it. Now other things are to be put in and if they do not work there can be extra compensation or what have you. I did not believe that was the intention of the Bill. But as I said, perhaps I am just thick.

Lord McIntosh of Haringey

The last exchange reminds me of the Marx brothers in, I believe, "Duck Soup". Margaret Dumont lost some of her jewellery. They searched the house and Groucho said that it was not in there so it must be in the house next door. There was not a house next door so they had to build one in order to search that as well. That seems to be the argument which my noble friend Lord McCarthy is using about the need for a further arbitrator since the CAC and ACAS cannot do the job that he wants done.

He spoke about last time and the Employment Protection Act 1975. We do not want to go back to that or the provisions of Section 11 of that Act. Under it,

using an approach which amounts in effect to arbitration, a settlement imposed under the threat that a person or body—in this case appointed by the CAC rather than the CAC itself—will make an award of new terms and conditions to be incorporated into individual worker's contracts if the employer does not keep to the settlement.

We looked again many times at the 1975 Act but, as we made quite clear in the White Paper and since, we believe that time has moved on. The number and severity of industrial disputes has declined dramatically since the 1970s.' Members of the Committee opposite can gloat as much as they want about. that. I am quite relaxed. Employers, workers or their representatives have on the whole learned to resolve their disputes without prolonged industrial action and indeed without such action at all in most cases.

The Bill is aimed more at promoting partnership than resolving disputes. Moreover, there are problems with the arbitration approach. At a time when inflation and the level of disputes were both high, compulsory arbitration had some attraction. Most disputes were about pay increases and could be settled by an arbitrator splitting the difference. But the world has changed. We are now in a prolonged period of low inflation. There is widespread use of performance pay. and industrial disputes are at their lowest level for over a hundred years. These days disputes are more likely to be about work organisation than basic conditions. Few employers will enter into a dispute unless they see the issue as very important for their business and arbitration is less attractive in these circumstances. Far more effective is the approach promoted with some success by ACAS of joint problem solving. That requires the willing consent of both parties and joint recognition of the large degree of common interest which both employer and employees have in the long-term success of the business.

The Bill is in part about signals and encouragement of a new partnership approach. For that reason I must say to my noble friend that the Government do not consider arbitration in the way suggested by him to be a necessary or appropriate element in the scheme for recognition. I hope that my noble friend will not pursue his amendment.

Lord McCarthy

I shall not pursue my amendment. My noble friend has made some very original and stimulating comments tonight but he cannot do so in relation to this amendment. We all know it has been laid down at the very highest level that there can be no movement on this matter. My noble friend said that the amendment reminded him of the Marx brothers. His observation reminded me of the Red Queen who said: What I tell you three times is true.

Lord McIntosh of Haringey

It was the Bellman in The Hunting of the Snark who said that.

Lord McCarthy

It is not true in either case, is it? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 229:

Page 57, line 13, at end insert—

("Notice of declarations

127A.—(1) If the CAC issues a declaration under this Schedule it must notify the parties of the declaration and its contents. (2) The reference here to the parties is to—

  1. (a) the union (or unions) concerned and the employer concerned, and
  2. (b) if the declaration is issued in consequence of an application by a worker or workers, the worker or workers making it.")

On Question, amendment agreed to.

[Amendment No. 230 not moved.]

Schedule 1, as amended, agreed to.

Baroness Miller of Hendon moved Amendment No. 231: Before Clause 2, insert the following new clause—



(".—(1) The Trade Union and Labour Relations (Consolidation) Act 1992 shall be amended as follows.

(2) After section 225 insert—

"Action pending recognition for collective bargaining.

225A. An act is not protected if the reason, or one of the reasons, for which it is done is that an employer has refused to recognise, to any extent, a trade union for the purpose of collective bargaining and—

  1. (a) the procedure laid down in Part I of Schedule AI has not yet been exhausted: or
  2. (b) the procedure laid down in Part I of Schedule A 1 has been exhausted and the union has failed to qualify for recognition."").

The noble Baroness said: I am in some confusion as to the siting of the amendment. When I tabled it I believed that it should fall somewhere in the middle of Schedule 3, but I am sure that the Public Bill Office knows better than I do. For that reason we find this amendment before Clause 2.

