Employment Bill [HL]

moved Amendment No. 25: 25: After Clause 15, insert the following new Clause— ““Additional restrictions on charging persons seeking employment, etc. (1) Section 6 of the Employment Agencies Act 1973 (c. 35) (restrictions on charging persons seeking employment, etc.) is amended as follows. (2) In subsection (2) for ““not exceeding level 5 on the standard scale”” there is substituted ““not less than £10,000 for each separate offence””. (3) After subsection (2) insert— ““(3) Any fee charged to a job seeker by a person carrying on an employment agency or an employment business shall be subject to a contract specifying— (a) the services to be provided; (b) the duration of the contract; (c) continuation fees or termination conditions; and (d) any charge for— (i) access to a vacancy database; (ii) personal grooming for interview presentation; (iii) interview training, including mock interviews; (iv) advice or preparation of a curriculum vitae; and (v) curriculum vitae circulation.”””” The noble Baroness said: My name is attached to Amendment No. 25 but the person who has done the work on it is my noble friend Lord James. He has left his notes with me. When he thought the Committee was going to be on 4 March he made special arrangements to be here. Unfortunately he has to be abroad today and so I shall read out what he would have said. He has had personal experiences that I think the Committee should hear. Amendment No. 25 deals exclusively with what for many years have been referred to as outplacement agencies. Although these agencies may fall within the jurisdiction of the 1973 Act, they are in fact illegally offering services that are a reversal of the usual process by which employment agencies work to find candidates on behalf of employers seeking introductions. Instead, an outplacement agency sets out to act on behalf of a jobseeker, who will usually be at least in the middle management group or even a quite senior executive, and who, probably unexpectedly, has found himself either redundant or subject to job loss during his mid-career years. Not unnaturally, any such manager or executive finding himself jobless is faced with very serious challenges potentially affecting the continuity of the whole way of life, not only of himself but also of other members of his family. Can he continue his children's school fees? Can he pay the mortgage? Can he afford health insurance and so on? To this group of individuals an outplacement operation can seem very attractive as a potential shortcut to finding good new employment opportunities, and individuals may welcome the support of an agency seeking on their behalf to provide an introduction. There is nothing new about outplacement agencies. They appear to have been operating on these lines for more than 30 years, so the department is quite correct, as the Minister—the noble Lord, Lord Bach—asserted in an earlier debate, that they already fall under the terms of the 1973 Act. The practical records and experience, however, are that agencies have either been unaware of the workings of the Act or have wilfully chosen to ignore its jurisdiction and take fees directly from jobseekers in direct contravention of the law. My noble friend Lord James is unaware of any prosecutions for this ever being brought. In days gone by, the leading agencies—of which my noble friend has provided a list of names and addresses to the noble Lord, Lord Bach—have been in the practice of charging very high fees for the straightforward functions of helping jobseekers and coaching them in good personal representation and so on. My noble friend has personal first-hand knowledge of instances where they have charged fees as high as £2,000 per month to an individual, a fee which was justified in those cases by the agencies as covering a combination of services. These included the professional preparation and printing of a CV; coaching in physical presentation and grooming for an interview; coaching in body language control; access to a database purporting to cover a constantly updated register of all job vacancies available in the relevant sector; endless coffee and sympathy and the daily company of other jobseekers for mutual support; a permanent office base from which to plan job-seeking activity; and direct job opportunity identifications and introductions. As a result of the huge pressures and distress caused to those experiencing redundancy, there is a constant risk that the services my noble friend has noted amount to a serious temptation to indulge in a lack of objective reality and open discussion with the members of the redundant person’s family, who may have most to offer in supporting the quest for a solution. There is an old expression which we seem to hear less often these days but which seems appropriate here: that is to liken outplacement agencies to snake oil salesmen, the famous individuals who toured the mid-west of the USA a hundred or more years ago claiming they had a potion capable of curing any ailment. My noble friend says he has personal, direct and very painful experience of a former colleague, aged 44, who fell into this trap. In one case, an individual received a package of £20,000 when made redundant from the job that he thought secure for life. He then signed up with an outplacement operation at a cost of £2,000 per month. He was able to keep going the charade that he had a job simply by attending the agency’s office, before his wife found out in month 8. At that point she left him on realising that he had already spent £16,000 of the £20,000 and was committed to spending the remaining £4,000. When his remains were found in his garden shed—he had been dead for three weeks—he still had no job and all his family had gone. Recent investigations have shown that outplacement agencies have significantly