Employment Bill [Lords]

I thank my hon. Friend for his important contribution. The issue goes even further. If we look through the record, we see that even the trade unions, the Labour party's close friends, had misgivings at the time. The TUC expressed its concerns over the ““potential confusion”” between the proposed legislation and the widely supported ACAS code. However, the right hon. Member for Kingston upon Hull, West and Hessle (Alan Johnson), then Minister with responsibility for employment relations, was undeterred by such criticism. His response was to say:"““We have set out a minimum three-step procedure because that is the right direction in which to move””—[Official Report, Standing Committee F, 13 December 2001; c.142 .]" He even implied that employment disputes would be simplified, as the Employment Bill as it was at that time had fewer provisions than the ACAS code. However, at some point the Government decided that the three-step procedure was not the right direction to take. The measures came into force in October 2004, and the Government spent the following years trying to undo the legislation that they themselves created. In March 2006, less than two years after statutory procedures were introduced, the Government published a policy statement rather grandly called ““Success at Work””, in which they announced that a review of the dispute resolution regulations was necessary. In the course of the next few months, they came clean about the fact that a full review of all dispute resolution procedures was needed. The then Secretary of State for Trade and Industry admitted that the time, cost and stress involved in settling disputes could be reduced by making changes. As my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) has noted, the consequent review, undertaken by Michael Gibbons, found that the procedures, as they stood at the time, involved a high administrative burden for both employers and employees; that they resulted in the need to use formal mechanisms such as the laying down of red tape, although previously disputes could be informally resolved; and that they were over-complex and the penalties for failing to observe them resulted in employers and employees seeking external legal advice earlier than in the past. That last consequence is of particular interest as the Government claim in their explanatory notes to the new Employment Bill that it was unforeseen. We beg to differ. In a Committee discussion on 18 December 2001, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out to the Minister with responsibility for employment relations that the Government's dispute resolution procedures"““would open the door for yet another lawyers' bonanza.””" My hon. Friend continued his warning to the Minister by arguing that there existed a need"““to establish certainty so that employers and employees can enter contractual arrangements knowing that they are compliant with the law without having to get involved with lawyers.””—[Official Report, Standing Committee F, 18 December 2001; c. 178.]" He then questioned the suitability of the proposed and subsequently implemented legislation for achieving that certainty. The Minister's response was that the procedures were designed to be simple and easy to understand and that uncertainty should not arise. At least now, by proposing to repeal said statutory procedures, the Government are admitting that that over-simplistic assessment was utterly wrong. The problem is that this is yet another occasion on which Labour has got it wrong. Last week's Regulatory Enforcement and Sanctions Bill, which the Minister and I recently debated, was its third attempt at reform, and this is its second attempt on dispute resolution procedures. What the Secretary of State said about less employment legislation is the opposite of the case—not only are we seeing more and more employment legislation, but a good part of it is an attempt to patch up previous, failed labour laws. We support the existence of a national minimum wage and the continual monitoring of the legislative provisions dealing with it. We also support action to ensure that workers who receive the minimum wage do not lose out in real terms when they are owed arrears as a result of underpayment. The current law gives almost no deterrent to underpayment, and we would welcome its amendment. However, we have concerns about certain aspects of this area of the Bill and we would like to hear more from the Government. They claim that they expect the new penalty measures under clause 11 to increase the deterrent effect on businesses that do not currently pay the national minimum wage. The Minister has said that some 1,600 employers were found to be non-compliant, but last year only very few cases of underpayment were deemed bad enough to lead to the issue of one of the Government's penalty notices. Other cases led to the employer paying arrears, but in no way being punished for the illegal underpayment. The Government have also said that only 5 to 10 per cent. of cases will result in the imposition of a penalty under the new legislation; it is therefore unclear to us how the new penalty, applied to only a small fraction of cases, will act as more of a deterrent than the currently rarely applied penalty notice. The Minister shook his head at my figure of 5 to 10 per cent., and I would be grateful if he put me right on that. While the proposal to allow enforcement officers to be able to withdraw and replace notices of underpayment is beneficial as errors may be corrected, the potential disadvantage, as with the current penalty notice regime, is that there are no real incentives for officers to get the notice right first time. Officers may issue an incorrect notice, put the employer to the trouble and expense of appealing it, and simply start again when they recognise their error. As with so many of the Government's attempts to make things better, there is potential for red tape and bureaucracy to mar the process. We strongly oppose the suggestion made in the other place on 13 March that the national minimum wage be extended to foreigners working on British ships and foreigners working on any ship at any time when it is within British territorial waters. Broadly speaking, we are concerned that those changes could be made prematurely, and we shall look to the Minister to address those concerns. I note that he did not comment on the report by the TUC's commission on vulnerable employment. Perhaps he could comment on the Government's findings on that report in relation to the proposals in the Bill. I urge that any changes that are made be implemented with maximum publicity. All employers must be given the opportunity to assess their companies and to correct any failings in payment of the national minimum wage before the new penalties are imposed. Have the Government yet given any indication of the expected costs of the new powers in enforcing the minimum penalty? If not, it is difficult to assess whether the proposals are the best way forward in protecting low-paid, vulnerable workers. The Minister concluded with the provisions on trade union membership, and I shall do the same. I therefore turn to clause 18, which, as he said, represents a response to the judgment made on 27 February last year by the European Court of Human Rights in the case of ASLEF v. the UK. The clause enables trade unions to prohibit or expel from their organisation an individual who belongs, or has belonged to, a particular political party. It amends the relevant sections of the Trade Union and Labour Relations (Consolidation) Act 1992. To our mind, the clause represents yet another rewrite of inadequate provisions that the Government introduced just four years ago.