The Trade Union and Labour Regulations Consolidation Act 1992 provides for the protection of unions and their members from legal—I stress "legal"—action taken in furtherance of a trade dispute. Clearly, there can be no objection to that; indeed, the Act was itself produced by the former government. A strike becomes legal if a proper ballot is taken of the workers, appropriate notice is given, and so on, and the proper procedures are followed. This amendment removes protection from two courses of action: first, if the workers and the union seek recognition under the terms of this Bill and, although the employer refuses to agree to such recognition voluntarily, the machinery laid down in the Bill is still being conducted by the CAC; and, secondly, if the machinery laid down by the Bill has been employed and the CAC has decided that the union's case for recognition has not been made out. In other words, in the first case the matter is still sub judice, and in the second case the matter has been decided but the union has failed in its representations.

The Bill gives extensive rights to employees and unions to enforce recognition against unwilling employers. If the case is made out the employer is bound to accept recognition whether or not he is willing. The amendment prevents a union or its members from jumping the gun by pre-empting the decision of the CAC and calling a strike or engaging in some other industrial action while the matter is still under consideration by the CAC. It also removes the protection from action taken after a decision has been reached by the CAC and the union has lost; in other words, it prohibits an attempted second bite at the cherry by using force where the conciliation machinery laid down by the Bill has already been employed. The Bill will give unions a lot of rights that they do not have at present. The reciprocal act required for those rights must be that unions and their members accept that a referee's decision is final.

11 p.m.

Lord McIntosh of Haringey

The amendment would prevent any form of industrial action in support of a claim for recognition. I hear the argument that it is a quid pro quo for the existence of a statutory procedure but I am not sufficiently convinced to accept the amendment.

The right of unions to call industrial action is already heavily circumscribed. We do not propose to limit it further. If we did, we would be breaching our International Labour Organisation commitments, which the Government take very seriously. The statutory recognition procedure in Schedule 1 will provide a better, more predictable way of resolving disputes than strikes. Industrial action over recognition should become extremely rare or disappear altogether. However, it would be unfair and unjustified to restrict a union's right to take industrial action in support of recognition.

The amendment is in danger of limiting the ability of unions to take industrial action in respect of causes entirely unrelated to recognition. If a union were to take industrial action on an unrelated matter after a failed application for recognition, an unscrupulous employer might claim that a reason for the dispute was that the employer had failed to recognise the union. That could deter a union from taking otherwise fully justified industrial action. That would be wrong.

There are drafting difficulties with the amendment, which refers to the recognition procedure that has "not yet been exhausted". It is not clear whether that is intended to include the case where no application has been made. If not, it is unclear. If so, the effect of the amendment would be to ban all industrial action in support of a recognition claim. The amendment makes no reference either to industrial action in support of a claim for derecognition under Part VI, which renders its scope somewhat defective.

I do not think that the amendment is necessary or proportionate to the end effect that it seeks, and I do not believe that its drafting is satisfactory. I ask the noble Baroness to withdraw the amendment.

Lord Cavendish of Furness

Before the Minister sits down, my noble friend said that she tabled the amendment to provide protection for an employer against unions jumping the gun. The noble Lord does not think that the amendment is necessary. Can he say that is because the employer does have protection? I would like clarification.

Lord McIntosh of Haringey

There are two separate sections of the law. One is the law on industrial action. The amendment is about industrial action, which is why the Public Bill Office advised the noble Baroness to table it within Section 1. The other area is statutory recognition. We shall deal with industrial action as a separate issue in the Bill. We have a whole section on that subject, including Schedule 5. It is better not to introduce, as the amendment appears to do, a restriction on industrial action as part of the process of recognition and collective bargaining.

Baroness Miller of Hendon

I shall seek to withdraw the amendment but I will think about it again. My noble friend Lord Cavendish repeated my comment about jumping the gun. The Minister referred to two separate sections of the law. While the CAC is considering the whole matter, is it appropriate for a strike to take place during that period of consultation?