altered the methodology and structure of the services they now offer. They now concentrate on the provision of the elements listed above such as grooming, database access and interview technique coaching, for which my noble friend understands a normal package today would cost a one-off fee of about £5,600. There is apparently substantial improvement on past practice but it still leaves a number of unresolved anxieties that the amendment is intended to address. First, the packages now generally exclude job-seeking opportunities for their clients, although there is good reason to believe that the practice continues in some cases. Secondly, the amendment states specifically that no charge can be made for the introduction of job opportunities, although the fees may concentrate on other useful elements to improve job hunting success. Thirdly, addressing a particular problem of past experience, a written contract should be provided from the beginning that will specifically state what services are to be provided and, particularly, the cost of any renewal or termination. Fourthly, recognising that the current Bill makes provision for breaches to be tried in High Court, thus effectively removing the cap on a penalty, the amendment provides that a penalty may be imposed for each separate breach made by an agency and not just for a generic breach of the Act as a whole. The amendment will, in conjunction with the new Bill, ensure the removal of opportunities for abuse that may have become a matter of custom and practice by years of misunderstanding of the 1973 Act. It will not stop agencies offering the useful services that they can provide, but it will ensure that jobseekers in distress cannot be abused or misled about what precisely they are getting into. My noble friend goes on to put the other side of the case. In one respect, he has nothing but admiration for the services provided by outplacement operators and nothing in the Bill or the amendment should be seen to interfere with that excellent work. He is referring to the valuable action when the outplacement agency works directly at the instigation of the company or body initiating the redundancy, where a positive effort is being made by a sympathetic former employer to help redundant staff in relocating themselves. Generally all the services he has noted are provided and there are notable examples of very high success being achieved. My noble friend has had personal experience of three such successes. First, when the British Shoe Corporation, owned by the then Sears Group, was liquidated, it left behind a head office of 500 people who were mostly specialists in shoe design, international shoe purchasing, retailing, shop facia design and merchandising. It was not necessarily a promising prospect for 500 such specialist people to be relocated. The British Shoe Corporation engaged the services of one female consultant who, within three months, managed to place 492 of around 500 staff in perfectly good alternatives. My noble friend recalls that only those with severe medical problems or who needed to stay at home in a carer role for a relative were unsuccessful. Secondly, when the Robinson Group was sold from its Northampton base to a Bradford firm, an outplacement exercise found jobs for 280 of 290 staff in the Northampton area, principally in manufacturing and shop floor activity. Thirdly, my noble friend faced the prospect of 2,000 young people, all of whom had had the first employment of their lives at the Dome, becoming redundant on the same day, 31 December 2000, and succeeded in finding jobs for some 1,700 of them, again using the very skilled young woman who had distinguished herself in the British Shoe Corporation project. In that case, the critical factor was that the outplacement operation persuaded the key sponsors of the Dome to prioritise all job vacancies for redundant Dome employees, which led to a very big take-up of jobs in the travel and entertainment sectors and to retail opportunities with Boots and WHSmith. Although it is probably an overgeneralisation, my noble friend recalls that there were enough job opportunities to employ the whole 2,000. Noble Lords may wonder what happened to the 300 who did not take up available places. It seems that 150 of them were intent on marrying the other 150, so we hope they have lived happily ever after when everything else had gone. It is to be hoped that every encouragement will be given to continuity of outplacement operations where the service is sold for an appropriate fee to employers. The Government would do well to take a positive initiative in encouraging any firm declaring a large number of redundancies to appoint appropriate consultants and to pay for that service before the problem is put entirely on the departing employees. My noble friend asked the noble Lord, Lord Bach, for clarification of the tax and fiscal treatment of any fees so paid and it was passed on that HMRC will treat every case on its individual merits. My noble friend can only say that in all the cases he has handled the cost of outplacement purchase by the company has been tax deductible. A statement to that effect could add significant value to a push by the Government for a wider use amongst companies declaring redundancies. That is what my noble friend Lord James wanted to say. I wish to comment on only one point. My noble friend mentioned agencies taking fees illegally. I recently heard a radio programme about what were called talent agencies, which all expected the so-called young future stars to come up with a fee before they would accept them on their register. As they were classified as talent agencies, no one was enforcing the employment law that states that people cannot be charged for registering to find a job. My noble friend has raised many issues here. I beg to move.