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Orders of the Day — Employment Relations Bill

House of Commons, 26 July 1999.

New Clause

Ian McCartney (Labour, Makerfield)

I beg to move, That this House agrees with the Lords in the said amendment.

Betty Boothroyd (Speaker, West Bromwich West)

With this, it will be convenient to take Lords amendments Nos. 306, 325 and 329.

Ian McCartney (Labour, Makerfield)

Section 196 of the Employment Rights Act 1996 generally limits the operation of the Act to employees who ordinarily work in Great Britain. It is a complicated section resulting from several consolidations, some relating to legislation at least a quarter of a century old. After careful consideration, we concluded that the complexities are unnecessary. International law and the principles of our domestic law are enough to ensure that our legislation does not apply in inappropriate circumstances. There must be some proper connection with the UK first, and in such cases it is right that UK law should apply. Other legislation has no need for such restrictions. We believe that now is the time to simplify the provisions, in line with our commitment to good regulation. Repealing that section has a number of other significant advantages. It ensures that we fulfil our European Union obligations, which, in some circumstances, mean that rights that are derived from Europe should apply to individuals who may not currently be covered. It extends employment rights to employees temporarily working in Great Britain and thus facilitates the implementation of the posting of workers directive, which otherwise would require further regulations later this year. It also means that people who may have worked for some years in the UK, but who are nevertheless excluded from claiming under the Employment Rights Act 1996, will be able to rely on the protection of our legislation, as should be the case. The recent case of Carver v. Saudi Arabian Airlines demonstrates the need for this provision. I do not claim that the amendment will have dramatic effects in practice—few cases arise, and the additional costs to employers will be minimal. Nevertheless, it takes forward an important principle, and modernises and simplifies our legislation. The position of mariners is special, and special provisions apply to them at present under sections 196 and 199. The amendment ensures that their position is unchanged. The implications of doing otherwise can be fully examined in the longer term. The new powers in the Bill to confer rights—clause 20, which would become section 23 of the Act—will provide us with the opportunity to consult on whether changes to the provisions applying to mariners would be desirable. The first subsection in the new clause makes a parallel change to the Trade Union and Labour Relations (Consolidation) Act 1992, removing the territorial restriction in that Act on rights to be consulted about mass redundancies. Subsection (2) is a purely technical change to powers in the 1992 Act to extend rights to offshore installations. Currently no procedure is specified for making the order. The amendments will provide for negative resolution, in line with the procedure that applies under the Employment Rights Act 1996. Amendments 306, 325 and 329 are consequential to the repeal of section 196.

Ian McCartney (Labour, Makerfield)

I beg to move, That this House agrees with the Lords in the said amendment. We indicated in our "Fairness at Work" White Paper our intention to revise the Transfer of Undertakings (Protection of Employment) Regulations 1981—commonly known as the TUPE regulations—to improve their operation. These regulations implement the European Communities acquired rights directive, and safeguard employees' rights when the business in which they work changes hands between employers. Since the White Paper was published, we have agreed with our European partners a new, improved directive: that was a notable success for the UK presidency last year. The new directive sets out for the first time an explicit definition of the transfer of an undertaking. It also gives member states clear options to allow, but not require, independent workers' representatives to negotiate changes to terms and conditions to save jobs when the undertaking of an insolvent employer is transferred, just as they can in cases of insolvency when no transfer is involved; to provide that the transferor's outstanding debts in relation to the employees do not pass to the transferee, so as to save jobs when the undertaking of an insolvent employer is transferred; to ensure that the transferor notifies the transferee of all the rights and obligations that will be transferred in a relevant transfer so far as they are or should be known to the transferor; and to include all occupational pension rights within the terms and conditions that pass from the transferor to the transferee in a relevant transfer. The amendment of the directive has laid the groundwork for our revision of the regulations. Officials in my Department are currently drawing up detailed proposals, in liaison with colleagues elsewhere in Whitehall and in informal discussions with the main employer and employee representative bodies and other outside interests, in line with social partnership principles. I am grateful for the constructive contribution that the Confederation of British Industry, the Trades Union Congress and others have made to this process. There is a high degree of consensus on the main issues to be addressed in the revision of the regulations. That is particularly so in the area of public sector contracting, where we have been assisted by the TUPE forum, which is a representative body with members from the CBI, the TUC, Unison, the Construction Confederation, the Business Services Association, the Local Government Management Board, the Association of Direct Labour Organisations and others. Our aim is to seek views on our detailed proposals by way of a formal public consultation document to be published a little later in the year, and to have the new requirements in place by next spring. As this work has progressed, however, it has become clear that some of the changes that we may decide to make could not be achieved under the existing powers in section 2(2) of the European Communities Act 1972. In particular, extending the scope so as to give rights to individuals when they would not have them under the directive could not be done under those existing powers. That limits the options available for tackling two major areas of uncertainty in the regulations: their application to contracting-out operations and their application to transfers involving public sector bodies. If we had to rely on the existing powers alone, we could be prevented from putting forward proposals to meet the widespread expectation—shared by employer and employee bodies alike—that the new regulations will apply comprehensively to changes that occur in service contracting. Specifically, it could prevent us from ensuring that recontracting or bringing back in-house of a contracted-out service was covered in cases where the conditions in the directive were not met, but where it was wished to provide consistent treatment. The existing powers would also be insufficient to allow us to apply the regulations to transfers of purely administrative functions between public administrative bodies, should we wish to do so. Amendment No. 24 seeks to remove those technical obstacles, so that we can be certain that we have sufficient powers to achieve what we are likely to be asked to achieve when we go out to formal public consultation. 4.15 pm I should stress that we are not yet ready to present our detailed proposals for revision of the regulations. Some difficult legal issues must be addressed, and my officials are still considering them. Besides, we are obviously not in a position to prejudge the outcome of the public consultation to which I have referred.