Lord McIntosh of Haringey

There could be reasons for taking industrial action which have nothing to do with the recognition procedures. It could not be the case that while extensive negotiation about collective bargaining and recognition is taking place the workforce should be debarred from taking industrial action. There is a whole series of reasons why industrial action might be necessary as a last resort.

Baroness Miller of Hendon

As I said, I shall withdraw the amendment, but I am left with enormous anxiety. If an unwilling employer running a small business is in the middle of the process that has been triggered and suddenly a strike is called, that will not make for a good partnership, conciliation or willingness to work together. It is a most unfortunate situation. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Schedule 2 [Union Membership: Detriment]:

Lord Wedderburn of Charlton moved Amendment No. 232:

Page 58, leave out lines 32 to 45 and insert— ("(4) Subsections (3), (4) and (5) shall cease to have effect.")

The noble Lord said: As previously, we aim to help the Government. I was delighted to hear the Minister's fine statement that we aim here and elsewhere to maintain our observance of International Labour Organisation conventions. Although it is late at night, and since we are all citing our favourite films, I remind the Committee of Bette Davis saying, "Hold on to your seat belts, it's going to be a bumpy ride!". There is a lot left to deal with, not least the amendment we are now moving.

The nub of the issue is that we want to do what we believe the Minister wants to do—although at the moment I am not sure what he wants to do—which is to get rid of what have sometimes been called the Ullswater amendments. I refer to the subsections in Section 148 of the 1992 Act which were inserted in 1993.

The Ullswater amendments, in social fact, were the beginnings of a most violent and abusive introduction of derecognition in the ports and the newspaper industry. It is an important area of social life to which the Bill addresses itself. In our view, it is most important to get rid of the Ullswater amendments fully and completely as they were introduced in 1993. Let me explain why.

In the two cases—Wilson in respect of the newspapers and Palmer in the case of the docks—the employers instituted a system of favours for those who did not want to obtain benefit from collective bargaining. Lord Justice Dillon always spoke of these advantaged as douceurs. He did not go to Latin, but he got half way. Curiously enough, we have a good word for what was happening; namely, "sweeteners". There were sweeteners for those who stuck by the employer who wanted to get rid of collective bargaining.

The immediate problem was that Section 146 of the Act makes it a wrong for the employer to penalise or in any way deter membership or the activities of an independent trade union on the part of employees. Those are not the full words, but it is the nub of the matter. The Court of Appeal took the view that it was bang in the centre of the section; that it was a system introduced by employers who were discriminating against those who were sticking by the union. Some Members of the Committee will remember that the noble Baroness, Lady Dean, said that the tactic was to let the union and collective bargaining wither on the vine. It was a good description of what was being done.

The Court of Appeal having said that, and before the judgments of the Court of Appeal were in print, on behalf of the Government the noble Viscount, Lord Ullswater, introduced, within five days, three new subsections. Subsections (4) and (5) are simply supports for subsection (3) and I take it that the Government will agree with that. Subsection (3) of Section 148, as it became, said that, where the evidence in the case showed that the employer was discriminating against the worker, and where there was evidence also that the employer intended to further a change in his relationship with his workers or any part of them, the first evidence should be cast aside and the second evidence should be taken, whatever the balance in the court room, as dominant to the case.

The assessment of the real evidence, if I may put it that way, was struck down and many authors wrote about how difficult it would be to show that the Ullswater balance between the employer giving evidence that he was changing the relationship with his workers on the one hand and that he was discriminating against the employee on union grounds on the other hand, must always come out on behalf of the employer.

So far, I think that the Government are with the amendment, although I submit that, having got this far, it is beginning to look as though subsections 1.3), (4) and

(5) of Section 148 of the 1992 Act should simply be dispensed with. I suspect that the Government did not do that in paragraph 4(4) of Schedule 2 because they wanted to keep in something about reasonable employers. The Ullswater doctrine gave the new formula a minor dent by saying that, if there was no possibility of an employer being reasonable in what he was doing, it would not apply. The Government have done something similar, which they have set out on page 58 of the Bill. The Government have added a proviso that occurs when the employer has, as stated in paragraph 4(4)(b):

"acted or failed to act, unless it considers that no reasonable employer would act or fail to act in the way concerned".

