The hon. Gentleman spent a lot of time in Committee posing such questions, but the Federation of Small Businesses, the Engineering Employers Federation, Citizens Advice and many of the top groups that deal with employers and employees tell us that a compensated, no-fault dismissal is bad for business, and BIS’s own impact assessment says exactly the same. Until the Government can produce empirical evidence that underpins some of the Beecroft reforms, I am unwilling to believe what the hon. Gentleman says.
I hope that the Minister has listened to my comments on amendment 81 and I will test the opinion the House on it at the appropriate time.
Amendment 82 would remove clause 13 and its provision on compensatory awards. The clause gives the Secretary of State the power to alter the amount of compensation paid to an employee who is found by a judge to have been unfairly dismissed. Every Government member of the Committee indicated that they want the amount to be drastically reduced, despite the fact that the Bill gives
the Secretary of State the potential to increase it from its current level of £72,000. The Secretary of State has indicated that his cap would be a maximum of either an annual salary or median earnings, whichever is the lower, potentially limiting all claims to about £26,000, the effect of which would be to hit anyone who earns more than average earnings. This Government have hit middle earners time and again and these proposals have the potential to hit them hardest when they will have actually won a claim at an employment tribunal. It should be up to the employment tribunal judge to decide what an adequate compensatory award is, not the Secretary of State.
I will give the House an anonymised example. A claimant was dismissed at the age of 58. He was earning as little as £26,020 net per year, but due to dismissal will not attain that level of earnings before he retires at 65. After eight months of unemployment, the claimant got a job on £20,020 net per year. His loss was calculated by a judge at an employment tribunal to be £124,200. Under the current regime, he would receive 62% of that claim. Under the Secretary of State’s regime, he would receive less than 20% of it. That is somebody on fairly average earnings of about £26,000 a year. Citizens Advice has stated:
“The idea that this could have a measurable effect on the behaviour of workers and employers is not credible”.
It proposes the deletion of clause 13 on that basis. That is why I would like to test the opinion of the House later this afternoon.
The critical point is that the combined impact of settlement agreements, ACAS early conciliation, fees and the lowering of the cap on compensatory awards will deliver the very compensated no-fault dismissal that was in the Beecroft report. Let me demonstrate why. If an employer decides that he no longer likes an employee, he might offer them a sum of money to leave his employment in a settlement agreement. The employer could say that the amount offered will be reduced each day that the settlement agreement is not accepted. The employee will feel pressured into accepting an offer for fear of victimisation, for fear that the offer will be withdrawn or reduced over time, or because of the spectre of having to take an unfair dismissal claim with the associated fee structure. Even if the employee were to win the tribunal case, the compensation cap proposed by the Secretary of State would be considerably lower than the losses that they had encountered.
This is a rogues charter that will result in poorly compensated employees who feel that the system is too complicated and expensive to make a rightful claim for justice. This is compensated no-fault dismissal in action. Let us not mention the ludicrous announcement by the Chancellor at the Conservative party conference that people could give up their workplace rights for a few company shares.
I will quickly run through amendments 92 and 83. In Committee, we pressed the then Minister, the hon. Member for North Norfolk, to introduce a better system for the enforcement of employment tribunal awards. He committed to look at that, but nothing has come forward. As the Minister has said today, some 40% of people who have been found by a judge at an employment tribunal to have been unfairly dismissed never receive their award. I am glad that the Minister is as shocked as
we are by those figures and is looking at the matter. I will support her if there is a genuine attempt to make the system better.
Amendment 92 would essentially add to the powers of the employment tribunal to impose a penalty on an employer who does not settle the award within the time specified by the judge. It seems strange that the Government are proposing to fine an employer for aggravated circumstances in order to boost the coffers of the Treasury, while the employee has to wait or gets nothing at all. I am sure that many Members have constituents who have not been paid their compensatory awards.
Amendment 83 would merely remove the provision that introduces a parking ticket-style discount to employers if they pay their fine to the Treasury within the set period of time. That could have the unintended consequence of the penalty being prioritised over the awards due to the employee.
I will move on to amendment 94 and the new clauses tabled by my hon. Friend the Member for North Ayrshire and Arran (Katy Clark). Amendment 94 relates to clause 15, in which the Government attempt to limit the definition of a protected disclosure, which is the basis of whistleblowing claims. Whistleblowing is a day-one right that has the potential for unlimited compensation. The Opposition agree with the Government that this should not be used for an individual’s own employment contract, but we disagree that inserting a public interest test into the legislation will assist in the matter.
The Law Society agrees with us. It has said that the provision should state that a breach of a legal obligation requires something more than a breach of the individual contract of employment, so as to satisfy the public interest test. At present, the provision means that allegations about matters other than a simple breach of a legal obligation must fall within a test of public interest. A disclosure that a criminal offence has been committed would therefore also have to satisfy the public interest test.
We propose that the legislation be altered to omit an individual’s employment contract from whistleblowing claims, unless it satisfies the public interest test. One reason why the Government have got it wrong on this matter is that there has been no consultation with the relevant parties and stakeholders on how best to achieve the goals that we want to achieve.
2.15 pm
The Government are trying to make it easier to fire, rather than hire, employees. They have no empirical evidence that the changes will improve the system. Indeed, the potential unintended consequences of an explosion in satellite litigation have been raised by many stakeholders and by many Members this afternoon. The impact will be felt by the lowest-paid and the most vulnerable. Although many Government Members are using the Bill as a way to attack the trade union movement, the changes will affect those who are not in a trade union the most, because they do not have the same representation.
Yesterday, we heard that the Government were legislating to try to change perceptions of health and safety. Today, they are doing the same with the perceptions of employees’ rights at work, rather than dealing with those perceptions.
An eminent employment lawyer with over 30 years’ experience, Joy Drummond from Simpson Millar, emphasised that in Committee:
“Isn’t it more responsible for a Government to educate…employers and publicise the traps and how they should behave, rather than to legislate on the basis of a myth which, in itself, will, through implementation in such a way, cause more problems for everybody?”—[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 97, Q212.]
That is why the measures that we are putting forward would be good for business.
Most shockingly, these reforms will impact on consumer confidence by damaging job security. These reforms purport to assist business, but they might have the opposite effect on the economy. Do not take that from me. The Minister’s predecessor, the hon. Member for North Norfolk, said of the Beecroft report before he was appointed to the Business, Innovation and Skills team:
“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence.”
He went on to say, “It’s crazy”. The Bill has the potential to choke off access to justice for people who have been wronged in the workplace and deserve justice. It also has the potential to damage growth. I challenge the Minister and the Government to prove once and for all that this is not Beecroft by the back door by joining us in the Lobby this afternoon.