Tim Collins (Conservative, Westmorland and Lonsdale)

May I express my hope, and that of many other Conservative Members, that the Minister receives the promotion that is due to him? The Minister said earlier that consultation would take place in the autumn, and that proposals would be in place some time next spring. I appreciate that he may not be able to be precise, but can he give us some idea of the minimum period that will elapse between the conclusion of the consultation and the implementation of the regulations?

Ian McCartney (Labour, Makerfield)

I thank the hon. Gentleman for his initial comments. I do not know whether they were helpful or unhelpful, but they were certainly apposite, given that we are dealing with the transfer of undertakings from one job to another—although I am not sure that that covers Ministers. The hon. Gentleman's main point is very valid. When my officials have completed their work, I shall be happy to give both the official Opposition and the Liberals a clear indication of the timetable for the proposals. That will involve consultation. This is the first opportunity that the Government have had, prior to consultation about specific regulations, to sit down with stakeholders and involve them in the preparation of a consultation document. When the timetable is produced, it will be as a result of agreement. The hon. Gentleman, however, asked a fair and reasonable question, and I shall answer it as soon as I can. If that is before the House returns from the recess, I shall write to him and to the Conservative and Liberal Democrat Front-Bench spokesmen, the hon. Members for Tiverton and Honiton (Mrs. Browning) and for Eastleigh (Mr. Chidgey). The use to which the power will be put will, as I have said, be subject to consultation. That is why the amendment was drafted in relatively wide terms. I hope, however, that by describing in some detail the purposes for which we expect the power to be used, I have been able to allay any fears that hon. Members may have had. I trust that I have succeeded in making clear what are undoubtedly complex legal points.

David Chidgey (Liberal Democrat, Eastleigh)

It would be helpful if the Minister could clarify one point. He referred to the transfer of undertakings from the public to the private sector. May I take him back a few years, to a time when privatisation policies were in full swing and many public-sector agencies became private, contracted-out organisations? In recent years, contracts have been re-tendered so that other private sector companies can bid for the privilege of undertaking the services. The Public Services Agency is an example. One problem that has arisen is exactly how the TUPE rights of workers are transferred to the second privatised employer who has contracted for those services. It has caused some confusion, and, as I think the Minister will know, what should happen is not made clear in the directive. Has the Minister taken this on board in the regulations, and, if not, can he assure me that he will?

Ian McCartney (Labour, Makerfield)

That is a fair and, indeed, important point. The whole purpose of agreeing the review with our European partners was to take account of exactly such issues. Over the years, a complexity has arisen because of decisions made in courts and in employment appeal tribunals. There are grey areas applying to both employers and employees, which should not need to be there. A common approach is needed on the part of employers' and employees' organisations to put the matter right, which is why prior consultation is taking place. I trust that the consultation will address those issues fully and effectively, so that when the new proposals are introduced next spring there will be a sense of common ownership, and both rights and obligations in regard to what happens in the case of first, second and, potentially, third-generation contractual arrangements will be clarified.