I should have said that another aspect of the legal doctrines involved is fully dealt with by the Government's amendment. That is to say, the House of Lords went on to find, in Judicial Committee, that what the employers had done with their douceurs, as it were, was simply an omission in not paying them to the discriminated workers. The Government have got rid of that by speaking of acting or deliberately failing to act. I congratulate them on that brief way round the point. That deals with the point and repeals the point.

However, there is the proviso. There is a problem about giving an exit for the reasonable employer in practice compared with what the formula appears to say on the face of the Bill, or indeed in the judgment. It arises in the cases of unfair dismissal where the employer is trying to show that he acted reasonably and very often he succeeds. However, in cases like Iceland Frozen Food v. Jones, 1983, the courts said: there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, and another might reasonably take another".

That formula has, especially in the writings of commentators, been shown very clearly to get rid of any substantive notion of reasonableness in the operation of such parts of the law. Professor Collins, in his book Justice in Dismissal, spent some time showing conclusively that it is an undesirable formula as it stands.

In my submission, it would also be part of the Government's proviso as set out on line 36 of page 58. It is inevitable that, where the employer is asked to balance the change of relations with the workers on the one side, and his action discriminating against an employee for trade union reasons on the other, he may well say—if I were briefed for him I would expect to win—that the context is a set of changes in the workforce (the Minister talked about the new situation at workforce level) in relation to himself in the course of which he happened to discriminate against an employee on trade union grounds.

Amendment No. 232 does not include that proviso because we do not believe it to be right that the only way in which an employer can discriminate on trade union grounds and get away with it is by saying he is changing his relationship with the workforce. If he were to show that there was some economic or social reason, or reasonable consultation for the change, that might be a different matter; though I would resist it. However, to give the proviso in sub-paragraph 4(b) on page 58 is to give the employer a way round the defence against discrimination of the workforce, and discrimination on trade union grounds in respect of the employee, all without the "do serve" which Mr. Justice Dillon found in previous practice.

In other words, the Government should look at paragraph 4(4)(b) on page 58 with a view to satisfying themselves that the proviso would take away a great deal of the repeal of the Ullswater amendments. If we are going to repeal the Ullswater amendments, let us do so. That is what our amendment seeks to do. Let us not play around with the notion of reasonable employers. I mentioned the book of Professor Collins not merely to increase his royalties, but also to suggest that if one wants to find a place where this line of case law is set up, there it is. It must be answered in terms of what has happened in tribunals and appellate courts. Therefore we hope that the Government will consider the straightforward wholesale cut of the Ullswater amendments, which were bad enough in themselves. I beg to move.


Lord McIntosh of Haringey

The right to belong to a trade union is separate from any rights to collective bargaining. They are related but they are distinct. The existing law makes that distinction and we wish to preserve it.

Clause 2 and Schedule 2 relate to an individual's right to belong or not to belong to a trade union and the right to participate in union activities; they do not relate to any entitlement for an individual to have his or her terms and conditions determined by a collective agreement negotiated by a union. Those rights are covered elsewhere in this Bill, most notably in Clause 1 and Schedule 1, and in Clause 15 to which we will come later.

My noble friend's amendment is aimed at paragraph 4 of Schedule 2 which amends the wording of Section 148 of the Trade Union and Labour Relations Consolidation Act 1992. As he makes clear, the amendment is aimed at what are now subsections (3) to (5) of Section 148; in other words, the Ullswater amendment. Those subsections specify that where an employer seeks to change his bargaining arrangements, his purpose shall be taken to be to effect such a change, and not to deter union membership unless his action is such that no reasonable employer would have taken it for that purpose. In other words, any reasonable act by an employer to change his bargaining arrangements is not discriminatory against trade union members.

The Ullswater amendment was introduced under controversial circumstances at a late stage in the passage of the Trade Union Reform and Employment Rights Act 1993. It was intended to reverse an aspect of the Court of Appeal's judgment in the Wilson and Palmer cases. In the event, the Judicial Committee of this House subsequently overturned the judgment of the Court of Appeal. Nevertheless, the amendment clarified the law. To accept this amendment and thereby repeal the latter would reintroduce uncertainty.

