I am afraid I do not have time. I need to get through the responses.
This Government are determined to support parties to resolve their disputes between themselves, rather than relying on a costly and time-consuming employment tribunal. A tribunal is an admission of failure and everything must be done, where practical, to prevent having to resort to it. The mediation of disputes retains employer flexibility while preserving workers’ rights and dignity, and our measures aim to encourage that further.
There has been much discussion today and in the past weeks about the proposal contained in the report prepared by Adrian Beecroft on compensated no-fault dismissal. I have made my views on the proposal very clear. This is not a measure in the Bill and therefore is not a matter on which I propose to dwell in the limited time available to me. Suffice it to say that the call for evidence has closed and my officials will be considering the responses received. I am clear, however, that we need to take action to improve the way in which businesses, especially small businesses, manage and end their relationships with employees. By addressing the fears that small businesses
tell us they have about ending up in an employment tribunal, we can help unlock the growth that we so desperately need.
By extending the qualifying period for unfair dismissal from one to two years, we have already taken action to increase the period that employers have to decide whether a new employee is the right one for the job, but we need to provide a solution where problems occur and where the qualifying period has been exhausted.
The shadow Secretary of State asked whether any more elements of the Beecroft report would be implemented through the Bill. We do not intend to table any further amendments prompted by the recommendations in the Beecroft report.
My hon. Friend the Member for Bury St Edmunds raised the question—the case, as it were—of exemptions from employment regulations for small businesses. I am not sure whether he is in the Chamber. The evidence from Germany is that when the reform was introduced to reduce employment protection for companies of up to 10 employees, it had no impact on the number of people employed in small businesses. It therefore seems that the evidence in favour is highly questionable.
On the measures we are proposing on settlement agreements, the all-party group on micro businesses, in its response to the call for evidence on compensated no-fault dismissal, for which I am extremely grateful, supported the idea that employers should have the option of using
“a new simpler route to end employment relationships”.
The all-party group states that in return for compensation employers should
“be able to terminate a contract with an employee without going through a performance review and dismissal process. … this should be an option that is voluntary but which employers are freely able to propose to employees without fear of being taken to court.”
We agree almost entirely with that sentiment. I appreciate the comments of the hon. Member for Skipton and Ripon (Julian Smith) in the debate today. I say “almost entirely” because there is one important difference: we do not think that this option should be available only to micro-businesses. Therefore, we will table a new clause in Committee to ensure that an offer of settlement cannot be used against an employer, any employer, in an unfair dismissal case, which will give businesses the confidence to talk to their employees about bringing the relationship to a swift end through the use of a settlement agreement.
The shadow Secretary of State raised a concern about trust and confidence in the employment relationship, but he will be aware that many businesses, probably including his former clients—big companies that probably paid him substantial hourly rates—regularly use compromise agreements. We want to ensure that all businesses, including small and medium-sizes businesses, can use those agreements. If there is no agreement, the employee’s rights are still protected. They have to work together to ensure that the employment relationship is maintained.
My hon. Friend the Member for Northampton South (Mr Binley) raised concerns about SMEs. We will shortly consult on a suite of proposals to help small businesses use settlement agreements to ensure that they have the confidence to deal with employment problems. I hope that that reassures him.
Reference was made to unfair dismissal compensatory award proposals. There has been debate about the power to amend the limit on unfair dismissal compensatory awards. The Labour party wants to make mischief on the issue, but I should point out that it is a matter of common ground that there should be a limit on the amount of the compensatory award. Having proposed removing the limit back in 1998, the then Government backtracked and elected instead to have a large, one-off increase from £12,000 to £50,000 and introduce a formula for future increases. As a result, the limit has increased rapidly in recent years and now stands at £72,300. That is greatly in excess of the median award for unfair dismissal, which is less than £5,000. Realism about potential awards is clearly important for encouraging the settlement of employment disputes and the greater use of settlement agreements.
I want to say a few words about competition. The Government believe that creating a new competition and markets authority will ensure that resources and specialised competition expertise can be deployed to best effect while reducing the burdens on business, and I was pleased that the shadow Secretary of State supported that principle. This matters for the taxpayer and for businesses and consumers at the wrong end of anti-competitive practices. The Government recognise that a great strength of the current regime is the two-phase approach to markets and merger cases and wish to preserve it. We will therefore retain the separation of decision making; the board will have responsibility for the initial investigation and phase-1 decisions, and groups of independent panellists will continue to make final decisions at phase 2. When making those decisions, the groups will be required to act independently of the board, which will ensure that decisions are robust by giving cases a second look and bringing in the use of experienced business people and other outside experts. There will also be scrutiny by the Competition Appeal Tribunal.
The Bill is pro-growth and pro-business. We have listened to small and large businesses across the country, the businesses on which this country’s recovery depends. They have told us that fair and speedy ways of resolving disputes matter to them. We have listened and are delivering the measures that matter to them. A strong and effective competition regime matters for business. Reducing the excessive burden of regulation, much of which was introduced under the previous Administration, and the cost of compliance with regulation matters for business. The Bill will help businesses to grow and succeed. It will boost consumer and business confidence and help the private sector create jobs. It will promote fairness and support our green economy. I commend it to the House.
Question put, That the amendment be made.