I acknowledge that, when in opposition, the Labour Party objected both to the content of the Ullswater amendment and to the manner in which the previous government introduced it. In the climate of those times it was seen as yet another anti-union measure, rushed through in the light of a Court of Appeal judgment which was subsequently overturned. But the context has now changed. First, the House of Lords judgment has confirmed that there is a real distinction between trade union membership and collective bargaining. Indeed, we have spent the whole of today debating collective bargaining.

Secondly, Section 148(3) needs to be seen in the context of government proposals on recognition and our objectives to avoid the fragmentation of bargaining. Thirdly, under Clause 15 we propose to give employees protection against pressure to give up the terms of collective agreements.

I can assure my noble friend that the Government have looked very carefully at Section 148(3) and have concluded that it serves a useful purpose in this new context and ought to be retained. It helps to make clear the important distinction between rights for trade union membership on the one hand, and, on the other, our proposed rights to collective bargaining, which the Committee has now agreed.

Repeal would raise doubts as to the intended purpose and effect of changing the law. We wish to avoid any such confusion. There will continue to be circumstances in which employers seek, quite legitimately, to change their bargaining arrangements; for example, following voluntary or statutory derecognition or where the bargaining unit has changed. The law must allow them to do so.

As has been made clear on the record both here and in another place, the Government have recognised that some employers might put pressure on employees to accept individual contracts. The inclusion in the Bill (in Clause 15) of protection for employees from being forced to sign contracts with terms that differ from applicable collective agreements will deal with this situation.

We have entered a new era of industrial relations. In the light of these explanations and the new context created by the Bill, I hope that my noble friend will not press his amendment.

Lord Wedderburn of Charlton

I hear what my noble friend the Minister says. However, I hope that he will give a reason on Report as to why the whole of subsection (3) of Ullswater ought to be retained. We should have one reason why we ought to retain a law which says, "You've been discriminated against, Smith, because you are a trade union member. But it is all very sad. You would have a remedy but your employer has decided to change the relationships of the workforce. So the discrimination against you is at an end, legally". What kind of law and justice is that? Do we go to the trade unions and say, "Yes, you are going to get a big right: of recognition, although we don't know what some of it means. But you will not get any rights in terms of discrimination on trade union membership or activities because the employers might change the nature of the relationship with the workforce". It is absurd. Every word we said about the Ullswater amendment was absolutely correct. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clause 3 [Blacklists]:

Baroness Miller of Hendon moved Amendment No. 232A:

Page 1, line 19, after ("compilation") insert ("and misuse")

The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 232B, 232C and 232D. They all relate to the provisions enabling the Secretary of State to prohibit blacklists. This is a concept which the Opposition wholly support. 1 regret to say, however, that the drafting of the clause leaves something to be desired—this is not the first time I have said that—in a number of respects. My first four amendments in this group seek to address that.

Amendment No. 232A qualifies the prohibition against compiling lists of trade union members or activists—I beg pardon of the noble Lord. Lord McIntosh, for using the word "activist" again—when the lists are to be used by employers or recruitment agencies. The compilation of a list of such persons cannot itself be improper or even undesirable. Indeed paragraph 9(3)(b) of Schedule 3 postulates that lists of members may be used. It is that use in connection with the employment of an individual that the Bill seeks to prohibit. However, it is not even that use which should be prohibited. It is—as the amendment provides—the improper use of such a list that should be prohibited.

What might be a proper use as distinct from an improper use? I give a single, simple example. An employer who has entered into a single union agreement would need to maintain such a list and the union would need to keep the employer updated as to its membership. As the Bill is drafted, the Secretary of State may make regulations leaving both the employer and the union liable to sanctions. If there are to be criminal sanctions they should be imposed for doing something improper, not for doing something that might have a perfectly innocuous purpose, however outlandish it may seem. Clearly the onus of justifying the production of the list will rest on the compiler.

Amendment No. 232B qualifies the word "activities". The amendment requires the activities to be lawful activities. What can be improper about making a list of those who have flouted the law by calling or taking part in an unlawful strike, illegal picketing, violence or sabotage, even if they did so in purported furtherance of a dispute? As an aside, the wording of this paragraph seems to be particularly loose. Suppose a list is made of paedophiles who happen to be members of one of the teaching unions. That surely would be perfectly proper. But, as they would be members of a union, that seems to be prohibited. Perhaps the Minister will consider tightening this up before the next stage and before one of these people tries to get his or her name off such a list.

Amendment No. 232C again seeks to clarify a provision. Obviously the Government are trying to prevent a list being used against a potential employee on the grounds that he is a trade union member. There is no reason why the Government should have been so coy about saying what they mean. Therefore I have done it for them. Amendment No. 232D seeks further clarification. It states that any list properly prepared and used in accordance with these amendments shall not be used for the purposes of positive or negative discrimination—that is, for preventing trade union members from being employed, or for ensuring that only union members are not employed. It would not inhibit the use of a list in the case of a single union shop because non-union members or members of other unions might still be employed so long as they accepted that their own union would not represent them. I hope the Government will accept that these small amendments improve and reinforce the Bill.

I realise that the noble Lord, Lord Simon, has an amendment in his name—which the noble Lord, Lord McIntosh, will no doubt address—to which I have an amendment (No. 235A). Every time I have tabled an amendment to the amendments of noble Lords opposite, although I was supposed to speak to my amendment first, that never happened. Is not Amendment No. 234A an amendment to Amendment No. 234, or have I got in a total muddle with this?

Lord McIntosh of Haringey

Amendments Nos. 234A and 234B are amendments to Amendment No. 234. In view of the agreement that has been reached, we shall not reach those amendments tonight. Amendment No. 235A is in the group we are discussing.

Baroness Miller of Hendon

I shall not be speaking to that at this stage.

Lord McIntosh of Haringey

In view of the agreement that has been reached through the usual channels, we should truncate the group of amendments. We should deal with Amendments Nos. 232A, B, C and D, which have been spoken to by the noble Baroness, Lady Miller, and with my Amendment No. 233, which is part of the same group. It would be realistic to move Amendments Nos. 235 and 235A after Amendment No. 234 on the next day in Committee.

All of the amendments concern the Bill's blacklisting provisions. Clause 3 gives the Secretary of State the power to introduce regulations to prohibit the blacklisting of trade union members and activists. The Delegated Powers and Deregulation Committee has made a number of observations about this clause and the powers that it gives to the Secretary of State. My Amendments Nos. 233 and 235 respond to the committee's concerns. They provide some further detail on the extent of the regulation-making powers which the clause confers on the Secretary of State.

Amendment No. 233 deals with an ambiguity in our original proposals. As currently worded, the clause provides powers for the introduction of regulations to prohibit the compilation and use of blacklists. The term "use" is probably inadequate to describe everyone who might handle the blacklists after they had been compiled. It would certainly cover the end users of the lists; that is, employers who use the lists for recruitment purposes. However, it would probably not cover organisations or individuals who act as middlemen, actively disseminating the lists provided by the compilers among employers.

Blacklisting is an activity where middlemen might flourish. In fact, they could be the main actors in the process, encouraging others to compile lists for them, which they then sell on to employers or employer organisations. Potentially, employer organisations could themselves act as middlemen, disseminating the information among their member companies. The amendment ensures that such middlemen are caught by the prohibition. In the regulations we will obviously ensure that the Royal Mail and other mailing companies that unknowingly distribute the lists as part of their normal business are not caught by any prohibition.

Perhaps I may now turn to the amendments brought forward by the noble Baroness. Amendment No. 232A seeks to give the Secretary of State the power to introduce regulations which prohibit the misuse of blacklists, as well as their compilation. I cannot see what this would usefully add to the clause. The noble Baroness should note that subsection (2) of the clause gives the Secretary of State the power to introduce regulations which prohibit the use of blacklists. In defining prohibited uses, the Secretary of State is in effect simultaneously defining how lists can be misused; he cannot avoid it. The effect of the amendment is therefore embedded in the wording of the clause.

It might be that the noble Baroness thinks that the clause should indicate in some way that there might be permissible uses of union lists. That too is unnecessary. There is nothing in the clause which prevents the Government from exempting certain lists or certain uses of lists from any prohibition. For example, it would seem inappropriate to stop unions from using lists of prominent trade unionists when trying to appoint one of them to a senior trade union position. Amendment No. 232A is unnecessary.

The purpose of Amendment No. 232B is to ensure that lists cannot be prohibited if the trade unionists on those lists had ever engaged in unlawful union activities. This seems to create a whole new area of uncertainty into the protection we are creating. It would create a smoke screen behind which blacklisters would continue to persecute ordinary trade unionists. It would be easy for a blacklisting organisation to allege that individuals had been involved in some kind of unlawful activity at some point during their union careers. Union law is exceedingly complex. It is very easy for individuals unintentionally to breach the law in some small way. Any breach of the law, however insignificant and however long ago it was committed, could be used by a blacklisting organisation to justify its work. At the very least the amendment would cause complications at the enforcement stage. Tribunals and courts would be asked to judge if individuals had ever engaged in any unlawful behaviour. There is plenty of scope there for arguments and expensive disputation about the facts.

We all agree that blacklisting should end finally and completely. This amendment would thoroughly undermine the clause. It would provide a lifeline for blacklisters and complicate the enforcement of any prohibition. I am sure that the noble Baroness does not want to achieve that and I would ask her to think again about the amendment.

Amendment No. 232C deals with the use of blacklists by employers and employment agencies. The clause states that the employers' purpose should be related to recruitment. That is the main purpose for which blacklists have been used in the past. Of course, employers could potentially use lists for other purposes. For example, they might be used to select existing employees for redundancy or dismissal. We are therefore considering whether Clause 3(1)(b) is correctly worded to cover all possible abuse, and we may come back to it, with amendments, at Report.

Amendment No. 232C qualifies the purpose by stating that the list should be used by employers or employment agencies in restricting or preventing recruitment. I cannot see the case for introducing a wording of that sort. It is very difficult to see how the lists could otherwise be used to inform recruitment decisions. Why should an employer purchase a list if he was not interested in using the names on the list to help determine his selection of possible candidates?

Amendment No. 232D is closely connected with Amendment No. 232C. It tries to ensure that regulations could be introduced to prohibit the compilation of lists which benefit those trade unionists who appear on them. I do not know what experience the noble Baroness draws on to justify the amendment. Is she concerned that this is a widespread practice? It may be that she feels that the Economic League and similar blacklisting organisations are really fairy godmothers in disguise, working for the benefit of their listed trade unionists. This is not a significant issue. I do not think there is any need to highlight the matter in primary legislation.

The current wording of the clause permits us to introduce regulations to prohibit the compilation and use of lists which contain the names of trade unionists. The regulation will focus on the use of such lists which work to the detriment of named individuals. That is where the problem exists; that is what the regulations should address. This amendment is also unnecessary. It identifies or seeks to identify a solution to a problem which does not exist in the real world.

I ask the noble Baroness to withdraw Amendment No. 232A and not to move Amendments Nos. 232B to 232D, and I ask the Committee to agree to Amendment No. 233.

Baroness Miller of Hendon

I shall seek to withdraw Amendment No. 232A, as the Minister has requested, and I will not move the rest of my amendments in this group. I am glad that debate on the other amendments has been postponed. However, I do not think the Minister answered one of my points. Let us suppose that a list was made of paedophiles who happened to be members of a teachers' union. I imagine that making a list of paedophiles would be perfectly proper. But if they had been members of a union, it seems that it would be prohibited by the provision. That is the point I was making.

Lord McIntosh of Haringey

No, the case made by the noble Baroness is covered by other legislation. It would not be overridden by trade union legislation.

Baroness Miller of Hendon: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 232B to 232D not moved.]

Lord McIntosh of Haringey moved Amendment No. 233:

Page 2. line 4, at end insert ("; (b) the sale or supply of lists to which subsection (1) applies.")

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to

Lord McIntosh of Haringey

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at twenty-one minutes before midnight.